79–006

106TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 2d Session 106–779

FEDERAL EMPLOYEES HEALTH BENEFITS CHILDREN’S

EQUITY ACT OF 2000

JULY 24, 2000.—Committed to the Committee of the Whole House on the State of

the Union and ordered to be printed

Mr. BURTON of Indiana, from the Committee on Government

Reform, submitted the following

R E P O R T

[To accompany H.R. 2842]

[Including cost estimate of the Congressional Budget Office]

The Committee on Government Reform, to whom was referred

the bill (H.R. 2842) to amend chapter 89 of title 5, United States

Code, concerning the Federal Employees Health Benefits (FEHB)

Program, to enable the Federal Government to enroll an employee

and his or her family in the FEHB Program when a State court

orders the employee to provide health insurance coverage for a

child of the employee but the employee fails to provide the coverage, having considered the same, report favorably thereon with

amendments and recommend that the bill as amended do pass.

CONTENTS

Page

I. Summary of Legislation ................................................................................ 2

II. Background and Need for the Legislation ................................................... 3

III. Legislative Hearings and Committee Actions ............................................. 3

IV. Committee Hearings and Written Testimony ............................................. 3

V. Explanation of the Bill .................................................................................. 3

VI. Compliance With Rule XI .............................................................................. 4

VII. Budget Analysis and Projections .................................................................. 4

VIII. Cost Estimate of the Congressional Budget Office ..................................... 4

IX. Specific Constitutional Authority for This Legislation ............................... 9

X. Committee Recommendation ........................................................................ 9

XI. Congressional Accountability Act; Public Law 104–1 ................................. 9

XII. Unfunded Mandates Reform Act; Public Law 104–4, Section 423 ............ 9

XIII. Federal Advisory Committee Act (5 U.S.C. App.) Section 5(b) .................. 9

XIV. Changes in Existing Law .............................................................................. 9

The amendments are as follows:

Strike out all after the enacting clause and insert in lieu thereof

the following:
2

SECTION 1. SHORT TITLE.

This Act may be cited as the ‘‘Federal Employees Health Benefits Children’s Equity Act of 2000’’.

SEC. 2. HEALTH INSURANCE COVERAGE FOR CHILDREN.

Section 8905 of title 5, United States Code, is amended by adding at the end the

following:

‘‘(h)(1) An unenrolled employee who is required by a court or administrative order

to provide health insurance coverage for a child who meets the requirements of section 8901(5) may enroll for self and family coverage in a health benefits plan under

this chapter. If such employee fails to enroll for self and family coverage in a health

benefits plan that provides full benefits and services in the location in which the

child resides, and the employee does not provide documentation showing that such

coverage has been provided through other health insurance, the employing agency

shall enroll the employee in a self and family enrollment in the option which provides the lower level of coverage under the Service Benefit Plan.

‘‘(2) An employee who is enrolled as an individual in a health benefits plan under

this chapter and who is required by a court or administrative order to provide

health insurance coverage for a child who meets the requirements of section 8901(5)

may change to a self and family enrollment in the same or another health benefits

plan under this chapter. If such employee fails to change to a self and family enrollment and the employee does not provide documentation showing that such coverage

has been provided through other health insurance, the employing agency shall

change the enrollment of the employee to a self and family enrollment in the plan

in which the employee is enrolled if that plan provides full benefits and services in

the location where the child resides. If the plan in which the employee is enrolled

does not provide full benefits and services in the location in which the child resides,

or, if the employee fails to change to a self and family enrollment in a plan that

provides full benefits and services in the location where the child resides, the employing agency shall change the coverage of the employee to a self and family enrollment in the option which provides the lower level of coverage under the Service

Benefits Plan.

‘‘(3) The employee may not discontinue the self and family enrollment in a plan

that provides full benefits and services in the location in which the child resides for

so long as the court or administrative order remains in effect and the child continues to meet the requirements of section 8901(5), unless the employee provides

documentation showing that such coverage has been provided through other health

insurance.’’.

SEC. 3. ANNUITY SUPPLEMENT.

(a) IN GENERAL.—Section 8421a(b) of title 5, United States Code, is amended by

adding at the end the following:

‘‘(5) Notwithstanding paragraphs (1) through (4), the reduction required by

subsection (a) shall be effective with respect to the annuity supplement payable

for each month in the 12-month period beginning on the first day of the seventh

month after the end of the calendar year in which the excess earnings were

earned.’’.

(b) EFFECTIVE DATE.—The amendment made by subsection (a) shall apply with

respect to reductions required to be made in calendar years beginning after the date

of enactment of this Act.

Amend the title so as to read:

A bill to amend chapter 89 of title 5, United States Code, concerning the Federal

Employees Health Benefits (FEHB) Program, to enable the Federal Government to

enroll an employee and his or her family in the FEHB Program when a State court

orders the employee to provide health insurance coverage for a child of the employee

but the employee fails to provide the coverage, and for other purposes.

I. SHORT SUMMARY OF LEGISLATION

H.R. 2842 enables the Federal Government to enroll an employee

in a ‘‘self and family’’ plan in the Federal Employees Health Benefits Program when a State court orders the employee to provide

health insurance coverage for a child of the employee but the employee fails to provide the coverage.
3

II. BACKGROUND AND NEED FOR THE LEGISLATION

The Omnibus Reconciliation Act of 1993 required each State to

pass a law requiring an employer to enroll a child in an employee’s

group health plan when a court orders the employee to provide

health insurance coverage for the child but the employee fails to

provide the coverage. The FEHBP law provides that a Federal employee ‘‘may enroll’’ in an FEHBP plan ‘‘either as an individual or

for self and family’’ coverage. The law does not allow an employing

agency to elect coverage on the employee’s behalf. Further, the

FEHBP law generally preempts State law with regard to coverage

and benefits. Therefore, a Federal agency currently is unable to ensure that a child is covered in accordance with a court or administrative order even though the same order would ensure coverage

for the child if the child’s parent were employed by an employer

other than the Federal government.

H.R. 2842 provides Federal agencies the authority to enroll an

employee in family coverage, if such action is necessary to enforce

compliance with a court order requiring the employee to provide

health insurance coverage for a child.

III. LEGISLATIVE HEARINGS AND COMMITTEE ACTIONS

The Committee held no legislative hearings on H.R. 2842. Rep.

Elijah Cummings introduced this measure on March 13, 1999. It

was referred to the Committee on Government Reform. The Committee on Government Reform’s Civil Service Subcommittee

marked up the bill on March 22, 2000. By voice vote, the Subcommittee approved an amendment offered by Mr. Cummings to

offset the costs of the legislation. The Subcommittee approved the

bill as amended and forwarded it to the Committee on Government

Reform by voice vote.

On March 30, 2000, the Committee on Government Reform

marked up the bill. The Committee adopted H.R. 2842, as amended, and ordered it favorably reported to the House of Representatives.

IV. COMMITTEE HEARINGS AND WRITTEN TESTIMONY

The Committee held no hearings.

V. EXPLANATION OF THE BILL AS REPORTED: SECTION-BY-SECTION

Section 1

Section one provides the bill’s short title, the ‘‘Federal Employees

Health Benefits Children’s Equity Act of 1999.’’

Section 2

Section two amends 5 U.S.C. 8905 by adding a new subsection

(f) to allow an employee who is not enrolled in an FEHBP plan to

enroll in a plan for self and family coverage if the employee is required by a court order or an administrative order to provide

health insurance coverage for a child who meets the definition of

‘‘member of family’’ under 5 U.S.C. 8901(5). Moreover, if such an

employee fails to enroll and cannot show that the child is covered

by other health insurance, this amendment would require the em-
4

ploying agency to enroll the employee for self and family under the

low-option Service Benefit Plan (currently Blue Cross/Blue Shield).

The new subsection (f) also prescribes similar treatment for a

similarly situated employee who is enrolled as an individual in an

FEHB plan. The amendment would ensure that, under the circumstances described in the preceding paragraph, the employee’s

enrollment would be changed to a self and family enrollment that

would cover the child. An employee who did not so change his or

her enrollment voluntarily would be enrolled for self and family in

the same plan in which the employee was already covered as an

individual, unless that plan does not provide full benefits and services where the child resides. In the latter event, the employee

would be enrolled for self and family under the low-option Service

Benefit Plan.

Finally, the new subsection (f) of title 5 would bar the employee

from discontinuing the self and family enrollment as long as the

order remains in effect and the child continues to meet the definition in section 8901(5), unless the employee can show that the child

has other health insurance.

Section 3

Section 3 amends section 8412a(b) of title 5 with respect to FERS

annuitants who retire before age 62 and who receive a special annuity supplement. The supplement must be reduced by $1 for every

$2 of earning that exceed a minimum level established by the Social Security Administration.

The section delays the adjustment of the annuity supplement

until July 1, to allow annuitants and OPM time to gather and process the necessary information. This section does not deprive any

annuitant of a benefit. It simply ensures that the correct level of

benefits is being paid.

VI. COMPLIANCE WITH RULE XI

Pursuant to rule XI, clause 2(l)(3)(A) of the Rules of the House

of Representatives, under the authority of rule X, clause 2(b)(1) and

clause 3(f), the results and findings from Committee oversight activities are incorporated in the bill and this report.

VII. BUDGET ANALYSIS AND PROJECTIONS

The budget analysis and projections required by section 308(a) of

the Congressional Budget Act of 1974 are contained in the estimate

of the Congressional Budget Office.

VIII. COST ESTIMATE OF THE CONGRESSIONAL BUDGET OFFICE

U.S. CONGRESS,

CONGRESSIONAL BUDGET OFFICE,

Washington, DC, May 16, 2000.

Hon. DAN BURTON,

Chairman, Committee on Government Reform,

House of Representatives, Washington, DC.

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 2842, the Federal Employees Health Benefits Children’s Equity Act of 2000.
5

If you wish further details on this estimate, we will be pleased

to provide them. The CBO staff contact is Charles L. Betley.

Sincerely,

BARRY B. ANDERSON

(For Dan L. Crippen, Director).

Enclosure.

CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

H.R. 2842—Federal Employees Health Benefits Children’s Equity

Act of 2000

Summary: Under current law, the Federal Employees Health

Benefits program (FEHB) has no authority to enforce compliance

with a child support order to provide health insurance for an employee’s children. H.R. 2842 would authorize the mandatory enrollment into family plan coverage and the deduction of premium contributions from the salaries of such employees who otherwise would

not participate in FEHB or employees who elect self-only coverage,

unless the employee provides documentation that insurance is provided from another source or the support order has ended.

Because the federal government contributes larger amounts to

the premiums for employees with family coverage, the bill would

increase discretionary costs of benefits for federal employees by

about $3 million in 2001 and $56 million over the 2001–2005 period.

Government contributions to FEHB for federal retirees are considered mandatory spending. Because some employees would retire

while still subject to support orders, H.R. 2842 would increase the

FEHB costs of annuitants and therefore would be subject to payas-you-go procedures. However, the mandatory costs in FEHB

would be less than $500,000 in 2001, and would sum to about $4

million over the 2001–2005 period. Direct spending would increase

for the health benefits of postal employees and annuitants subject

to the bill’s provisions, but these costs are classified as off-budget

and would not be subject to pay-as-you-go procedures.

The bill would also reduce mandatory federal and state outlays

for Medicaid and the State Children’s Health Insurance Program

(SCHIP) because some children with parents who are not complying with medical support orders would end up on those programs’ rolls, with mandatory federal savings of about $16 million

over the 2001–2005 period. Finally, the bill would modify the earnings test that applies to supplemental benefits paid by the Federal

Employees’ Retirement System (FERS), but this provision would

not have significant budgetary effects over the 2001–2005 period.

The bill includes no governmental or private-sector mandates as

defined in the Unfunded Mandates Reform act (UMRA). With a

greater number of children enrolled in the FEHB program, states

would realize decreased expenditures in Medicaid and SCHIP totaling about $12 million over the 2001–2005 period.

Estimated cost to the Federal Government: The estimated budgetary impact of H.R. 2842 is shown in the following table. The bill

would add to discretionary spending by all federal agencies for employee health benefits and would affect mandatory spending in

budget functions 550 (health) and 600 (income security).
6

Outlays by fiscal year, in millions of dollars—

2001 2002 2003 2004 2005

CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Incremental cost of family coverage under FEHB for more federal

employees ....................................................................................... 3 7 12 16 18

CHANGES IN DIRECT SPENDING

Postal Service contributions to FEHB ................................................. 2 4 0 0 0

FEHB payments for retirees ................................................................ (1) (1)112

Medicaid and SCHIP ........................................................................... ¥1 ¥2 ¥3 ¥5 ¥5

Total changes ........................................................................ (1) 2 ¥2 ¥4 ¥3

1 Less than $500,000.

2 In addition to the FEHB, Medicaid, and SCHIP effects, the bill would affect direct spending under the Federal Employees’ Retirement System, but CBO estimates that those effects would be less than $500,000 a year over the 2001–2005 period.

Note: Components may not add to totals because of rounding.

BASIS OF ESTIMATE

CBO’s estimate of the federal costs of H.R. 2842 is based on assumptions about the number of employees who would be required

to obtain family coverage who do not already do so, and the federal

share of the change in spending by plans participating in FEHB for

newly covered employees and children. In addition, CBO estimated

savings for Medicaid and SCHIP based on assumptions about the

number of children who would be covered by those programs under

current law, but who would be covered by FEHB under the bill. Finally, the estimate of savings from the FERS annuity supplement

policy change is based on the number of FERS retirees subject to

the earnings test and the increased recoveries that can be expected

from applying the tests over a longer period.

Spending subject to appropriation

H.R. 2842 would increase the number of federal employees who

obtain FEHB family coverage because they are required to do so

by a child support order by an estimated 11,500 workers. Data

from the Census Bureau (Current Population Survey, April 1996

supplement) indicates that about 1 percent of the population, ages

18 through 64, fails to comply with a medical support order. Assuming that the rate of noncompliance among federal employees is

similar to the national rate, after adjusting for the different age

distribution of federal workers, CBO estimates that about 23,000

federal employees (not including postal workers) are not in compliance with a medical support order. Because administrative barriers

in the child support enforcement system limit how many support

orders are enforced, CBO expects that about half of those federal

employees would be brought into compliance with medical support

orders.

CBO also expects that it would take about four years to identify

and bring into compliance those 11,500 employees. Because federal

employment is likely to remain close to current levels over the next

five years, we assume that newly applied medical support orders

would be approximately balanced by orders that end or by other

employee attrition.

Based on information from the Office of Personnel Management

(OPM), CBO estimates that the costs incurred by FEHB plans for

single-parent families average two-thirds of the cost for two-parent

families. For the purposes of this estimate, we assume that 90 per-
7

cent of the employees brought into compliance with medical support orders under H.R. 2842 have self-only coverage under current

law. For those employees, the estimated increase in federal spending would be about $900 per family policy in 2001, which is the difference between the federal share of the annual premium for selfonly coverage and two-thirds of the federal share of the premium

for family coverage, on average. Once expected compliance is fully

phased-in (in 2004), the incremental cost of FEHB coverage for conversion from self-only to family coverage would cost about $9 million a year in 2001 dollars.

CBO assumes that the remaining 10 percent of the affected employees who would be brought into compliance with medical support orders would have no FEHB coverage under current law. For

those employees, the estimated effect on federal spending in 2001

would be about $3,500 per family policy, which is two-thirds of the

federal share of the average annual premium for family coverage.

The annualized cost of providing family coverage for those employees with no FEHB coverage under current law would be about $4

million a year in 2001 dollars.

Assuming that agency appropriations would be increased to

maintain current levels of staffing and to reflect anticipated inflation in the cost of FEHB coverage, CBO estimates that implementing H.R. 2842 would increase discretionary spending for

FEHB by $3 million in 2001 and by $56 million over the 2001–2005

period.

Direct spending

Health Care Costs.—Enacting H.R. 2842 would increase costs to the U.S. Postal Service by about $2 million in fiscal year 2001 and

$4 million in 2002 because an estimated 6,000 postal employees

would be subject to medical support orders. By 2003, CBO anticipates that the Postal Service would increase postal rates and offset

such costs. Postal Service spending and collections are classified as

off-budget and thus the charges incurred by H.R. 2842 would not

be subject to pay-as-you-go procedures.

A federal employee would be subject to the mandatory family enrollment until a support order expires. Some of the 11,500 employees affected by the bill would be required to cover their children

after they retire from active federal employment, shifting the classification of costs from discretionary to mandatory spending. However, there are fewer support orders for older employees, and most

children covered under such orders are likely to be close to reaching adulthood. Based on the rate of retirement of federal employees

and assumptions about the rate of expiration of support orders,

CBO estimates that the increase in direct spending by FEHB for

payments to cover affected retirees would be negligible in 2001, but

would total $4 million over the 2001–2005 period.

The bill would reduce spending by Medicaid and SCHIP. CBO estimates that 15 percent of the 17,500 employees and postal workers

would have children who would enroll in those programs under

current law if medical support orders are not enforced. (That is

slightly lower than the estimated rate for the general population,

reflecting an assumption that the children of federal workers are

somewhat less likely to have low-enough incomes to qualify for

such programs.) CBO estimates the Medicaid savings based on the
8

average costs per child, multiplied by an average of 1.5 children

covered under each support order. After accounting for anticipated

inflation, the estimated federal share of Medicaid savings would be

$1 million in 2001 and $16 million over the 2001–2005 period.

Some SCHIP savings also would occur, but CBO estimates that such savings would be less than $500,000 annually.

Modify Earnings Test for FERS and Annuity Supplement.—The

Federal Employees’ Retirement System pays supplemental benefits

to certain nondisabled retirees until they reach age 62 and become

eligible for Social Security. These supplemental benefits are subject

to an earnings test. Individuals with earnings that exceed a certain

level in a calendar year (about $10,000 in 2000) have their supplemental benefits reduced during the 12-month period starting on

January 1 of the following year. H.R. 2842 would make reductions

from the earning test effective for the 12-month period starting on

July 1 of the following year.

Under the current earnings test, OPM pays unreduced supplemental benefits for the first two or three months of each year until

it receives the wage information needed to administer the earnings

test. This inevitably leads to overpayments, which OPM does not

try to recover. The bill’s provisions would increase spending on supplemental benefits in 2001 (a one-time cost of moving the effective

date to July 1) before yielding savings in later years by eliminating

overpayments.

According to OPM, about 700 retires currently have their supplemental benefits reduced because of the earnings test. (This figure

will rise in the future as the number of FERS retirees grows.) CBO

estimates that the earnings test reduces their supplemental benefits by 50 percent—a reduction of about $100 per month for current

retires. CBO estimates that H.R. 2842 would increase spending on

supplemental benefits by about $240,000 in 2001 and reduce

spending in later years. Annual savings would grow slowly and

would reach $1 million in 2010.

Pay-as-you-go considerations: The Balanced Budget and Energy

Deficit Control Act sets up pay-as-you-go procedures for legislation

affecting direct spending or receipts. The net changes in outlays

that are subject to pay-as-you-go procedures are shown in the following table. For the purposes of enforcing pay-as-you-go procedures, only the effects in the current year, the budget year, and the

succeeding four years are counted.

By fiscal year, in millions of dollars—

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Changes in outlays .............................. 0 ¥1 ¥2 ¥3 ¥4 ¥3 ¥4 ¥4 ¥4 ¥4 ¥4

Changes in receipts ............................. Not Applicable

Intergovernmental and private-sector impact: H.R. 2842 contains

no intergovernmental or private-sector mandates as defined in

UMRA. With a greater number of children enrolled in the FEHB

program, states would realize decreased expenditures in Medicaid

and SCHIP totaling about $12 million over the 2001–2005 period.

Estimate prepared by: Federal Costs: FEHB—Charles L. Betley,

Child Support—Sheila Dacey, Other Costs—Eric Rollins; Impact on

State, Local, and Tribal Governments: Leo Lex; and Impact on the

Private Sector: John Harris.
9

Estimate approved by: Peter H. Fontaine, Deputy Assistant Director for Budget Analysis.

IX. SPECIFIC CONSTITUTIONAL AUTHORITY FOR THIS LEGISLATION

Clauses 1 and 18 of Article I, section 8 of the Constitution grant

Congress the power to enact this law.

X. COMMITTEE RECOMMENDATION

On March 30, 2000, a quorum being present, the Committee ordered the bill, as amended, favorably reported.

COMMITTEE ON GOVERNMENT REFORM—106TH CONGRESS

ROLLCALL

Date: March 30, 2000.

Final Passage of H.R. 2842, as amended.

Offered by: Hon. Dan Burton.

Adopted by voice vote.

XI. CONGRESSIONAL ACCOUNTABILITY ACT; PUBLIC LAW 104–1;

SECTION 102(B)(3)

H.R. 2842 will apply to all employees who participate in the

FEHBP, including those on the legislative branch.

XII. UNFUNDED MANDATES REFORM ACT; PUBLIC LAW 104–4;

SECTION 423

H.R. 2842 does not impose any federal mandates on state, local,

or tribal governments.

XIII. FEDERAL ADVISORY COMMITTEE ACT (5 U.S.C. APP.) SECTION

5(b)

The Committee finds that H.R. 2842 does not establish or authorize establishment of an advisory committee within the definition of 5 U.S.C. App., section 5(b).

XIV. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the

House of Representatives, changes in existing law made by the bill,

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic,

existing law in which no change is proposed is shown in roman):

TITLE 5, UNITED STATES CODE

* * * * * * *

PART III—EMPLOYEES

* * * * * * *

Subpart G—Insurance and Annuities

* * * * * * *
10

CHAPTER 84—FEDERAL EMPLOYEES’ RETIREMENT

SYSTEM

* * * * * * *

SUBCHAPTER II—BASIC ANNUITY

* * * * * * *

§ 8421a. Reductions on account of earnings from work performed while entitled to an annuity supplement

(a) * * *

(b) The amount of an individual’s excess earnings shall be

charged to months as follows:

(1) * * *

* * * * * * *

(5) Notwithstanding paragraphs (1) through (4), the reduction required by subsection (a) shall be effective with respect to

the annuity supplement payable for each month in the 12-

month period beginning on the first day of the seventh month

after the end of the calendar year in which the excess earnings

were earned.

* * * * * * *

CHAPTER 89—HEALTH INSURANCE

* * * * * * *

§ 8905. Election of coverage

(a) * * *

* * * * * * *

(h)(1) An unenrolled employee who is required by a court or administrative order to provide health insurance coverage for a child

who meets the requirements of section 8901(5) may enroll for self

and family coverage in a health benefits plan under this chapter.

If such employee fails to enroll for self and family coverage in a

health benefits plan that provides full benefits and services in the

location in which the child resides, and the employee does not provide documentation showing that such coverage has been provided

through other health insurance, the employing agency shall enroll

the employee in a self and family enrollment in the option which

provides the lower level of coverage under the Service Benefit Plan.

(2) An employee who is enrolled as an individual in a health benefits plan under this chapter and who is required by a court or administrative order to provide health insurance coverage for a child

who meets the requirements of section 8901(5) may change to a self

and family enrollment in the same or another health benefits plan

under this chapter. If such employee fails to change to a self and

family enrollment and the employee does not provide documentation

showing that such coverage has been provided through other health

insurance, the employing agency shall change the enrollment of the

employee to a self and family enrollment in the plan in which the

employee is enrolled if that plan provides full benefits and services

in the location where the child resides. If the plan in which the employee is enrolled does not provide full benefits and services in the
11

location in which the child resides, or, if the employee fails to

change to a self and family enrollment in a plan that provides full

benefits and services in the location where the child resides, the employing agency shall change the coverage of the employee to a self

and family enrollment in the option which provides the lower level

of coverage under the Service Benefits Plan.

(3) The employee may not discontinue the self and family enrollment in a plan that provides full benefits and services in the location in which the child resides for so long as the court or administrative order remains in effect and the child continues to meet the

requirements of section 8901(5), unless the employee provides documentation showing that such coverage has been provided through

other health insurance.

* * * * * * *

Æ