An Act to provide a health benefits program for certain retired employees of the Government.
PL 86-724 (S.2575), enacted 09/08/1960

74 
S T A T . ] 
PUBLIC LAW 86-724-SEPT. 8, 1960 
849 
Public Law 86-724 
AN ACT 
September 8, 1960 
[S. 2575] 
To provide a health benefits program for certain retired employees of the 
Government. 
Be it enacted by the Senate and House of Representatives 
of the 
United States of America in Congress assembled, That this Act may Emptoyets^Helit^ 
be cited as the "Retired Federal Employees Health Benefits Act". 
Benefits Act. 
DEFINITIONS 
SEC. 2. As used in this Act— 
(1) The terms "employee", "Government", "member of family", and 
"Commission" have the same meanings, when used in this Act as such 
terms have when used in the Federal Employees Health Benefits Act 
of 1959. 
(2) "Health benefits plan" means an insurance policy or contract, 
medical or hospital service arrangement, membership or subscription 
contract, or similar agreement provided by a carrier for a stated 
periodic premium or subscription charge for the purpose of providing, 
paying for, or reimbursing expenses for hospital care, surgical or 
medical diagnosis, care, and treatment, drugs and medicines, remedial 
care, or other medical supplies and services, or any combination of 
these. 
(3) "Retired employee" means any person who would be an annui-
tant as that term is defined in the Federal Employees Health Benefits 
Act of 1959 if the contribution and enrollment provisions of that Act 
had been in effect on the date the person became an annuitant, but 
does not include any person who was a noncitizen whose permanent-
duty station was outside a State of the United States or the District 
of Columbia on the day before he became an annuitant. 
(4) "Carrier" means a voluntary association, corporation, partner-
ship, or other nongovernmental organization which lawfully offers 
a health benefits plan. 
73 Stat. 708. 
5 u s e 3001 note. 
GOVERNMENT-WIDE PLAN 
SEC. 3. (a) The Commission shall, without regard to section 3709 
of the Revised Statutes or any other provision of law requiring com-
petitive bidding, enter into a contract w^ith a qualified carrier for one 
uniform Government-wide health benefits plan for retired employees. 
Such contract shall be for a period of at least one year and shall be 
automatically renewable in the absence of notice of termination by 
either party. 
The carrier shall, if the Commission so directs, cede 
reinsurance to such other companies which regularly issue group 
health insurance as may elect to participate or shall allocate its rights 
and obligations under the contract among such of its aflfiliates as may 
elect to participate in accordance with an equitable formula to be de-
termined by the carrier and approved by the Commission. 
The con-
tracting carrier, if an insurance company, shall be licensed to issue 
group health insurance in all the States of the United States and the 
District of Columbia and shall, in the most recent year for which 
data are available, have made at least 1 per centum of all group health 
insurance benefit payments in the United States. 
(b) The contract under this Act shall contain a detailed statement 
of the benefits offered and shall include such maximums, limitations, 
exclusions, and other definitions of benefits as the Commission may 
deem necessary or desirable. No person may be excluded because of 
race, sex, health status, or age, and the contract may not deny or limit 
benefits because of any preexisting condition. 
48232 0-61-54 
41 use 5. 
PUBLIC LAW 86-724-SEPT. 8, 1960 
[74 STAT. 
(c) The rates charged for the health benefits plan described in sub-
section (a) of this section shall reasonably and equitably reflect the 
cost of the benefits provided. Rates determined for the first term shall 
be adjusted for suDsequent terms on the basis of experience. The 
Commission shall prescribe the extent to which reserves due to favor-
able experience may be retained by the carrier. Such reserves shall 
in any case be retained for the benefit of retired employees enrolled 
thereunder, and members of their families. 
CONTRIBUTIONS 
SEC. 4. (a) If a retired employee enrolls in the health benefits 
plan provided for by section 3 of this Act, the Government shall 
contribute toward his subscription charge such amounts as the Com-
mission by regulation may from time to time prescribe. The amount 
so prescribed, if the employee is enrolled for self only, shall not be 
less than $3.00 monthly or more than $4.00 monthly. The amount 
to be prescribed for a retired employee enrolled for self and family 
shall be twice the contribution for one enrolled for self only. A 
retired employee may not receive a Government contribution for more 
than one plan, nor may a retired employee receive a Government 
contribution if he is covered under the enrollment of another em-
ployee or retired employee who is receiving a Government contribution 
toward his enrollment. 
(b) In addition, the Government shall contribute an amount, as 
prescribed by the Commission, up to 2 per centum of each contri-
bution authorized by subsection (a) of this section to the Retired 
Employees Health Benefits Fund, for payment of expenses incurred 
by the Commission in administering this Act. 
WITHHOLDING 
SEC. 5. There shall be withheld from the annuity or compensation 
of each retired employee enrolled in the health benefits plan provided 
for under section 3 of this Act so much as is necessary, after deduct-
ing the contribution of the Government, to pay the total charge for 
his enrollment. 
OTHER HEALTH BENEFITS PLANS 
SEC. 6. (a) Subject to subsection (b) of this section, a retired 
employee who elects to obtain a health benefits plan, or to retain an 
existing health benefits plan, other than the plan provided for under 
section 3 of this Act, directly with a carrier, shall be paid a Govern-
ment contribution to the cost of his health benefits plan which shall 
be equal in amount to the appropriate Government contribution 
established by the Commission pursuant to section 4(a) of this Act, 
but may not exceed the cost to him of the health benefits plan in which 
he is enrolled or which he retains or, if the plan combines health 
benefits with other benefits, shall not exceed the cost to him of the 
premium fixed by the carrier for the health benefits portion of the 
plan in which he is enrolled or which he retains. A retired employee 
may not receive a Government contribution for more than one plan, 
nor may a retired employee receive a Government contribution if he is 
covered under the enrollment of another employee or retired 
employee who is receiving a Government contribution toward his 
enrollment. 
(b) A retired employee who enrolls in a plan shall be entitled to 
the Government contribution provided by this section only if the car-
rier of the plan (1) has been providing health benefits for at least 
one year and (2), if an insurance company, is licensed to issue indi-
74 S T A T . ] 
PUBLIC LAW 86-724-SEPT. 8, 1960 
vidual or group health insurance in all the States of the United States 
and the District of Columbia. Clause (2) of the immediately preced-
ing sentence shall not apply to enrollment in a plan sponsored by an 
association or other organization more than 50 per centum of the 
members of which are Federal employees or former Federal employees, 
(c) In addition, the Government shall contribute an amount, as 
prescribed by the Commission, up to 2 per centum of each contribution 
authorized by subsection (a) of this section to the Retired Employees 
Health Benefits Fund, for payment of expenses incurred by the Com-
mission in administering this Act. 
ELECTIONS 
SEC. 7. Each retired employee shall, within such time after March 
1, 1961, as the Commission shall prescribe, notify the Commission of 
his election (1) to enroll in the plan provided under section 3 of this 
Act, (2) to enroll in or retain another health benefits plan and receive 
Government contributions under section 6 of this Act, or (3) not to 
participate in the program offered under this Act. 
If the retired 
employee elects to enroll under clause (2) of this section, his election 
shall be accompanied by a certificate of the carrier certifying the fact 
of his enrollment and the cost to him of the health benefits plan, or of 
the health benefits portion of the plan. 
RETIRED EMPLOYEES H E A L T H BENEFITS F U N D 
SEC. 8. (a) The withholding of retired employees under section 5 
of this Act and the contributions of the Government under sections 
4 and 6 of this Act shall be deposited in the Retired Employees Health 
Benefits Fund, hereinafter referred to as the "Fund", which is hereby 
created and which shall be administered by the Commission. 
(b) The Fund shall be available without fiscal year limitation for all 
payments on account of the health benefits plan negotiated under sec-
tion 3 of this Act, for payment of the Government's contribution pro-
vided for by section 6(a) of this Act to agencies of the Government 
which administer a retirement system for civilian employees of the 
Government, and for payment of expenses, not to exceed the Govern-
ment's contributions authorized by sections 4(b) and 6(b) of this Act, 
incurred by the Commission in administering this Act. 
(c) Any dividends or other refunds made by the carrier under sec-
tion 3 of this Act shall be set aside in the Fund as a contingency reserve 
for the Government-wide plan. 
Such contingency reserve may be used 
to defray increases in future rates of or to reduce the retired employees' 
and the Government's contributions to, or to increase the health bene-
fits provided by that plan, as the Commission may from time to time 
determine. 
(d) The Secretary of the Treasury is authorized to invest and rein-
vest any of the moneys in the Fund in interest-bearing obligations of 
the United States for the purposes of the Fund. 
The interest on and 
the proceeds from the sale of any such obligations shall become a part 
of the Fund. 
ADMINISTRATION 
SEC. 9. (a) The Commission shall administer this Act and pre-
scribe such regulations as are necessary to give full effect to the pur-
poses of this Act. 
(b) Such regulations shall fix minimum standards to be met by the 
carrier and the plan under section 3 of this Act, including extensions of 
coverage to be provided. 
The Commission may request all carriers to 
furnish such reasonable reports as the Commission determines to be 
852 
PUBLIC LAW 86-724-SEPT. 8, 1960 
[74 STAT. 
necessary to enable it to carry out its functions under this Act. The 
carrier shall furnish such reports when requested and permit the Com-
mission and representatives of the General Accounting Office to exam-
ine such records of the carriers as may be necessary to carry out the 
purposes of this Act. 
(c) The Commission's regulations may include, but are not limited 
to, the following: 
(1) exclusions of retired employees from coverage ; 
(2) beginning and ending dates of coverage, and conditions of 
eligibility; 
(3) methods of filing the elections required by section 7 of this 
Act and other information; 
(4) methods of making contributions authorized by section 6, 
and withholdings required by section 5 of this Act; 
(5) changes in enrollment; 
^6) questions of dependency; 
(7) certificates and other information to be furnished to retired 
employees; 
(8) contributions and withholding during periods of suspension 
of annuity payments and in other extraordinary situations; 
(9) when, and under what conditions, an election not to partici-
pate in the programs offered under this Act may be withdrawn; 
and 
(10) under what conditions and to what extent the cost of a plan 
shall be considered a cost attributable to the retired employee. 
(d) Each agency of the United States or the District of Columbia 
which administers a retirement system for annuitants shall keep such 
records, make such certifications, and furnish the Commission with 
such information and reports as may be necessary to enable the Com-
mission to carry out its functions under this Act. 
(e) There are hereby authorized to be expended from the Em-
ployees Life Insurance Fund, without regard to limitations on expend-
itures from that Fund, for any fiscal years from the date of enactment 
through the fiscal year ending June 30,1962, inclusive, such sums as 
may be necessary to pay administrative expenses incurred by the Com-
mission in carrying out the health benefits provisions ot this Act. 
Keimbursements to the Employees Life Insurance Fund for sums so 
expended, together with interest at a rate to be determined by the 
Secretary of the Treasury, shall be made from the Ketired Employees 
Health Benefits Fund which is hereby made available for this purpose. 
APPROPRIATIONS 
SEG. 10. The amounts authorized by this Act to be contributed by 
the Government shall be paid from annual appropriations which are 
hereby authorized to be made for such purpose. 
ANNUAL REPORT 
SEC. 11. The Commission shall transmit to the Congress annually 
a report concerning the operation of this Act. 
EFFECTIVE DATE 
SEC. 12. The health benefits program provided for by this Act shall 
take effect July 1,1961. The contributions and withholdings provided 
for by this Act shall take effect on June 1,1961, with respect to annuity 
or compensation accruing for periods beginning on and after that 
date. 
Approved September 8, 1960.