81 FR 86898 - Removal of Eligible Family Members From Existing Self and Family Enrollments

OFFICE OF PERSONNEL MANAGEMENT

Federal Register Volume 81, Issue 231 (December 1, 2016)

This action would amend Federal Employees Health Benefits (FEHB) Program rules. This proposed rule is in response to enrollee requests to remove family members from existing enrollments. The intended effect of this action is to allow certain eligible family members to be removed from self and family or self plus one enrollments.

[Federal Register Volume 81, Number 231 (Thursday, December 1, 2016)]
[Proposed Rules]
[Pages 86898-86900]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-28787]



[[Page 86897]]

Vol. 81

Thursday,

No. 231

December 1, 2016

Part III





 Office of Personnel Management





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5 CFR Part 890





Removal of Eligible Family Members From Existing Self and Family 
Enrollments; Proposed Rule

Federal Register / Vol. 81 , No. 231 / Thursday, December 1, 2016 / 
Proposed Rules

[[Page 86898]]


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OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 890

RIN 3206-AN43


Removal of Eligible Family Members From Existing Self and Family 
Enrollments

AGENCY: Office of Personnel Management (OPM).

ACTION: Proposed rule.

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SUMMARY: This action would amend Federal Employees Health Benefits 
(FEHB) Program rules. This proposed rule is in response to enrollee 
requests to remove family members from existing enrollments. The 
intended effect of this action is to allow certain eligible family 
members to be removed from self and family or self plus one 
enrollments.

DATES: Comments are due on or before January 30, 2017.

ADDRESSES: Send written comments to Padma Shah, Senior Policy Analyst, 
Planning and Policy Analysis, U.S. Office of Personnel Management, Room 
4316, 1900 E Street NW., Washington, DC. You may also submit comments 
identified by the RIN number stated above using the Federal eRulemaking 
Portal (http://www.regulations.gov). Follow the instructions for 
submitting comments.

FOR FURTHER INFORMATION CONTACT: Padma Shah at (202) 606-0004.

SUPPLEMENTARY INFORMATION:

I. Background

    Currently under 5 CFR 890.302, all eligible family members are 
covered under a self and family enrollment. Subject to a temporary 
extension of coverage and conversion, a family member's coverage 
terminates on the day he or she ceases to be an eligible family member, 
as provided by 5 CFR 890.304. Existing regulations allow enrollees to 
change enrollment from self and family to self plus one or self only 
based on a qualifying life event or during Open Season. However, there 
is no provision in the existing regulations addressing the voluntary 
removal of an eligible covered family member under an existing self and 
family or self plus one enrollment.
    The Office of Personnel Management has experienced a number of 
requests to remove eligible family members since OPM implementated FEHB 
coverage for children up to age 26 for plan year 2011 pursuant to the 
Patient Protection and Affordable Care Act, Public Law 111-148, as 
amended by the Health Care and Education Reconciliation Act, Public Law 
111-152 (the Affordable Care Act). In accordance with this law, OPM 
issued guidance to FEHB carriers in Carrier Letter No. 2010-18 and to 
agency benefit officers in Benefits Administration Letter No. 2010-201. 
In these guidance documents, OPM advised that for the upcoming plan 
year and beyond married children were eligible for coverage without 
dependency requirements, residency requirements, or requirements that a 
child be a student or have prior or current insurance coverage under 
their parent's FEHB Program enrollment. On October 30, 2013, OPM 
published a final rule codifying this change in eligibility in 5 CFR 
890.302 (78 FR 64873).
    With the extension of FEHB coverage to children up to age 26, 
including the addition of coverage for married and non-dependent 
children, there are more circumstances where eligible family members 
have their own coverage and are either not in need of coverage under a 
parent's FEHB self and family enrollment or do not wish to be covered 
under that enrollment. In addition, some FEHB-enrolled parents do not 
wish to provide health insurance coverage for their adult children. In 
light of the number of FEHB enrollees who have communicated to us that 
they do not wish to maintain coverage for their adult child and adult 
children who have communicated that they want to be removed from their 
parent's FEHB self and family enrollment, OPM has re-examined its 
previous policy not to allow removal of eligible family members under 
any circumstances. Our review of this issue also indicated that there 
may be circumstances where covered spouses would also seek to be 
removed from an existing enrollment. Accordingly, this proposed change 
attempts to provide appropriate removal opportunities for covered 
family members, including spouses and adult children. Though the 
availability of the new self plus one enrollment type will alleviate 
this issue somewhat, we anticipate that enrollees may still wish to 
remove family members from existing enrollments, especially in 
situations where there are more than three family members covered under 
a self and family enrollment.

II. Discussion of the Proposed Rule

    The Office of Personnel Management proposes to add a new paragraph, 
5 CFR 890.308(h), that allows eligible family members to be removed 
from a self and family or a self plus one enrollment in certain limited 
circumstances. A request for removal under this proposed rule can be 
submitted and effectuated anytime during the plan year if the 
individual provides all needed documentation. The proposed rule also 
includes amendments to Sec.  890.302 requiring that proof of family 
member eligibility must be provided upon request by a carrier, 
employing office, or OPM and updating paragraph numbering. For more 
information on these changes, see proposed rule Federal Employees 
Health Benefits Program: Removal of Ineligible Individuals from 
Existing Enrollments, publishing elsewhere in this issue of the Federal 
Register.
    In a majority of cases, there appears to be no detriment to an 
eligible family member covered under a self and family or a self plus 
one enrollment, even if the family member has other coverage. Health 
insurance plans can coordinate coverage and provide what, in most 
cases, amounts to more generous benefits to a family member who has 
double coverage. However, in a minority of circumstances, it may be 
beneficial for a family member to be removed from an enrollment. For 
example, if a family member covered under an FEHB enrollment is 
eligible for their own employer's high deductible health plan with a 
health savings account, under Internal Revenue Service (IRS) 
regulations, the family member may not be able to take advantage of the 
employer's offer unless he or she is not covered under another health 
plan. Accordingly, the regulation proposes to allow spouses and adult 
children to be removed from a self and family or a self plus one 
enrollment if certain requirements are met.
    In the case of a self plus one enrollment, it would, in most cases, 
be beneficial for the enrollee to decrease his or her enrollment to a 
self only enrollment or cancel the enrollment in accordance with Sec.  
890.302 for a family member to no longer be covered. Similarly, in the 
case of a self and family enrollment with two eligible family members, 
it would in most cases be beneficial for the enrollee to decrease to a 
self plus one enrollment. However, if the enrollee is enrolled in 
premium conversion, IRS rules would prohibit the decrease in or 
cancellation of the enrollment mid-year in the absence of a qualifying 
life event. Therefore, the regulation allows an enrollee or a family 
member to choose removal with no decrease in enrollment at any time 
mid-year.
    This regulation also addresses situations where an enrollee has 
more than two eligible family members covered under a self and family 
enrollment, and one of the eligible family members may wish to no 
longer

[[Page 86899]]

be covered under the enrollment. For example, a self and family 
enrollment may cover an enrollee's spouse, one minor child and one 
adult child. The adult child may wish to stop coverage under the 
enrollee's self and family enrollment due to the availability of other 
employer-sponsored coverage, while the enrollee's spouse and minor 
child have no other access to coverage. In this example, the adult 
child can be removed from the existing self and family enrollment.
    In contemplating circumstances for removal, OPM sought to balance 
the interests of eligible family members with the interests of FEHB 
enrollees. For example, under this proposed rule, spouses may be 
removed if both the enrollee and the spouse provide a notarized request 
for removal to their agency. This ensures that both the enrollee and 
family member are aware of and agree to the request and avoids agencies 
receiving conflicting requests as to whether a spouse should be covered 
where the spouses disagree, for instance where they are nearing or 
seeking divorce.
    Adult children may be removed from a self plus one or self and 
family enrollment by the enrollee without the consent of the child if 
the enrollee provides proof that the child is no longer a dependent. 
Consistent with the Affordable Care Act, the proposed rule 
``continue[s] to make [FEHB] coverage available for an adult child'' 
but permits an enrollee to reject the offer of coverage for adult 
children who are no longer dependents. OPM plans to provide 
subregulatory guidance defining how an individual may demonstrate that 
a child is no longer a dependent.
    Adult children who request removal from a self and family or self 
plus one enrollment will be removed if the child submits a notarized 
request for removal. OPM recognizes that with the extension of coverage 
to married and non-dependent children to age 26, there are more 
eligible adult children covered under the program who have their own 
independent means for obtaining health insurance coverage or who wish 
for other reasons, such as an interest in privacy, not to be covered 
under their parent's enrollment. However, under the proposed rule, 
minor children may not be removed from an enrollment without a court 
order to protect the interests of children who are not yet at an age 
where they are ready to be responsible for their own health insurance 
coverage.

Submissions of Requests

    To submit a notarized request for removal, the proposed rule 
instructs that the request must be submitted to the employing agency 
and that the effective date of the removal be the first day of the pay 
period following the agency's approval of the request. When an enrollee 
requesting removal of an adult child has submitted proof that the adult 
child is no longer a dependent, the proposed effective date is the 
first day of the second pay period following the agency's approval of 
the request. This proposed effective date gives a child being removed 
without his or her consent a pay period to receive notice of the 
removal and to procure other health coverage.
    If an eligible family member is removed from an enrollment, he or 
she may only regain coverage under the applicable self plus one or self 
and family enrollment during the annual Open Season or within 60 days 
of the eligible family member losing other coverage. Enrollees must 
provide the written consent of the family member and demonstrate their 
continued eligibility as a spouse or child under this section. This 
proposed policy avoids family members making multiple changes 
throughout the plan year and allows FEHB carriers to properly 
administer needed services. OPM will publish subregulatory guidance 
through a Benefits Administration Letter providing specific guidance to 
agencies on processes for removals.
    Family members removed under this proposed regulation will not be 
eligible for temporary extension of coverage and conversion under Sec.  
890.401 or temporary continuation of coverage (TCC) under Sec.  
890.1103. The FEHB governing statute does not allow removed family 
members to be eligible for TCC or a temporary extension of coverage and 
conversion as such removal does not result in the child ceasing to meet 
the requirements for being considered a child within the meaning of 5 
U.S.C. 8905a and 8901(1).
    Regulatory Impact Analysis: OPM has examined the impact of this 
proposed rule as required by Executive Order 12866 and Executive Order 
13563, which directs agencies to assess all costs and benefits of 
available regulatory alternatives and, if regulation is necessary, to 
select regulatory approaches that maximize net benefits (including 
potential economic, environmental, public, health, and safety effects, 
distributive impacts, and equity). A regulatory impact analysis must be 
prepared for major rules with economically significant effects of $100 
million or more in any one year. This rule is not considered a major 
rule because it provides a process for removal of erroneously enrolled 
eligible family members from self and family enrollments, which we do 
not estimate to have widespread applicability under the FEHB Program.

Regulatory Flexibility Act

    The Regulatory Flexibility Act of 1980 (Pub. L. 96-354) (RFA) 
establishes ``as a principle of regulatory issuance that agencies shall 
endeavor, consistent with the objectives of the rule and of applicable 
statutes, to fit regulatory and informational requirements to the scale 
of the businesses, organizations, and governmental jurisdictions 
subject to regulation.'' To achieve this principle, agencies are 
required to solicit and consider flexible regulatory proposals and to 
explain the rationale for their actions to assure that such proposals 
are given serious consideration.'' The RFA covers a widerange of small 
entities, including small businesses, not-for-profit organizations, and 
small governmental jurisdictions.
    Agencies must perform a review to determine whether a rule will 
have a significant economic impact on a substantial number of small 
entities. If the agency determines that it will, the agency must 
prepare a regulatory flexibility analysis as described in the RFA. I 
certify that this regulation will not have a significant economic 
impact on a substantial number of small entities because the regulation 
only affects health insurance benefits of Federal employees and 
annuitants.

Regulatory Review

    This rule has been reviewed by the Office of Management and Budget 
in accordance with Executive Orders 13563 and 12866.

Federalism

    The Office of Personnel Management has examined this proposed rule 
in accordance with Executive Order 13132, Federalism. The agency has 
determined that this proposed rule will not have any negative impact on 
the rights, roles, and responsibilities of State, local, or Tribal 
governments.

Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (44 U.S.C. chapter 3507(d); see 
5 CFR part 1320) requires that the U.S. Office of Management and Budget 
(OMB) approve all collections of information by a Federal agency from 
the public before they can be implemented. Respondents are not required 
to respond to any collection of information unless it displays a 
current valid OMB control number. OPM is not proposing any additional 
collections in this rule.

[[Page 86900]]

List of Subjects on 5 CFR Part 890

    Administrative practice and procedure, Government employees, Health 
insurance.

    U.S. Office of Personnel Management.
Beth F. Cobert,
Acting Director.

    For the reasons set forth in the preamble, OPM proposes to amend 
Part 890 of Title 5 of the Code of Federal Regulations as follows:

PART 890--FEDERAL EMPLOYEES HEALTH BENEFITS PROGRAM

0
1. The authority citation for part 890 continues to read as follows:

    Authority: 5 U.S.C. 8913; Sec 890.301 also issued under sec. 311 
of Pub. L. 111-03, 123 Stat. 64; Sec. 890.111 also issued under 
section 1622(b) of Pub. L. 104-106, 110 Stat. 521; Sec. 890.112 also 
issued under section 1 of Pub. L. 110-279, 122 Stat. 2604; 5 U.S.C. 
8913; Sec. 890.803 also issued under 50 U.S.C. 403p, 22 U.S.C. 4069c 
and 4069c-1; subpart L also issued under sec. 599C of 101, 104 Stat. 
2064, as amended; Sec. 890.102 also issued under sections 11202(f), 
11232(e), 11246(b) and (c) of Pub. L. 105-33, 111 Stat. 251; and 
section 721 of Pub. L. 105-261, 112 Stat. 2061; Pub. L. 111-148, as 
amended by Pub. L. 111-152.

0
2. Amend Sec.  890.302 by revising paragraph (a)(1) to read as follows:


Sec.  890.302   Coverage of family members.

    (a)(1) An enrollment for self plus one includes the enrollee and 
one eligible family member. An enrollment for self and family includes 
all family members who are eligible to be covered by the enrollment 
except as provided in section 890.308(h). Proof of family member 
eligibility may be required, and must be provided upon request, to the 
carrier, the employing office or OPM. Except as provided in paragraph 
(a)(2) of this section, no employee, former employee, annuitant, child, 
or former spouse may enroll or be covered as a family member if he or 
she is already covered under another person's self plus one or self and 
family enrollment in the FEHB Program.
* * * * *
0
3. Amend Sec.  890.308 by adding paragraph (h) to read as follows:


Sec.  890.308   Disenrollment.

* * * * *
    (h) Removal from Enrollment: Eligible Family Members. (1) An 
eligible family member may be removed from a self plus one or a self 
and family enrollment if a request is submitted to the employing office 
for approval in the following circumstances:
    (i) In the case of a spouse, if the enrollee and his or her spouse 
provide a notarized request for removal.
    (ii) In the case of a child who has reached the age of majority in 
the child's state of residence (the enrollee's state of residence if 
the child's is not known), if the enrollee provides proof that the 
child is no longer his or her dependent. The enrollee shall also 
provide the last known contact information for the child.
    (iii) In the case of a child who has reached the age of majority in 
the child's state of residence, if the child provides a notarized 
request for removal.
    (2) For removals under paragraphs (h)(1)(i) and (h)(1)(iii) of this 
section, the effective date is the first day of the pay period 
following the date that the request is approved by the employing 
office. For removals under paragraph (h)(1)(ii), the effective date is 
the first day of the second pay period following the date the request 
is approved by the employing office.
    (3) The family member's removal under this paragraph is considered 
a cancellation under Sec.  890.304(d) and removed family members are 
not eligible for temporary extension of coverage and conversion under 
section 890.401or temporary continuation of coverage under Sec.  
809.1103 of this chapter.
    (4) If an eligible family member is removed under this paragraph, 
he or she may only regain coverage under the applicable self plus one 
or self and family enrollment if requested by the enrollee during the 
annual open season or within 60 days of the family member losing other 
health insurance coverage. The enrollee must also provide written 
consent to reinstatement of coverage from the family member and 
demonstrate eligibility of the spouse or child as a family member.
    (5) If an employing office approves a request for removal, the 
employing office must notify the enrollee and the carrier of the 
removal immediately. For removals under paragraph (h)(1)(ii) of this 
section, the employing office must also immediately notify the child of 
the removal using the last known contact provided by the enrollee.

[FR Doc. 2016-28787 Filed 11-30-16; 8:45 am]
 BILLING CODE 6325-63-P