H. R. 2675
One Hundred Fifth Congress
of the
United States of America
AT THE SECOND SESSION
Begun and held at the City of Washington on Tuesday,
the twenty-seventh day of January, one thousand nine hundred and ninety-eight
An Act
To provide for the Office of Personnel Management to conduct a study and submit
a report to Congress on the provision of certain options for universal life insurance
coverage and additional death and dismemberment insurance under chapter 87
of title 5, United States Code, to improve the administration of such chapter,
and for other purposes.
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
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 dis-
memberment 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.
H. R. 2675—2
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 compensa-
tion 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
H. R. 2675—3
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 contin-
ued under paragraph (2) shall be reduced each month
by 2 percent effective at the beginning of the second cal-
endar 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 addi-
tional 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 para-
graph (1); or
‘‘(ii) the full period or periods of service during which
the insurance was available to the employee, if fewer than
5 years,
H. R. 2675—4
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. Alter-
natively, 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 sepa-
ration 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 adminis-
trative 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 condi-
tions 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 rec-
ommendations 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).
H. R. 2675—5
‘‘(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 insur-
ance 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.
H. R. 2675—6
(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 MEM-
BERS.—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.