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                            FEHBAR
                            1652.215-71   Investment Income.
        
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FEHBARPart Number: 1652
        
                  

                                
                  
        Federal Employee Health Benefits Acquisition Regulation
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1652.215-71 Investment Income.1652.215-71 Investment Income.       As prescribed in 1615.470–1, the following clause shall be inserted in all FEHBP contracts based on cost analysis:                                  Investment Income (JAN 1998)                                  (a) The Carrier shall invest and reinvest all FEHB funds on hand that are in excess of the funds needed to promptly discharge the obligations incurred under this contract. The Carrier shall seek to maximize investment income with prudent consideration to the safety and liquidity of investments.                                  (b) All investment income earned on FEHB funds shall be credited to the Special Reserve on behalf of the FEHBP.                                  (c) When the Contracting Officer concludes that the Carrier failed to comply with paragraph (a) or (b) of this clause, the Carrier shall credit the Special Reserve with investment income that would have been earned, at the rate(s) specified in paragraph (f) of this clause, had it not been for the Carrier's noncompliance. “Failed to comply with paragraph (a) or (b)” means:          (1)  			Making any charges against the contract which are not allowable, allocable, or reasonable; or (2) failing to credit any income due the contract and/or failing to place excess funds, including subscription income and payments from OPM not needed to discharge promptly the obligations incurred under the contract, refunds, credits, payments, deposits, investment income earned, uncashed checks, or other amounts owed the Special Reserve, in income producing investments and accounts.                                  (d) Investment income lost as a result of unallowable, unallocable, or unreasonable charges against the contract shall be paid from the 1st day of the contract term following the contract term in which the unallowable charge was made and shall end on the earlier of:          (1)  			The date the amounts are returned to the Special Reserve (or the Office of Personnel Management); (2) the date specified by the Contracting Officer; or, (3) the date of the Contracting Officer's Final Decision.                                  (e) Investment income lost as a result of failure to credit income due the contract or failure to place excess funds in income producing investments and accounts shall be paid from the date the funds should have been invested or appropriate income was not credited and shall end on the earlier of:          (1)  			The date the amounts are returned to the Special Reserve (or the Office of Personnel Management); (2) the date specified by the Contracting Officer; or, (3) the date of the Contracting Officer's Final Decision.                                  (f) The Carrier shall credit the Special Reserve for income due in accordance with this clause. All lost investment income payable shall bear simple interest at the quarterly rate determined by the Secretary of the Treasury under the authority of 26 U.S.C. 6621(a)(2) applicable to the periods in which the amount becomes due, as provided in paragraphs (d) and (e) of this clause.                                  (g) The Carrier shall incorporate this clause into agreements with underwriters of the Carrier's FEHB plan and shall substitute “underwriter” or other appropriate reference for the term “Carrier.”                               (End of clause)    **Parent topic:**  Subpart 1652.2—Texts of FEHBP Clauses
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