‘‘CHAPTER 88—NON-WORK RELATED 
DISABILITY INSURANCE 
‘‘Sec. 
‘‘8801. Definitions. 
‘‘8802. Availability of insurance. 
‘‘8803. Contracting authority. 
‘‘8804. Benefits. 
‘‘8805. Premiums. 
‘‘8806. Preemption. 
‘‘8807. Studies, reports, and audits. 
‘‘8808. Jurisdiction of courts. 
‘‘8809. Administrative functions. 
‘‘8810. Cost accounting standards. 
‘‘§ 8801. Definitions 
‘‘For purposes of this chapter— 
‘‘(1) the term ‘Director’ means the Director of 
the Office of Personnel Management; 
‘‘(2) the term ‘employee’ has the meaning given 
such term in section 8901(1); 
‘‘(3) the term ‘carrier’ means a voluntary asso-
ciation, corporation, partnership, or other non-
governmental organization which is lawfully engaged 
in providing, paying for, or reimbursing lost wages 
or salaries under group insurance policies or con-
tracts, membership or subscription contracts, or 
similar group arrangements, in consideration of pre-
miums or other periodic charges payable to the car-
rier, including an insurance plan duly sponsored or 
underwritten by an employee organization and an 
association of organizations or other entities de-
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scribed in this paragraph sponsoring a temporary 
benefits plan; 
‘‘(4) the term ‘injury’ includes an injury related 
to pregnancy and childbirth; 
‘‘(5) the term ‘sickness’ includes a sickness re-
lated to pregnancy and childbirth; 
‘‘(6) the term ‘State’ includes the District of 
Columbia; and 
‘‘(7) the term ‘totally disabled’, used with re-
spect to an employee, means such employee is unable 
to perform the essential functions of such employee’s 
position. 
‘‘§ 8802. Availability of insurance 
‘‘(a) The Director shall establish and administer a 
program to make available insurance coverage under this 
chapter for an injury occurring outside the workplace or 
other disability otherwise not covered under chapter 81. 
‘‘(b) Insurance shall not be available under this chap-
ter if the injury of an employee is caused by such employ-
ee’s intention to bring about the injury to himself or to 
another individual. 
‘‘(c) In addition to the requirements otherwise appli-
cable under section 8801(3), an insurance contract under 
this chapter must be fully insured, whether through rein-
surance with other carriers or otherwise. 
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‘‘§ 8803. Contracting authority 
‘‘(a) The Director shall, without regard to section 5 
of title 41 or any other statute requiring competitive bid-
ding, contract with one or more carriers for a policy or 
policies of disability insurance as described under this 
chapter. The Director shall ensure that each resulting con-
tract is awarded on the basis of contractor qualifications, 
price, and reasonable competition. 
‘‘(b)(1) Each contract under this section shall con-
tain— 
‘‘(A) a detailed statement of the benefits of-
fered (including any maximums, limitations, exclu-
sions, and other definitions of benefits); 
‘‘(B) the premiums charged (including any limi-
tations or other conditions on their subsequent ad-
justment); 
‘‘(C) the terms of the enrollment period; and 
‘‘(D) such other terms and conditions (includ-
ing procedures for establishing eligibility for insur-
ance under this chapter) as may be determined by 
the Director, consistent with the requirements of 
this chapter. 
‘‘(2) Premiums charged under a contract under this 
section shall reasonably and equitably reflect the cost of 
the benefits provided, as determined by the Director. 
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‘‘(c)(1) Each contract under this section shall require 
the carrier— 
‘‘(A) to provide payments or benefits described 
in subsection (c) or (d) of section 8804 to an em-
ployee if such employee is entitled thereto under the 
terms of the contract; and 
‘‘(B) with respect to disputes regarding claims 
for payments or benefits under the terms of the con-
tract— 
‘‘(i) to establish internal procedures de-
signed to resolve such disputes expeditiously; 
and 
‘‘(ii) to establish for disputes not resolved 
through procedures under clause (i), procedures 
for one or more alternative means of dispute 
resolution involving independent third-party re-
view under circumstances acceptable to the Di-
rector. 
‘‘(2) The carrier’s determination as to whether or not 
a particular employee is eligible to obtain insurance cov-
erage under this chapter shall be subject to review to the 
extent and in the manner provided in the applicable mas-
ter contract. 
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‘‘(3) Nothing in this chapter shall be considered to 
grant authority for the third-party reviewer to change the 
terms of any contract under this chapter. 
‘‘(d)(1) Each contract under this section shall be for 
a term of 7 years, unless terminated earlier by the Direc-
tor in accordance with the terms of such contract. How-
ever, the rights and responsibilities of the enrolled em-
ployee, the insurer, and the Director under each contract 
shall continue with respect to such employee until the ter-
mination of coverage of the enrolled employee or the effec-
tive date of a successor contract. 
‘‘(2) A 7-year contract described in paragraph (1) 
may be made automatically renewable, for a term of 1 year 
each January first, unless written notice of non-renewal 
is given either by the Director or the carrier not less than 
180 calendar days before the renewal date, or unless modi-
fied by mutual agreement. 
‘‘(3) A 7-year contract described in paragraph (1) 
shall include such provisions as may be necessary to en-
sure that, once an employee becomes duly enrolled, insur-
ance coverage pursuant to that enrollment shall be termi-
nated only if the individual is separated from Federal serv-
ice or, where appropriate, for non-payment of premiums. 
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‘‘§ 8804. Benefits 
‘‘(a) The Director may prescribe reasonable minimum 
standards for benefit plans offered under this chapter. The 
benefits under this chapter shall provide for benefits as 
described in subsections (c) and (d). 
‘‘(b)(1) Benefits under this chapter may supplement 
other benefits of an employee, including worker’s com-
pensation and disability retirement income. 
‘‘(2) A contract providing benefits under this chapter 
shall not provide for a preexisting condition exclusion. 
‘‘(c)(1) An eligible employee may receive benefits 
under this chapter during the first 12 months that an em-
ployee qualifies for such benefits. An employee shall re-
ceive such benefits after the expiration of the waiting pe-
riod selected by such employee under paragraph (2)(A). 
The amount of benefits shall be the lesser of— 
‘‘(A) 70 percent of the monthly pay, excluding 
bonuses, of an employee at the time of the injury or 
sickness of such employee occurs; or 
‘‘(B) 70 percent of the maximum rate of basic 
pay provided for grade GS–15 of the general sched-
ule. 
‘‘(2)(A) The period for which benefits are payable to 
an employee under this subsection will begin after the 
completion of a waiting period. An employee shall elect 
one of the following waiting period options: 
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‘‘(i) On the 8th day of continuous disability. 
‘‘(ii) On the 31st day of continuous disability. 
‘‘(iii) On the 91st day of continuous disability. 
‘‘(iv) On the 181st day of continuous disability. 
‘‘(B) Employees who elect to receive benefits earlier 
shall pay a higher premium. 
‘‘(d)(1) An employee may receive benefits after the 
12-month period established under subsection (c) has ex-
pired only if such employee is totally disabled due to injury 
or sickness. 
‘‘(2) The amount of total disability benefits shall be 
50 percent of an employee’s monthly pay, excluding bo-
nuses, at the time of the benefits under subsection (c) have 
expired. Total disability benefits shall not be available to 
an employee once such employee reaches the age of 67. 
‘‘(e) A contract approved under this chapter shall re-
quire the carrier to cover the geographic service delivery 
area specified by the Director. The Director shall require 
carriers to include non-work related disability underserved 
areas in their service delivery areas. 
‘‘(f) A surviving spouse, disability annuitant, or sur-
viving child whose annuity is terminated and is later re-
stored, may continue enrollment in a disability benefits 
plan subject to the terms and conditions prescribed in reg-
ulations issued by the Office. 
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‘‘§ 8805. Premiums 
‘‘(a) Each eligible individual obtaining insurance cov-
erage under this chapter shall be responsible for 100 per-
cent of the premiums for such coverage. 
‘‘(b) The amount necessary to pay the premiums for 
enrollment shall be withheld from the pay of the enrolled 
individual. 
‘‘(c) The carrier participating under this chapter 
shall maintain records that permit it to account for all 
amounts received under this chapter (including investment 
earnings on those amounts) separate and apart from all 
other funds. 
‘‘(d)(1)(A) The Employees’ Life Insurance Fund is 
available, without fiscal year limitation, for reasonable ex-
penses incurred in administering this chapter before the 
start of the first term described in section 8803(d)(1), in-
cluding reasonable implementation costs. 
‘‘(B) Such Fund shall be reimbursed, before the end 
of the first year of the first 7-year period described in sec-
tion 8803(d)(1), for all amounts obligated or expended 
under subparagraph (A) (including lost investment in-
come). Reimbursement under this subparagraph shall be 
made by the carrier in accordance with applicable provi-
sions included in the relevant contract. 
‘‘(C)(i) There is hereby established in the Employees’ 
Life Insurance Fund a Non-Work Related Disability In-
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surance Administrative Account, which shall be available 
to the Office of Personnel Management, without fiscal 
year limitation, to defray reasonable expenses incurred by 
the Office in administering this chapter after the start of 
the first term described in section 8803(d)(1). 
‘‘(ii) A contract under this chapter shall include ap-
propriate provisions under which the carrier involved shall, 
during each year, make such periodic contributions to the 
Non-Work Related Disability Insurance Administrative 
Account as necessary to ensure that the reasonable antici-
pated expenses of the Office of Personnel Management in 
administering this chapter during such year (adjusted to 
reconcile for any earlier overestimates or underestimates 
under this subparagraph) are defrayed. 
‘‘(e) Nothing in this chapter shall, in the case of an 
enrolled individual applying for an extension of disability 
insurance coverage under this chapter after the expiration 
of such enrolled individual’s first opportunity to enroll, 
preclude the application of underwriting standards for 
later enrollment. 
‘‘§ 8806. Preemption 
‘‘(a) The terms of any contract under this chapter 
which relate to the nature, provision, or extent of coverage 
or benefits (including payments with respect to benefits) 
shall supersede and preempt any State, territorial, tribal, 
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or local law, or any regulation issued thereunder, which 
relates to non-work related disability insurance or con-
tracts. 
‘‘(b)(1) No tax, fee, or other monetary payment may 
be imposed or collected, directly or indirectly, by any 
State, territory, tribe, or locality, or by any political sub-
division or other governmental authority thereof, on, or 
with respect to, any premium paid for an insurance policy 
under this chapter. 
‘‘(2) Paragraph (1) shall not be construed to exempt 
any company or other entity issuing a policy of insurance 
under this chapter from the imposition, payment, or collec-
tion of a tax, fee, or other monetary payment on the net 
income or profit accruing to or realized by such entity 
from business conducted under this chapter, if that tax, 
fee, or payment is applicable to a broad range of business 
activity. 
‘‘(c) No law of a State, territory, tribe, or locality, 
pertaining to subrogation or reimbursement with respect 
to benefits provided under this chapter, shall operate ex-
cept as expressly adopted by the Director. 
‘‘§ 8807. Studies, reports, and audits 
‘‘(a) A contract under this chapter shall contain pro-
visions requiring the carrier to furnish such reasonable re-
ports as the Director determines to be necessary to enable 
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the Director to carry out the Director’s functions under 
this chapter. 
‘‘(b) Each Federal agency shall keep such records, 
make such certifications, and furnish the Director, the 
carrier, or both, with such information and reports as the 
Director may require. 
‘‘(c) The Director shall conduct periodic reviews of 
each plan under this chapter to ensure its competitiveness. 
‘‘§ 8808. Jurisdiction of courts 
‘‘The district courts of the United States have origi-
nal jurisdiction, concurrent with the United States Court 
of Federal Claims, of a civil action or claim against the 
United States under this chapter after such administrative 
remedies as required under section 8803(c) have been ex-
hausted, but only to the extent judicial review is not pre-
cluded by any dispute resolution or other remedy under 
this chapter. 
‘‘§ 8809. Administrative functions 
‘‘(a)(1) Except as otherwise provided in this chapter, 
the Director shall prescribe regulations necessary to carry 
out this chapter and to make arrangements as necessary 
with other agencies and payroll systems to implement the 
program. 
‘‘(2) Except as otherwise provided by law, the Direc-
tor shall specify in regulation the treatment of time spent 
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by an individual in receipt of benefits under this chapter 
for the purposes of periodic increases in pay, retention 
purposes, and other rights, benefits, and conditions of em-
ployment for which length of service is a factor. 
‘‘(b) The carrier shall provide for periodic coordinated 
enrollment, promotion, and education efforts, as specified 
by the Director. 
‘‘§ 8810. Cost accounting standards 
‘‘The cost accounting standards issued pursuant to 
section 26(f) of the Office of Federal Procurement Policy 
Act (41 U.S.C. 422(f)) shall not apply with respect to an 
insurance contract under this chapter.’’. 
(b) The analysis for part III of title 5, United States 
Code, is amended by adding at the end of subpart G the 
following: 
‘‘88. Non-Work Related Disability Insurance .......................... 8801’’. 
Æ 
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