Federal Employee Short-Term Disability Insurance Act of 2018

Summary:  Federal Employee Short-Term Disability Insurance Act of 2018 This bill requires the Office of Personnel Management to establish and administer a short-term disability insurance program for federal employees who suffer a non-work related injury or disability, take leave to care for a family member, or take leave to adopt a child or become a foster parent.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Federal Employee Short-Term 
Disability Insurance Act of 2018''.

SEC. 2. PURPOSE.

    The purpose of this Act is to offer voluntary insurance to Federal 
employees for protection against the loss of pay resulting from--
            (1) short-term injury or disability;
            (2) short-term leave taken for the purpose of caring for a 
        family member;
            (3) the birth of a child of such an employee; or
            (4) making arrangements to adopt a child or to become a 
        foster parent.

SEC. 3. NON-WORK RELATED DISABILITY INSURANCE.

    (a) In General.--Title 5, United States Code, is amended by 
inserting after chapter 87 the following:

     ``CHAPTER 88--NON-WORK RELATED SHORT-TERM 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' means--
                    ``(A) an employee defined in section 8901(1); and
                    ``(B) an officer or employee of the United States 
                Postal Service or of the Postal Regulatory Commission;
            ``(3) the term `injury or disability', with respect to an 
        employee, means that such employee is unable to perform the 
        essential functions of such employee's position of employment 
        with the Federal Government;
            ``(4) the term `member of family' has the meaning given 
        such term in section 8901(5);
            ``(5) the term `carrier' means an insurance company that is 
        licensed to issue disability insurance in all States, taking 
        into account any subsidiaries or affiliates of such a company; 
        and
            ``(6) the term `State' includes the District of Columbia.
``Sec. 8802. Availability of insurance
    ``(a) The Director shall establish and administer a program to make 
insurance coverage available under this chapter--
            ``(1) for an injury or disability not covered under chapter 
        81;
            ``(2) for leave to care for, or leave to make arrangements 
        to care for, a member of family, including the birth of a son 
        or a daughter; and
            ``(3) for leave to make arrangements--
                    ``(A) to become a foster parent; or
                    ``(B) to adopt a child.
    ``(b) Insurance shall not be available under this chapter if the 
injury or disability of an employee is--
            ``(1) caused by willful misconduct of such employee;
            ``(2) caused by such employee's intention to bring about 
        such injury or disability to himself or to another individual; 
        or
            ``(3) proximately caused by the intoxication of such 
        employee.
    ``(c) In addition to the requirements otherwise applicable under 
section 8801(5), 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 any 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 duration 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 section 
        8804(c) 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 contract.
    ``(3) Nothing in this chapter shall be considered to grant 
authority for a 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 
not less than 3 years and not greater than 7 years, and may be 
terminated earlier than the termination date of such contract 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 contract described in paragraph (1) may be made 
automatically renewable, for a term of 1 year each January 1, unless 
written notice of non-renewal is given either by the Director or the 
carrier not less than 180 days before the renewal date, or unless 
modified by mutual agreement.
    ``(3) A 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.
    ``(b)(1) Benefits provided to an employee under this chapter shall 
offset other benefits received by such employee for the same injury or 
disability, leave to care for or make arrangements to care for a member 
of family (including the birth of a son or a daughter), or leave to 
make arrangements to adopt a child or become a foster parent including 
worker's compensation and disability retirement income.
    ``(2) A contract providing benefits under this chapter--
            ``(A) shall not provide for a preexisting condition 
        exclusion; and
            ``(B) shall not charge higher premiums, deny coverage, or 
        drop coverage of an employee with a preexisting condition.
    ``(3) A contract providing benefits under this chapter shall 
provide incentives for an employee who is receiving benefits under such 
contract to return to work.
    ``(c)(1) For each instance that such employee suffers an injury or 
disability, takes leave to care for or make arrangements to care for a 
member of family (including the birth of a son or a daughter), or takes 
leave to make arrangements to adopt a child or become a foster parent, 
and is eligible for benefits under this chapter, such employee may 
receive benefits under this chapter for a period not to exceed 12 
months beginning on the date on which such 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 equal to the lesser of--
            ``(A) 70 percent of the annual rate of pay, excluding 
        bonuses, of an employee at the time of the injury or disability 
        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 shall begin after the completion of a waiting 
period, subject to the requirement in subparagraph (C). An employee 
shall elect one of the following waiting period options:
            ``(i) On the 8th day of continuous injury or disability, 
        leave to care for or to make arrangements to care for a member 
        of family (including the birth of a son or a daughter), or 
        leave to make arrangements to adopt a child or become a foster 
        parent.
            ``(ii) On the 31st day of continuous disability, leave to 
        care for or to make arrangements to care for a member of family 
        (including the birth of a son or a daughter), or leave to make 
        arrangements to adopt a child or become a foster parent.
            ``(iii) On the 91st day of continuous disability, leave to 
        care for or to make arrangements to care for a member of family 
        (including the birth of a son or a daughter), or leave to make 
        arrangements to adopt a child or become a foster parent.
            ``(iv) On the 181st day of continuous disability, leave to 
        care for or to make arrangements to care for a member of family 
        (including the birth of a son or a daughter), or leave to make 
        arrangements to adopt a child or become a foster parent.
    ``(B) An employee who elects to receive benefits earlier shall pay 
a higher premium.
    ``(C) A waiting period selected under subparagraph (A) shall begin 
on the first day of an employee's injury or disability.
``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 a contract 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 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 1502 of 
title 41 shall not apply with respect to an insurance contract under 
this chapter.''.
    (b) Conforming Amendment.--Section 1005(f) of title 39, United 
States Code, is amended by inserting ``88,'' after ``87,''.
    (c) Clerical Amendment.--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 Short-Term Disability                    8801''.
                            Insurance.
    (d) Date of Application.--The amendment made by subsection (a) 
shall apply to contracts that take effect with respect to the first 
calender year that begins more than 18 months after the date of 
enactment of this section.