Office of Personnel Management

Retirement and Insurance Service

1920 1954 1959 1986 

 

Benefits Administration Letter

Number: 97-201 Date: March 4, 1997 

SUBJECT: Federal Employees Health Benefits Program: Recent Legislation Requires

Agencies to Advance the Employee Share of FEHB Premiums During Periods

of Nonpay Status or Insufficient Pay

 

I. NEW LEGISLATION

 

A. Legislative provision Section 422 of the Treasury, Postal Service and General

Government Appropriations, 1997, as incorporated in Section

101(f) of the Omnibus Consolidated Appropriation Act of 1997,

Public Law 104-208, enacted on September 30, 1996, amended

5 U.S.C. § 8906(e)(1). 5 U.S.C. § 8906(e)(1) governs the

continuation of Federal Employees Health Benefits (FEHB)

coverage for employees in nonpay status.

 

B. Major impact of new

 legislation

The new legislation requires employing offices to

forward the full FEHB premium (both Government and

employee contributions) to OPM for employees in

nonpay status or with insufficient pay on a current basis

for each pay period FEHB coverage continues.

The employing office must remit these premium payments with the

other deductions and contributions via the Retirement and

Insurance Transfer System (RITS), for each pay period during

which the coverage continued. Previously, employing offices were

required to forward only the government contribution portion of the

FEHB premium on a current basis for employees in nonpay status

or with insufficient pay.

Employees no longer incur a debt for past-due FEHB premiums

that employing offices must collect and forward to OPM. Since

employing offices must now make an advance payment of salary
2

to cover the employee share of FEHB premiums, employees incur

a debt to the employing office for the advance payments.

 

C. Effective Date The requirement that employing offices forward the full FEHB

premium for employees in nonpay status or with insufficient pay

became effective for pay periods beginning on or after September

30, 1996. As a consequence, employing offices are required to

implement these requirements retroactively to that date.

 

II. EFFECT OF LEGISLATION ON EMPLOYING OFFICES' PROCEDURES

A. Most recent

 publication of

 procedures

The most recent publication of the procedures that employing

offices must follow in administering the FEHB coverage of

employees in nonpay status or with insufficient pay was transmitted

to employing offices in Benefits Administration Letter 96-207,

dated October 16, 1996. The new legislation does affect some of

these procedures. Below is an explanation of how the procedures

are affected by the new legislation.

 

B. Procedures that

 remain the same

The following procedures in Benefits Administration Letter 96-207

remain largely unchanged:

 The procedures in section III, "Employing Offices Must Notify

Employees," remain the same. However, the written notice that

employing offices must give to employees as soon as possible after

the employing office becomes aware FEHB premium payments

cannot be withheld because the employee is in nonpay status or has

insufficient pay must be revised to accommodate the new

legislation.

The legislation states that advance payments of the employee share

of the FEHB premium are recoverable in the same manner as under

5 U.S.C. § 5524a(c). 5 U.S.C. § 5524a(c) governs the recovery of

advance payments of basic pay to newly appointed employees.

Previously, the written notice, by regulation, limited withholdings

from salary to recover past-due FEHB premiums to the amount of

one FEHB premium per pay period. The written notice is being

revised so employing offices may decide what limit on

withholdings from salary to apply. Any limit on withholdings

chosen by an employing office must be reasonable. Attachment 1

is a revised sample notice that replaces Attachment 2 in Benefits

Administration Letter 96-207.
3

 The procedures in section IV, "What Happens if the Enrollment

Terminates?," section V, "What is the Effect of a Termination?,"

section VI, "Retroactive Reinstatement of Terminated FEHB

Coverage," and section VII, "When Can Employees Reenroll for

FEHB Coverage?," remain the same.

The procedures in section X, "Special Circumstances," remain

largely the same. The only exception is that the paragraph on

"Discharges in bankruptcy" is no longer applicable and should be

disregarded.

 The procedures in section XII, "Coordination with Retirement or

Workers' Compensation Cases," remain the same. The only

clarification is that instead of coordinating the collection of

past-due FEHB premiums, employing offices must now coordinate

the collection of advance payments of the employee share of FEHB

premiums with deductions from Federal retirement and workers'

compensation benefit payments.

 

C. Procedures that

 change

The following procedures in Benefits Administration Letter 96-207

are changed by the new legislation:

 There are two changes to the procedures in section VIII, "What

Happens if the Enrollment Continues?." Under the new legislation,

the employing office that advances the employee share of the

FEHB premium is permanently responsible for collecting the debt.

Therefore, section VIII.B is changed by requiring that employees'

written notices electing to continue FEHB coverage be retained by

the employing office to which the employee is indebted.

In addition, under the new legislation, employees no longer incur

a debt for past-due FEHB premiums. Therefore, section VIII.C is

changed by eliminating the requirement that employing offices

forward the debt they collect for pay periods beginning on or after

September 30, 1996, to OPM.

The procedures in section IX, "Collecting Past-Due FEHB

Premiums for Pay Periods Beginning Before September 30, 1996,"

do not apply to the collection of advance payments of the employee

share of FEHB premiums for pay periods beginning on or after

September 30, 1996. The following section provides guidance to

employing offices on how to collect this debt.

The procedures in section IX continue to apply to collecting

past-due FEHB premiums for pay periods which began before

September 30, 1996, with one exception. The reference in section
4

IX.E to filing notices of indebtedness in the official personnel

folder (OPF) should refer to the left hand side, not the right hand

side. The notice of indebtedness should be removed from the OPF

when the debt is paid. Until the debt is paid, the notice of

indebtedness should be transferred with the OPF.

 The information in section XI, "Payment of the Government

Contribution," is no longer accurate. Employing offices must now

in any and all circumstances, on a current basis, forward the full

cost of an enrollment under the FEHB Program (both

Government and employee contributions) for every pay period

during which an employee's enrollment continues whether the

employee is in a pay or nonpay status.

 

III. COLLECTING ADVANCE PAYMENTS FOR THE EMPLOYEE SHARE OF FEHB

 PREMIUMS FOR PAY PERIODS BEGINNING ON OR AFTER SEPTEMBER 30, 1996

 

A. Recovery of advance

 payments under

 section 5524a(c)

The legislation specifies that the advance payments are recoverable

in the same manner as under 5 U.S.C. § 5524a(c).

 

B. Employing offices

 are not required to

 provide a hearing

 before recovering

 advances in pay

In order to continue FEHB coverage, employees sign a written

notice agreeing that if they continue FEHB coverage they will pay

the resulting debt in full, and agreeing the debt may be withheld

from any salary payments to them from the Federal Government.

Therefore, employing offices are not required to provide employees

a hearing before recovering advance payments of the employee

share of FEHB premiums.

 

C. Notifying employees

 before recovering

 advances in pay

Though employing offices are not required to provide employees

a hearing, they must give employees a notice informing employees

of the employing office's intention to recover the advance in pay.

 

Abby L. Block, Chief

Insurance Policy and

 Information Division

Attachment
Attachment 1

FEDERAL EMPLOYEE HEALTH BENEFITS (FEHB) OPTIONS WHILE IN NONPAY STATUS

Name of Employee: Date: 

You must respond within 31 days, (45 days for employees residing overseas), of this notice or your

FEHB enrollment will automatically terminate.

Each pay period you are enrolled in the FEHB Program, you are responsible for payment of the employee

share of the premium. When you enter nonpay status, or your pay is insufficient to cover the premium, you

must:

• terminate the enrollment; or

• continue the enrollment and agree to pay the premium or incur a debt.

TERMINATING THE ENROLLMENT

If you elect to terminate your enrollment (or the enrollment automatically terminates), the termination will

take effect at the end of the last pay period in which premiums were withheld from pay. FEHB coverage will

continue at no cost to you for an additional 31 days. During the 31 days, you and your covered family

members may convert to a nongroup contract. The termination is not considered a break in the continuous

coverage necessary for continuing FEHB coverage into retirement. However, the period during which the

termination is in effect does not count toward satisfying the required 5 years of continuous coverage. When

you return to pay and duty status, or at the end of the first pay period your pay becomes sufficient to cover

your premium, you must reenroll within 31 days if you want FEHB coverage.

CONTINUING THE ENROLLMENT AND AGREEING TO PAY THE PREMIUM

If you elect to continue your coverage, you must elect to pay the premiums directly or to incur a debt in the

amount of the unpaid premiums. If you elect to pay directly, mail a check or money order payable to 

. Include on the check your name, social security number, a note that the payment is for "FEHB premium",

and the pay period for which the payment is being made. Mail to: (address) .

If you elect to incur a debt, or if you elect to pay directly but fail to pay the entire amount due, you will

receive a notice stating the total amount due. The notice will be sent when you return to pay status, your pay

becomes sufficient, or you separate from employment. By electing to continue coverage you agree to repay

the resulting debt in full and to allow the debt to be collected by withholdings from any salary payments to

you from the Federal Government, up to . If the amount due cannot be

withheld in full from salary, it will be recovered from a lump sum payment of accrued leave, income tax

refunds, amounts payable under the Civil Service Retirement System or Federal Employees Retirement

System, or any other source normally available for the recovery of a debt due the United States.

Please check the appropriate space(s) below, sign, and return this notice to your employing office at:

(address) .

After reading and understanding the above, I elect to:

Continue the enrollment (Check one): Submit direct payments Incur a debt

(Signature) (Date) 

Terminate the enrollment. (Signature) (Date) 

Refer questions to: (Name) (Telephone)