‘‘(p)(1) The Office shall contract under this chapter
for a high deductible health plan with any qualified carrier
that—
‘‘(A) offers such a plan; and
‘‘(B) as of the date of enactment of the Federal
Employees Health Care Freedom of Choice Act, of-
fers a health benefits plan under this chapter.
‘‘(2) The Office may contract under this chapter for
a high deductible health plan with any qualified carrier
that—
‘‘(A) offers such a plan; but
‘‘(B) does not satisfy the requirement under
paragraph (1)(B).’’.
(c) DESCRIPTION OF HIGH DEDUCTIBLE HEALTH
PLANS
AND
BENEFITS
TO
BE
PROVIDED
THERE-
UNDER.—
(1) IN
GENERAL.—Section 8903 of title 5,
United States Code, is amended by adding at the
end the following:
‘‘(5) HIGH DEDUCTIBLE HEALTH PLANS.—(A)
One or more plans described by paragraph (1), (2),
(3), or (4), which—
‘‘(i) are high deductible health plans (as
defined by section 220(c)(2) of the Internal
Revenue Code of 1986); and
‘‘(ii) provide benefits of the types referred
to by section 8904(a)(5).
‘‘(B) Nothing in this section shall be consid-
ered—
‘‘(i) to prevent a carrier from simulta-
neously offering a plan described by subpara-
graph (A) and a plan described by paragraph
(1) or (2);
‘‘(ii) to require that a high deductible
health plan offer two levels of benefits; or
‘‘(iii) to allow, in any contract year, for—
‘‘(I) more than one plan to be offered
which satisfies both subparagraph (A) and
paragraph (1) (subject to clause (ii)); and
‘‘(II) more than one plan which satis-
fies both subparagraph (A) and paragraph
(2) (subject to clause (ii)).’’.
(2) TYPES OF BENEFITS.—Section 8904(a) of
title 5, United States Code, is amended by inserting
after paragraph (4) the following:
‘‘(5) HIGH DEDUCTIBLE HEALTH PLANS.—Ben-
efits of the types named under paragraph (1) or (2)
of this subsection or both.’’.
(3) CONFORMING AMENDMENTS.—(A) Section
8903a of title 5, United States Code, is amended by
redesignating subsection (d) as subsection (e) and by
inserting after subsection (c) the following:
‘‘(d) The plans under this section may include one
or more plans, otherwise allowable under this section, that
satisfy the requirements of clauses (i) and (ii) of section
8903(5)(A).’’.
(B) Section 8909(d) of title 5, United States
Code, is amended by striking ‘‘8903a(d)’’ and insert-
ing ‘‘8903a(e)’’.
(4) REFERENCES.—Section 8903 of title 5,
United States Code, is amended by adding at the
end (as a flush left sentence) the following:
‘‘The Office shall prescribe regulations under which the
requirements of section 8902(c), 8902(n), 8909(e), and
any other provision of this chapter that applies with re-
spect to a plan described by paragraph (1), (2), (3), or
(4) of this section shall apply with respect to the cor-
responding plan under paragraph (5) of this section. Simi-
lar regulations shall be prescribed with respect to any plan
under section 8903a(d).’’.
(d) CONTRIBUTIONS TOWARD HIGH DEDUCTIBLE
HEALTH PLANS AND MEDICAL SAVINGS ACCOUNTS.—
(1) AMENDMENTS.—
(A) IN GENERAL.—Title 5, United States
Code, is amended by redesignating section
8906a as section 8906b and by inserting after
section 8906 the following:
‘‘§ 8906a. Contribution provisions relating to certain
individuals enrolled in high deductible
health plans
‘‘(a) In the case of an employee or annuitant who
enrolls in a high deductible health plan, section 8906 shall
apply in accordance with its terms, except as otherwise
provided in this section.
‘‘(b) Instead of the amount that would otherwise
apply under the provisions of section 8906(d), the amount
to be withheld under such provisions from the pay or an-
nuity of an employee or annuitant described in subsection
(a), for any biweekly or other period, shall be the equiva-
lent (expressed in terms of such periods) of the amount
by which—
‘‘(1) the applicable average subscription charge,
as determined under section 8906(a) for the con-
tract year involved, exceeds
‘‘(2) the total Government contribution allow-
able for such contract year (as defined in subsection
(h)),
but not to exceed 100 percent of the subscription charge
for the plan in which such employee or annuitant is en-
rolled.
‘‘(c) Instead of the amount that would otherwise
apply under the provisions of section 8906(b), in the case
of an employee or annuitant described in subsection (a),
the biweekly or other periodic Government contribution
under such provisions toward the subscription charge for
the plan in which such employee or annuitant is enrolled
shall be the amount by which such charge exceeds (if at
all) the amount which under subsection (b) is required to
be withheld from the pay or annuity of the employee or
annuitant involved.
‘‘(d)(1) Subject to paragraph (2), there shall be paid
to the medical savings account of each employee or annu-
itant described in subsection (a), at the same time that
the Government contribution under section 8906 is made
(or would, but for this section, be made) for the benefit
of such employee or annuitant, the amount by which—
‘‘(A) the total Government contribution allow-
able for the contract year involved (as defined in
subsection (h)), exceeds
‘‘(B) the amount of the Government contribu-
tion which under subsection (c) is required to be
made toward the subscription charge for the plan in
which such employee or annuitant is enrolled.
No election to decline any contributions under this sub-
section shall be available to an employee or annuitant.
‘‘(2) No contribution under this subsection shall be
made to any medical savings account of an employee or
annuitant for any period if, as of the first day of the
month before the month in which such period commences,
such employee or annuitant (or the spouse of such em-
ployee or annuitant, if coverage is for self and family) is
entitled to benefits under part A of title XVIII of the So-
cial Security Act.
‘‘(3) The Office shall by regulation prescribe the time,
form, and manner in which an employee or annuitant shall
identify any medical savings account to which contribu-
tions for such employee or annuitant shall be made under
this subsection.
‘‘(4) Subsections (f) and (g) of section 8906 shall
apply with respect to contributions under this subsection.
‘‘(e) Any adjustment in the amount of any contribu-
tion under section 8906 that is required by subsection (b)
or (c) of this section beginning in any contract year shall
take effect—
‘‘(1) in the case of an employee, at the point in
such year described in the second sentence of section
8906(b)(1); and
‘‘(2) in the case of an annuitant, at the point
in such year described in the third sentence of sec-
tion 8906(b)(1).
‘‘(f)(1) This section shall not apply to any employee
or annuitant with respect to any period for which such
employee or annuitant would not otherwise be eligible for
a Government contribution under section 8906 (deter-
mined disregarding this section).
‘‘(2) Neither subsection (b) nor (c) shall apply with
respect to an employee or annuitant for any period for
which—
‘‘(A) such employee or annuitant is ineligible
for any contribution under subsection (d) by reason
of paragraph (2) thereof; or
‘‘(B) the amount of the contribution under sub-
section (d) for such employee or annuitant would
otherwise be zero.
‘‘(g) The Office shall by regulation provide for the
application of section 8906(c) to the extent necessary to
reflect any change in the ratio of individual to Government
contributions resulting from the application of this section.
‘‘(h) For purposes of this section, the term ‘total Gov-
ernment contribution allowable’, as used with respect to
a contract year, means the maximum Government con-
tribution that could be made for health benefits for an
employee or annuitant for such contract year, as deter-
mined under paragraph (1) of section 8906(b) (as well as
paragraph (3) thereof, if appropriate, but disregarding
paragraph (2) thereof and the provisions of this section).’’.
(B) TECHNICAL AND CONFORMING AMEND-
MENTS.—(i) The table of sections at the begin-
ning of chapter 89 of title 5, United States
Code, is amended by striking the item relating
to section 8906a and inserting the following:
‘‘8906a.
Contribution provisions relating to certain individuals enrolled in
high deductible health plans.
‘‘8906b.
Temporary employees.’’.
(ii) Section 8913(b)(4) of title 5, United
States 
Code, 
is 
amended 
by 
striking
‘‘8906a(a)’’ and inserting ‘‘8906b(a)’’.
(2) HIGH DEDUCTIBLE HEALTH PLANS TO BE
DISREGARDED IN DETERMINING GOVERNMENT CON-
TRIBUTIONS.—Section 8906 of title 5, United States
Code, is amended by adding at the end the follow-
ing:
‘‘(j) Notwithstanding any other provision of this sec-
tion, there shall not be taken into account, for purposes
of computing any average under subsection (a), any sub-
scription charge for any high deductible health plan or any
individuals enrolled therein.’’.
(3) COORDINATION
PROVISION.—Nothing in
this section or in any amendment made by this sec-
tion shall be considered to affect any authority
under section 1005(f) of title 39, United States
Code, to vary, add to, or substitute for any provision
of chapter 89 of title 5, United States Code, as
amended by this section.
(4) TECHNICAL AMENDMENT.—The second sen-
tence of section 8909(a) of title 5, United States
Code, is amended by inserting ‘‘(not including any
Government contributions under section 8906a to a
medical savings account)’’ after ‘‘of this title’’.
(e) INFORMATION TO INDIVIDUALS WHO MAY BE
ELIGIBLE FOR GOVERNMENT CONTRIBUTIONS TO A MED-
ICAL SAVINGS ACCOUNT.—Section 8907 of title 5, United
States Code, is amended by adding at the end the follow-
ing:
‘‘(c) In addition to any information otherwise pro-
vided for under this section, the Office shall make avail-
able to all employees and annuitants eligible to enroll in
a high deductible health plan, in a form acceptable to the
Office after consultation with the carrier, information re-
lating to—
‘‘(1) the conditions under which a Government
contribution shall be made under this chapter to a
medical savings account;
‘‘(2) the amount of the Government contribu-
tion payable under this chapter to a medical savings
account (or how such amount may be ascertained);
and
‘‘(3) any other matter which the Office consid-
ers appropriate in connection with medical savings
accounts.’’.
(f) EFFECTIVE DATE.—The amendments made by
this section shall apply with respect to contract years be-
ginning on or after January 1, 1999. The Office of Per-
sonnel Management shall take appropriate measures to
ensure that coverage under a high deductible health plan
under chapter 89 of title 5, United States Code (as
amended by this section) shall be available as of the begin-
ning of the first contract year described in the preceding
sentence.
SEC. 3. AMENDMENTS TO THE INTERNAL REVENUE CODE
OF 1986.
(a) INCLUSION
OF
EMPLOYEES
ENROLLED
IN
FEHBP HIGH DEDUCTIBLE HEALTH PLAN.—Clause
(iii) of section 220(c)(1)(A) of the Internal Revenue Code
of 1986 (defining eligible individual) is amended by strik-
ing ‘‘or’’ at the end of subclause (I), by striking the period
at the end of subclause (II) and inserting ‘‘, or’’, and by
adding at the end the following new subclause:
‘‘(III) the high deductible health
plan covering such individual is pro-
vided under chapter 89 of title 5,
United States Code.’’.
(b) CONTRIBUTIONS LIMITED
TO FEDERAL CON-
TRIBUTION.—Subsection (b) section 220 of such Code (re-
lating to limitations) is amended by adding at the end the
following new paragraph:
‘‘(8) DENIAL OF DEDUCTION FOR INDIVIDUALS
COVERED
BY
HIGH
DEDUCTIBLE
FEDERAL
EM-
PLOYEE HEALTH BENEFITS PLAN.—The limitation
under this subsection for any month with respect to
any individual shall be zero if, as of the first day of
such month, such individual is covered under a high
deductible health plan provided under chapter 89 of
title 5, United States Code. For purposes of apply-
ing section 106(b) for such month—
‘‘(A) the preceding sentence shall not
apply, and
‘‘(B) paragraph (4) shall not apply to any
individual who is entitled to receive any amount
for such month by reason of being an annuitant
(as defined in section 8901(3) of such title 5).’’.
(c) NUMERICAL
LIMITATIONS, ETC., NOT
TO
APPLY.—
(1) IN GENERAL.—Subsection (i) of section 220
of such Code is amended by adding at the end the
following new paragraph:
‘‘(6) EXCEPTION
FOR
INDIVIDUALS
COVERED
BY
FEDERAL
EMPLOYEE
HEALTH
BENEFITS
PLANS.—This subsection shall not apply to any indi-
vidual who is an eligible individual by reason of sub-
section (c)(1)(A)(iii)(III). Medical savings accounts
established by such individuals shall not be taken
into account in determining whether the numerical
limitations under subsection (j) are exceeded.’’.
(2) EXCEPTION FROM REPORTING.—Paragraph
(4) of section 220(j) of such Code is amended by
adding at the end the following new subparagraph:
‘‘(E) EXCEPTION FOR ACCOUNTS OF INDI-
VIDUALS
COVERED
BY
FEDERAL
EMPLOYEE
HEALTH BENEFITS PLANS.—No report shall be
required under this paragraph with respect to a
medical savings account of an individual if such
account was established at the time such indi-
vidual was an eligible individual by reason of
subsection (c)(1)(A)(iii)(III).’’.
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