To provide for a voluntary, non-work related disability insurance program for Federal employees.

Summary: Federal Employee Disability Insurance Act of 2010 - Requires the Director of the Office of Personnel Management (OPM) to establish and administer a program to make available insurance coverage for an injury occurring outside the workplace or for other disability otherwise not covered under federal employee worker's compensation provisions. Makes such insurance unavailable if the injury is caused by the employee's intention to bring about the injury to himself or to another individual. Requires an insurance contract under this provision to be fully insured.

Requires the Director to contract with one or more carriers for such disability insurance policies. Authorizes the Director to prescribe reasonable minimum standards for benefit plans offered. Prohibits such a contract from providing for a preexisting condition exclusion.

 Allows an eligible employee to receive: (1) during the first 12 months that he or she qualifies, benefits equal to the lesser of 70% of his or her monthly pay at the time the injury or sickness occurs or 70% of the maximum rate of basic pay provided for grade GS-15 of the general schedule, beginning after expiration of the waiting period elected by the employee; and (2) after such 12-month period, benefits equal to 50% of monthly pay until age 67, only if such employee is totally disabled.

Requires each eligible individual obtaining insurance coverage under this Act to be responsible for 100% of the premiums, which shall be higher for employees who elect a shorter waiting period.

Establishes in the Employees' Life Insurance Fund a Non-Work Related Disability Insurance Administrative Account, which shall be available to OPM to defray reasonable expenses incurred in administering this Act and to which contracted carriers shall make contributions necessary to cover such expenses.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Federal Employee Disability 
Insurance Act of 2010''.

SEC. 2. NON-WORK RELATED DISABILITY INSURANCE.

    (a) Title 5, United States Code, is amended by adding after chapter 
87 the following:

          ``CHAPTER 88--NON-WORK RELATED DISABILITY INSURANCE

``Sec.
``8801. Definitions.
``8802. Availability of insurance.
``8803. Contracting authority.
``8804. Benefits.
``8805. Premiums.
``8806. Preemption.
``8807. Studies, reports, and audits.
``8808. Jurisdiction of courts.
``8809. Administrative functions.
``8810. Cost accounting standards.
``Sec. 8801. Definitions
    ``For purposes of this chapter--
            ``(1) the term `Director' means the Director of the Office 
        of Personnel Management;
            ``(2) the term `employee' has the meaning given such term 
        in section 8901(1);
            ``(3) the term `carrier' means a voluntary association, 
        corporation, partnership, or other nongovernmental organization 
        which is lawfully engaged in providing, paying for, or 
        reimbursing lost wages or salaries under group insurance 
        policies or contracts, membership or subscription contracts, or 
        similar group arrangements, in consideration of premiums or 
        other periodic charges payable to the carrier, including an 
        insurance plan duly sponsored or underwritten by an employee 
        organization and an association of organizations or other 
        entities described in this paragraph sponsoring a temporary 
        benefits plan;
            ``(4) the term `injury' includes an injury related to 
        pregnancy and childbirth;
            ``(5) the term `sickness' includes a sickness related to 
        pregnancy and childbirth;
            ``(6) the term `State' includes the District of Columbia; 
        and
            ``(7) the term `totally disabled', used with respect to an 
        employee, means such employee is unable to perform the 
        essential functions of such employee's position.
``Sec. 8802. Availability of insurance
    ``(a) The Director shall establish and administer a program to make 
available insurance coverage under this chapter for an injury occurring 
outside the workplace or other disability otherwise not covered under 
chapter 81.
    ``(b) Insurance shall not be available under this chapter if the 
injury of an employee is caused by such employee's intention to bring 
about the injury to himself or to another individual.
    ``(c) In addition to the requirements otherwise applicable under 
section 8801(3), an insurance contract under this chapter must be fully 
insured, whether through reinsurance with other carriers or otherwise.
``Sec. 8803. Contracting authority
    ``(a) The Director shall, without regard to section 5 of title 41 
or any other statute requiring competitive bidding, contract with one 
or more carriers for a policy or policies of disability insurance as 
described under this chapter. The Director shall ensure that each 
resulting contract is awarded on the basis of contractor 
qualifications, price, and reasonable competition.
    ``(b)(1) Each contract under this section shall contain--
            ``(A) a detailed statement of the benefits offered 
        (including any maximums, limitations, exclusions, and other 
        definitions of benefits);
            ``(B) the premiums charged (including any limitations or 
        other conditions on their subsequent adjustment);
            ``(C) the terms of the enrollment period; and
            ``(D) such other terms and conditions (including procedures 
        for establishing eligibility for insurance under this chapter) 
        as may be determined by the Director, consistent with the 
        requirements of this chapter.
    ``(2) Premiums charged under a contract under this section shall 
reasonably and equitably reflect the cost of the benefits provided, as 
determined by the Director.
    ``(c)(1) Each contract under this section shall require the 
carrier--
            ``(A) to provide payments or benefits described in 
        subsection (c) or (d) of section 8804 to an employee if such 
        employee is entitled thereto under the terms of the contract; 
        and
            ``(B) with respect to disputes regarding claims for 
        payments or benefits under the terms of the contract--
                    ``(i) to establish internal procedures designed to 
                resolve such disputes expeditiously; and
                    ``(ii) to establish for disputes not resolved 
                through procedures under clause (i), procedures for one 
                or more alternative means of dispute resolution 
                involving independent third-party review under 
                circumstances acceptable to the Director.
    ``(2) The carrier's determination as to whether or not a particular 
employee is eligible to obtain insurance coverage under this chapter 
shall be subject to review to the extent and in the manner provided in 
the applicable master contract.
    ``(3) Nothing in this chapter shall be considered to grant 
authority for the third-party reviewer to change the terms of any 
contract under this chapter.
    ``(d)(1) Each contract under this section shall be for a term of 7 
years, unless terminated earlier by the Director in accordance with the 
terms of such contract. However, the rights and responsibilities of the 
enrolled employee, the insurer, and the Director under each contract 
shall continue with respect to such employee until the termination of 
coverage of the enrolled employee or the effective date of a successor 
contract.
    ``(2) A 7-year contract described in paragraph (1) may be made 
automatically renewable, for a term of 1 year each January first, 
unless written notice of non-renewal is given either by the Director or 
the carrier not less than 180 calendar days before the renewal date, or 
unless modified by mutual agreement.
    ``(3) A 7-year contract described in paragraph (1) shall include 
such provisions as may be necessary to ensure that, once an employee 
becomes duly enrolled, insurance coverage pursuant to that enrollment 
shall be terminated only if the individual is separated from Federal 
service or, where appropriate, for non-payment of premiums.
``Sec. 8804. Benefits
    ``(a) The Director may prescribe reasonable minimum standards for 
benefit plans offered under this chapter. The benefits under this 
chapter shall provide for benefits as described in subsections (c) and 
(d).
    ``(b)(1) Benefits under this chapter may supplement other benefits 
of an employee, including worker's compensation and disability 
retirement income.
    ``(2) A contract providing benefits under this chapter shall not 
provide for a preexisting condition exclusion.
    ``(c)(1) An eligible employee may receive benefits under this 
chapter during the first 12 months that an employee qualifies for such 
benefits. An employee shall receive such benefits after the expiration 
of the waiting period selected by such employee under paragraph (2)(A). 
The amount of benefits shall be the lesser of--
            ``(A) 70 percent of the monthly pay, excluding bonuses, of 
        an employee at the time of the injury or sickness of such 
        employee occurs; or
            ``(B) 70 percent of the maximum rate of basic pay provided 
        for grade GS-15 of the general schedule.
    ``(2)(A) The period for which benefits are payable to an employee 
under this subsection will begin after the completion of a waiting 
period. An employee shall elect one of the following waiting period 
options:
            ``(i) On the 8th day of continuous disability.
            ``(ii) On the 31st day of continuous disability.
            ``(iii) On the 91st day of continuous disability.
            ``(iv) On the 181st day of continuous disability.
    ``(B) Employees who elect to receive benefits earlier shall pay a 
higher premium.
    ``(d)(1) An employee may receive benefits after the 12-month period 
established under subsection (c) has expired only if such employee is 
totally disabled due to injury or sickness.
    ``(2) The amount of total disability benefits shall be 50 percent 
of an employee's monthly pay, excluding bonuses, at the time of the 
benefits under subsection (c) have expired. Total disability benefits 
shall not be available to an employee once such employee reaches the 
age of 67.
    ``(e) A contract approved under this chapter shall require the 
carrier to cover the geographic service delivery area specified by the 
Director. The Director shall require carriers to include non-work 
related disability underserved areas in their service delivery areas.
    ``(f) A surviving spouse, disability annuitant, or surviving child 
whose annuity is terminated and is later restored, may continue 
enrollment in a disability benefits plan subject to the terms and 
conditions prescribed in regulations issued by the Office.
``Sec. 8805. Premiums
    ``(a) Each eligible individual obtaining insurance coverage under 
this chapter shall be responsible for 100 percent of the premiums for 
such coverage.
    ``(b) The amount necessary to pay the premiums for enrollment shall 
be withheld from the pay of the enrolled individual.
    ``(c) The carrier participating under this chapter shall maintain 
records that permit it to account for all amounts received under this 
chapter (including investment earnings on those amounts) separate and 
apart from all other funds.
    ``(d)(1)(A) The Employees' Life Insurance Fund is available, 
without fiscal year limitation, for reasonable expenses incurred in 
administering this chapter before the start of the first term described 
in section 8803(d)(1), including reasonable implementation costs.
    ``(B) Such Fund shall be reimbursed, before the end of the first 
year of the first 7-year period described in section 8803(d)(1), for 
all amounts obligated or expended under subparagraph (A) (including 
lost investment income). Reimbursement under this subparagraph shall be 
made by the carrier in accordance with applicable provisions included 
in the relevant contract.
    ``(C)(i) There is hereby established in the Employees' Life 
Insurance Fund a Non-Work Related Disability Insurance Administrative 
Account, which shall be available to the Office of Personnel 
Management, without fiscal year limitation, to defray reasonable 
expenses incurred by the Office in administering this chapter after the 
start of the first term described in section 8803(d)(1).
    ``(ii) A contract under this chapter shall include appropriate 
provisions under which the carrier involved shall, during each year, 
make such periodic contributions to the Non-Work Related Disability 
Insurance Administrative Account as necessary to ensure that the 
reasonable anticipated expenses of the Office of Personnel Management 
in administering this chapter during such year (adjusted to reconcile 
for any earlier overestimates or underestimates under this 
subparagraph) are defrayed.
    ``(e) Nothing in this chapter shall, in the case of an enrolled 
individual applying for an extension of disability insurance coverage 
under this chapter after the expiration of such enrolled individual's 
first opportunity to enroll, preclude the application of underwriting 
standards for later enrollment.
``Sec. 8806. Preemption
    ``(a) The terms of any contract under this chapter which relate to 
the nature, provision, or extent of coverage or benefits (including 
payments with respect to benefits) shall supersede and preempt any 
State, territorial, tribal, or local law, or any regulation issued 
thereunder, which relates to non-work related disability insurance or 
contracts.
    ``(b)(1) No tax, fee, or other monetary payment may be imposed or 
collected, directly or indirectly, by any State, territory, tribe, or 
locality, or by any political subdivision or other governmental 
authority thereof, on, or with respect to, any premium paid for an 
insurance policy under this chapter.
    ``(2) Paragraph (1) shall not be construed to exempt any company or 
other entity issuing a policy of insurance under this chapter from the 
imposition, payment, or collection of a tax, fee, or other monetary 
payment on the net income or profit accruing to or realized by such 
entity from business conducted under this chapter, if that tax, fee, or 
payment is applicable to a broad range of business activity.
    ``(c) No law of a State, territory, tribe, or locality, pertaining 
to subrogation or reimbursement with respect to benefits provided under 
this chapter, shall operate except as expressly adopted by the 
Director.
``Sec. 8807. Studies, reports, and audits
    ``(a) A contract under this chapter shall contain provisions 
requiring the carrier to furnish such reasonable reports as the 
Director determines to be necessary to enable the Director to carry out 
the Director's functions under this chapter.
    ``(b) Each Federal agency shall keep such records, make such 
certifications, and furnish the Director, the carrier, or both, with 
such information and reports as the Director may require.
    ``(c) The Director shall conduct periodic reviews of each plan 
under this chapter to ensure its competitiveness.
``Sec. 8808. Jurisdiction of courts
    ``The district courts of the United States have original 
jurisdiction, concurrent with the United States Court of Federal 
Claims, of a civil action or claim against the United States under this 
chapter after such administrative remedies as required under section 
8803(c) have been exhausted, but only to the extent judicial review is 
not precluded by any dispute resolution or other remedy under this 
chapter.
``Sec. 8809. Administrative functions
    ``(a)(1) Except as otherwise provided in this chapter, the Director 
shall prescribe regulations necessary to carry out this chapter and to 
make arrangements as necessary with other agencies and payroll systems 
to implement the program.
    ``(2) Except as otherwise provided by law, the Director shall 
specify in regulation the treatment of time spent by an individual in 
receipt of benefits under this chapter for the purposes of periodic 
increases in pay, retention purposes, and other rights, benefits, and 
conditions of employment for which length of service is a factor.
    ``(b) The carrier shall provide for periodic coordinated 
enrollment, promotion, and education efforts, as specified by the 
Director.
``Sec. 8810. Cost accounting standards
    ``The cost accounting standards issued pursuant to section 26(f) of 
the Office of Federal Procurement Policy Act (41 U.S.C. 422(f)) shall 
not apply with respect to an insurance contract under this chapter.''.
    (b) The analysis for part III of title 5, United States Code, is 
amended by adding at the end of subpart G the following:

``88. Non-Work Related Disability Insurance.................    8801''.