Federal Employees Life Insurance Improvement Act

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Federal Employees Life Insurance 
Improvement Act''.

SEC. 2. STUDY AND REPORT ON CERTAIN LIFE INSURANCE OPTIONS OFFERED TO 
              FEDERAL EMPLOYEES.

    (a) In General.--Not later than July 31, 1998, the Office of 
Personnel Management shall conduct a study on life insurance options 
for Federal employees described under subsection (b) and submit a 
report to Congress.
    (b) Study and Report.--The study and report referred to under 
subsection (a) shall--
        (1) survey and ascertain the interest of Federal employees in 
    an offering under chapter 87 of title 5, United States Code, of 
    insurance coverage options relating to--
            (A) group universal life insurance;
            (B) group variable universal life insurance; and
            (C) additional voluntary accidental death and dismemberment 
        insurance; and
        (2) include any comments, analysis, and recommendations of the 
    Office of Personnel Management relating to such options.

SEC. 3. REPEAL OF MAXIMUM LIMITATION ON EMPLOYEE INSURANCE.

    Chapter 87 of title 5, United States Code, is amended--
        (1) in section 8701(c), in the first sentence, by striking the 
    comma immediately following ``$10,000'' and all that follows and 
    inserting a period; and
        (2) in section 8714b(b), in the first sentence, by striking 
    ``except'' and all that follows and inserting a period.

SEC. 4. FOSTER CHILD COVERAGE.

    Section 8701(d)(1)(B) of title 5, United States Code, is amended by 
inserting ``or foster child'' after ``stepchild'' both places it 
appears.

SEC. 5. INCONTESTABILITY OF ERRONEOUS COVERAGE.

    Section 8706 of title 5, United States Code, as amended by section 
5(2), is further amended by adding at the end the following new 
subsection:
    ``(g) The insurance of an employee under a policy purchased under 
section 8709 shall not be invalidated based on a finding that the 
employee erroneously became insured, or erroneously continued insurance 
upon retirement or entitlement to compensation under subchapter I of 
chapter 81 of this title, if such finding occurs after the erroneous 
insurance and applicable withholdings have been in force for 2 years 
during the employee's lifetime.''.

SEC. 6. DIRECT PAYMENT OF INSURANCE CONTRIBUTIONS.

    Chapter 87 of title 5, United States Code, is amended--
        (1) in section 8707--
            (A) in subsection (a), by striking ``(a) During'' and 
        inserting ``(a) Subject to subsection (c)(2), during'';
            (B) in subsection (b), by striking ``(b)(1) Whenever'' and 
        inserting ``(b)(1) Subject to subsection (c)(2), whenever''; 
        and
            (C) in subsection (c), by inserting ``(1)'' immediately 
        after ``(c)'' and by adding at the end the following new 
        paragraph:
    ``(2) An employee who is subject to withholdings under this section 
and whose pay, annuity, or compensation is insufficient to cover such 
withholdings may nevertheless continue insurance if the employee 
arranges to pay currently into the Employees' Life Insurance Fund, 
through the agency or retirement system that administers pay, annuity, 
or compensation, an amount equal to the withholdings that would 
otherwise be required under this section.'';
        (2) in section 8714a(d), by adding at the end the following new 
    paragraph:
    ``(3) Notwithstanding paragraph (1), an employee who is subject to 
withholdings under this subsection and whose pay, annuity, or 
compensation is insufficient to cover such withholdings may 
nevertheless continue optional insurance if the employee arranges to 
pay currently into the Employees' Life Insurance Fund, through the 
agency or retirement system which administers pay, annuity, or 
compensation, an amount equal to the withholdings that would otherwise 
be required under this subsection.'';
        (3) in section 8714b(d), by adding at the end the following new 
    paragraph:
    ``(3) Notwithstanding paragraph (1), an employee who is subject to 
withholdings under this subsection and whose pay, annuity, or 
compensation is insufficient to cover such withholdings may 
nevertheless continue additional optional insurance if the employee 
arranges to pay currently into the Employees' Life Insurance Fund, 
through the agency or retirement system which administers pay, annuity, 
or compensation, an amount equal to the withholdings that would 
otherwise be required under this subsection.''; and
        (4) in section 8714c(d), by adding at the end the following new 
    paragraph:
    ``(3) Notwithstanding paragraph (1), an employee who is subject to 
withholdings under this subsection and whose pay, annuity, or 
compensation is insufficient to cover such withholdings may 
nevertheless continue optional life insurance on family members if the 
employee arranges to pay currently into the Employees' Life Insurance 
Fund, through the agency or retirement system that administers pay, 
annuity, or compensation, an amount equal to the withholdings that 
would otherwise be required under this subsection.''.

SEC. 7. ADDITIONAL OPTIONAL LIFE INSURANCE CONTINUATION AND 
              PORTABILITY.

    (a) In General.--Section 8714b of title 5, United States Code, is 
amended--
        (1) in subsection (c)--
            (A) by striking the last 2 sentences of paragraph (2); and
            (B) by adding at the end the following:
    ``(3) The amount of additional optional insurance continued under 
paragraph (2) shall be continued, with or without reduction, in 
accordance with the employee's written election at the time eligibility 
to continue insurance during retirement or receipt of compensation 
arises, as follows:
        ``(A) The employee may elect to have withholdings cease in 
    accordance with subsection (d), in which case--
            ``(i) the amount of additional optional insurance continued 
        under paragraph (2) shall be reduced each month by 2 percent 
        effective at the beginning of the second calendar month after 
        the date the employee becomes 65 years of age and is retired or 
        is in receipt of compensation; and
            ``(ii) the reduction under clause (i) shall continue for 50 
        months at which time the insurance shall stop.
        ``(B) The employee may, instead of the option under 
    subparagraph (A), elect to have the full cost of additional 
    optional insurance continue to be withheld from such employee's 
    annuity or compensation on and after the date such withholdings 
    would otherwise cease pursuant to an election under subparagraph 
    (A), in which case the amount of additional optional insurance 
    continued under paragraph (2) shall not be reduced, subject to 
    paragraph (4).
        ``(C) An employee who does not make any election under the 
    preceding provisions of this paragraph shall be treated as if such 
    employee had made an election under subparagraph (A).
    ``(4) If an employee makes an election under paragraph (3)(B), that 
individual may subsequently cancel such election, in which case 
additional optional insurance shall be determined as if the individual 
had originally made an election under paragraph (3)(A).
    ``(5)(A) An employee whose additional optional insurance under this 
section would otherwise stop in accordance with paragraph (1) and who 
is not eligible to continue insurance under paragraph (2) may elect, 
under conditions prescribed by the Office of Personnel Management, to 
continue all or a portion of so much of the additional optional 
insurance as has been in force for not less than--
        ``(i) the 5 years of service immediately preceding the date of 
    the event which would cause insurance to stop under paragraph (1); 
    or
        ``(ii) the full period or periods of service during which the 
    insurance was available to the employee, if fewer than 5 years,
at group rates established for purposes of this section, in lieu of 
conversion to an individual policy. The amount of insurance continued 
under this paragraph shall be reduced by 50 percent effective at the 
beginning of the second calendar month after the date the employee or 
former employee attains age 70 and shall stop at the beginning of the 
second calendar month after attainment of age 80, subject to a 
provision for temporary extension of life insurance coverage and for 
conversion to an individual policy of life insurance under conditions 
approved by the Office. Alternatively, insurance continued under this 
paragraph may be reduced or stopped at any time the employee or former 
employee elects.
    ``(B) When an employee or former employee elects to continue 
additional optional insurance under this paragraph following separation 
from service or 12 months without pay, the insured individual shall 
submit timely payment of the full cost thereof, plus any amount the 
Office determines necessary to cover associated administrative 
expenses, in such manner as the Office shall prescribe by regulation. 
Amounts required under this subparagraph shall be deposited, used, and 
invested as provided under section 8714 and shall be reported and 
accounted for together with amounts withheld under section 8714a(d).
    ``(C)(i) Subject to clause (ii), no election to continue additional 
optional insurance may be made under this paragraph 3 years after the 
effective date of this paragraph.
    ``(ii) On and after the date on which an election may not be made 
under clause (i), all additional optional insurance under this 
paragraph for former employees shall terminate, subject to a provision 
for temporary extension of life insurance coverage and for conversion 
to an individual policy of life insurance under conditions approved by 
the Office.''; and
        (2) in the second sentence of subsection (d)(1) by inserting 
    ``if insurance is continued as provided under subsection 
    (c)(3)(A),'' after ``except that,''.
    (b) Report.--Not later than 3 years after the date of enactment of 
this Act, the Office of Personnel Management shall submit a report to 
Congress on additional optional insurance provided under section 
8714b(c)(5) of title 5, United States Code (as added by subsection (a) 
of this section). Such report shall include recommendations on whether 
continuation for such additional optional insurance should terminate as 
provided under such section, be extended, or be made permanent.
    (c) Technical Amendment.--The last sentence of section 8714b(d)(1) 
of title 5, United States Code, is amended by inserting ``(and any 
amounts withheld as provided in subsection (c)(3)(B))'' after ``Amounts 
so withheld''.

SEC. 8. IMPROVED OPTIONAL LIFE INSURANCE ON FAMILY MEMBERS.

    (a) In General.--Section 8714c(b) of title 5, United States Code, 
is amended to read as follows:
    ``(b)(1) The optional life insurance on family members provided 
under this section shall be made available to each eligible employee 
who has elected coverage under this section, under conditions the 
Office shall prescribe, in multiples, at the employee's election, of 1, 
2, 3, 4, or 5 times--
        ``(A) $5,000 for a spouse; and
        ``(B) $2,500 for each child described under section 8701(d).
    ``(2) An employee may reduce or stop coverage elected pursuant to 
this section at any time.''.
    (b) Technical and Conforming Amendments.--Section 8714c of title 5, 
United States Code, is amended--
        (1) in subsection (c)(2), by striking ``section 8714b(c)(2) of 
    this title'' and inserting ``section 8714b(c) (2) through (4)''; 
    and
        (2) in subsection (d)(1), by inserting before the last sentence 
    the following: ``Notwithstanding the preceding sentence, the full 
    cost shall be continued after the calendar month in which the 
    former employee becomes 65 years of age if, and for so long as, an 
    election under this section corresponding to that described in 
    section 8714b(c)(3)(B) remains in effect with respect to such 
    former employee.''.

SEC. 9. OPEN SEASON.

    Beginning not later than 180 days after the date of enactment of 
this Act, the Office of Personnel Management shall conduct an open 
enrollment opportunity for purposes of chapter 87 of title 5, United 
States Code, over a period of not less than 8 weeks. During this 
period, an employee (as defined under section 8701(a) of such title)--
        (1) may, if the employee previously declined or voluntarily 
    terminated any coverage under chapter 87 of such title, elect to 
    begin, resume, or increase group life insurance (and acquire 
    applicable accidental death and dismemberment insurance) under all 
    sections of such chapter without submitting evidence of 
    insurability; and
        (2) may, if currently insured for optional life insurance on 
    family members, elect an amount above the minimum insurance on a 
    spouse.

SEC. 10. MERIT SYSTEM JUDICIAL REVIEW.

    (a) In General.--Section 7703 of title 5, United States Code, is 
amended--
        (1) in subsection (b)(1) by striking ``within 30 days'' and 
    inserting ``within 60 days''; and
        (2) in subsection (d) in the first sentence, by inserting after 
    ``filing'' the following: ``, within 60 days after the date the 
    Director received notice of the final order or decision of the 
    Board,''.
    (b) Effective Date.--The amendments made by this section shall take 
effect on the date of enactment of this Act, and apply to any suit, 
action, or other administrative or judicial proceeding pending on such 
date or commenced on or after such date.

SEC. 11. EFFECTIVE DATES.

    (a) In General.--Except as otherwise provided in this Act, the 
amendments made by this Act shall take effect on the date of enactment 
of this Act.
    (b) Maximum Limitation on Employee Insurance.--Section 3 shall take 
effect on the first day of the first applicable pay period beginning on 
or after the date of enactment of this Act.
    (c) Erroneous Coverage.--Section 5 shall be effective in any case 
in which a finding of erroneous insurance coverage is made on or after 
the date of enactment of this Act.
    (d) Direct Payment of Insurance Contributions.--Section 6 shall 
take effect on the first day of the first applicable pay period 
beginning on or after the date of enactment of this Act.
    (e) Additional Optional Life Insurance.--
        (1) In general.--Section 7 shall take effect on the first day 
    of the first pay period that begins on or after the 180th day 
    following the date of enactment of this Act, or on any earlier date 
    that the Office of Personnel Management may prescribe that is at 
    least 60 days after the date of enactment of this Act.
        (2) Regulations.--The Office shall prescribe regulations under 
    which an employee may elect to continue additional optional 
    insurance that remains in force on such effective date without 
    subsequent reduction and with the full cost withheld from annuity 
    or compensation on and after such effective date if that employee--
            (A) separated from service before such effective date due 
        to retirement or entitlement to compensation under subchapter I 
        of chapter 81 of title 5, United States Code; and
            (B) continued additional optional insurance pursuant to 
        section 8714b(c)(2) as in effect immediately before such 
        effective date.
    (f) Improved Optional Life Insurance on Family Members.--The 
amendments made by section 8 shall take effect on the first day of the 
first pay period which begins on or after the 180th day following the 
date of enactment of this Act or on any earlier date that the Office of 
Personnel Management may prescribe.
    (g) Open Season.--Any election made by an employee under section 9, 
and applicable withholdings, shall be effective on the first day of the 
first applicable pay period that--
        (1) begins on or after the date occurring 365 days after the 
    first day of the election period authorized under section 9; and
        (2) follows a pay period in which the employee was in a pay and 
    duty status.

                               Speaker of the House of Representatives.

                            Vice President of the United States and    
                                               President of the Senate.

Summary: Federal Employees Life Insurance Improvement Act - Directs the Office of Personnel Management to conduct a study on the following life insurance options for Federal employees: (1) group universal life insurance, (2) group variable universal life insurance. And (3) additional voluntary accidental death and dismemberment insurance. Amends requirements relating to Federal employee life insurance to repeal the maximum limitation on: (1) group accidental death and dismemberment life insurance. And (2) additional optional life insurance. Modifies the definition of family member to include a foster child. Prohibits the invalidation of an employee's group life and accidental death and dismemberment insurance policy based on a finding that the employee erroneously became insured, or erroneously continued insurance upon retirement or entitlement to compensation for work injuries, if such finding occurs after the erroneous insurance and applicable withholdings have been in force for two years during the employee's lifetime. Permits an employee who is subject to withholdings for group life and accidental death and dismemberment insurance, optional life insurance, additional life insurance, or optional life insurance on family members and whose pay, annuity, or compensation are insufficient to cover such withholdings to nevertheless continue such insurance if such employee arranges to pay currently into the Employees' Life Insurance Fund, through the agency or retirement system that administers pay, annuity, or compensation, an amount equal to the withholding that would otherwise be required. Provides for the amount of additional optional life insurance of any employee who retires on an immediate annuity or who becomes entitled to receive compensation because of disease or injury to the employee, to be continued, with or without reduction, in accordance with the employee's written election at the time eligibility to continue insurance during retirement or receipt of compensation arises. Permits the employee, instead of the option under current law, to elect to have the full cost of such insurance continue to be withheld from such employee's annuity or compensation on and after the date such withholdings would otherwise cease pursuant to an election, in which case the amount of such insurance continued shall not be reduced. Allows an employee whose additional optional insurance would otherwise stop, and who is not eligible to continue insurance, to elect to continue such insurance at group rates, in lieu of conversion to an individual policy. Requires an employee or former employee who elects to continue such insurance following separation from service or 12 months without pay to submit timely payment of its full cost, plus any amount the Office determines necessary to cover associated administrative expenses. Disallows any election to continue such insurance from being made three years after an effective date. Terminates, on and after the date on which an election may no longer be made, all such insurance for former employees, subject to a provision for temporary extension of life insurance coverage and for conversion to an individual policy of life insurance under conditions approved by the Office. Requires the Office, not later than three years after the enactment of this Act, to report to the Congress on such insurance, including recommendations on whether continuation for such insurance should terminate as provided, be extended, or be made permanent. Revises requirements relating to optional life insurance on family members. Requires the Office to conduct an open enrollment opportunity for purposes of obtaining life insurance. Permits an employee during this period: (1) if the employee previously declined or voluntarily terminated any coverage, to elect to begin, resume, or increase group life insurance without submitting evidence of insurability. And (2) if currently insured for optional life insurance on family members, to elect an amount above the minimum insurance on a spouse. Amends provisions relating to the judicial review of decisions of the Merit Systems Protection Board to: (1) revise the time period any petition for judicial review of a final order or decision of the Board must be filed. And (2) permit the Director to obtain review of any final order or decision of the Board by filing within 60 days after the date he or she received notice of the final order or decision of the Board.