[Senate Report 106-492]
[From the U.S. Government Publishing Office]
106th Congress
2d Session SENATE Report
106-492
_______________________________________________________________________
Calendar No. 942
FEDERAL EMPLOYEES HEALTH BENEFITS
CHILDREN'S EQUITY ACT OF 1999
__________
R E P O R T
of the
COMMITTEE ON GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
to accompany
S. 1688
TO AMEND CHAPTER 89 OF TITLE 5, UNITED STATES CODE, RELATING TO THE
FEDERAL EMPLOYEES HEALTH BENEFITS PROGRAM, TO ENABLE THE FEDERAL
GOVERNMENT TO ENROLL AN EMPLOYEE AND THE FAMILY OF THE EMPLOYEE IN THE
PROGRAM WHEN A STATE COURT ORDERS THE EMPLOYEE TO PROVIDE HEALTH
INSURANCE COVERAGE FOR A CHILD OF THE EMPLOYEE, BUT THE EMPLOYEE FAILS
TO PROVIDE THE COVERAGE, AND FOR OTHER PURPOSES
October 6, (legislative day, September 22), 2000.--Ordered to be
printed
COMMITTEE ON GOVERNMENTAL AFFAIRS
FRED THOMPSON, Tennessee, Chairman
WILLIAM V. ROTH, Jr., Delaware JOSEPH I. LIEBERMAN, Connecticut
TED STEVENS, Alaska CARL LEVIN, Michigan
SUSAN M. COLLINS, Maine DANIEL K. AKAKA, Hawaii
GEORGE VOINOVICH, Ohio RICHARD J. DURBIN, Illinois
PETE V. DOMENICI, New Mexico ROBERT G. TORRICELLI, New Jersey
THAD COCHRAN, Mississippi MAX CLELAND, Georgia
ARLEN SPECTER, Pennsylvania JOHN EDWARDS, North Carolina
JUDD GREGG, New Hampshire
Hannah S. Sistare, Staff Director and Counsel
Dan G. Blair, Senior Counsel
Judith B. White, Detailee, Subcommittee on International
Security, Proliferation, and Federal Services
Joyce A. Rechtschaffen, Minority Staff Director and Counsel
Lawrence B. Novey, Minority Counsel
Nanci E. Langley, Minority Deputy Staff Director,
Subcommittee on International Security, Proliferation, and Federal
Services
Darla D. Cassell, Chief Clerk
Calendar No. 942
106th Congress Report
SENATE
2d Session 106-492
======================================================================
FEDERAL EMPLOYEES HEALTH BENEFITS CHILDREN'S EQUITY ACT OF 1999
_______
October 6 (legislative day September 22), 2000.--Ordered to be printed
_______
Mr. Thompson, from the Committee on Governmental Affairs, submitted the
following
R E P O R T
[To accompany S. 1688]
The Committee on Governmental Affairs, to which was
referred the bill (S. 1688) to amend chapter 89 of title 5,
United States Code, relating to the Federal Employees Health
Benefits Program, to enable the Federal Government to enroll an
employee and the family of the employee in the program when a
State court orders the employee to provide health insurance
coverage for a child of the employee, but the employee fails to
provide the coverage, and for other purposes, having considered
the same, reports favorably thereon without amendment and
recommends that the bill do pass.
CONTENTS
Page
I. Purpose..........................................................1
II. Background.......................................................2
III. Legislative History..............................................3
IV. Section-by-Section Analysis......................................4
V. Regulatory Impact Statement......................................3
VI. Congressional Budget Office Cost Estimate........................4
VII. Changes in Existing Law..........................................8
I. Purpose
S. 1688, as reported by the Committee on Governmental
Affairs, amends chapter 89 of title 5, United States Code,
relating to the Federal Employees Health Benefit (FEHBP)
Program, to enable the Federal Government to enroll an employee
and the family of the employee in the Program when a State
court orders the employee to provide health insurance coverage
for a child of the employee but the employee fails to provide
the coverage.
This legislation ensures that a child of a Federal employee
is covered in accordance with a court or administrative order
even though the same order would ensure coverage for the child,
if the child's parent were employed by an employer other than
the Federal government.
II. Background
The Omnibus Reconciliation Act of 1993 required each State
to pass a law requiring an employer to enroll a child in an
employee's group health plan when a court orders the employee
to provide health insurance coverage for the child but the
employee fails to provide the coverage. The FEHBP law provides
that the Federal employee ``may enroll'' in an FEHBP plan
``either as an individual or for self and family'' coverage.
The law does not allow an employing agency to elect coverage on
the employee's behalf. Further, the FEHBP law generally
preempts State law with regard to coverage and benefits.
Therefore, a Federal agency currently is unable to ensure that
a child is covered in accordance with a court or administrative
order even though the same order would ensure coverage for the
child, if the child's parent were employed by an employer other
than the Federal government.
S. 1688 provides Federal agencies the authority to enroll
an employee in family coverage, if such action is necessary to
enforce compliance with a court order requiring the employee to
provide health insurance coverage for a child.
III. Legislative History
S. 1688 was introduced by Senators Carl Levin and Daniel
Akaka on October 5, 1999 and referred to the Committee on
Governmental Affairs. On November 17, 1999, the bill was
referred to the Subcommittee on International Security,
Proliferation, and Federal Services. By unanimous consent, the
full Committee took up consideration of S. 1688 at its
September 27, 2000 business meeting. No hearings were held on
the bill.
On September 27, 2000, the Committee considered S. 1688. No
amendments were offered and S. 1688 was ordered to be reported
favorably by voice vote. Committee members present were
Senators Roth, Stevens, Collins, Voinovich, Domenici, Cochran,
Levin, Akaka, Durbin, Torricelli, Cleland, Edwards, and
Thompson.
A House companion bill, H.R. 2842, introduced by
Representative Elijah Cummings, on March 13, 1999, was passed
by the House of Representatives under suspension of the rules
on September 19, 2000. It was referred to the Committee on
September 20, 2000.
IV. Section-by-Section Analysis
Section 1. Short Title
Section one provides the bill's short title, the ``Federal
Employees Health Benefits Children's Equity Act of 1999.''
Section 2. Enrollment of Certain Employees and Families
Section two amends 5 U.S.C. 8905 by adding a new subsection
(f) to allow an employee who is not enrolled in an FEHBP plan
to enroll in a plan for self and family coverage if the
employee is required by a court order or an administrative
order to provide health insurance coverage for a child who
meets the definition of ``member of family'' under 5 U.S.C.
8901(5). Moreover, if such an employee fails to enroll and
cannot show that the child is covered by other health
insurance, this amendment would require the employing agency to
enroll the employee for self and family under the low-option
Service Benefit Plan (currently Blue Cross/Blue Shield).
The new subsection (f) also prescribes similar treatment
for a similarly situated employee who is enrolled as an
individual in an FEHBP plan. The amendment would ensure that,
under the circumstances described in the preceding paragraph,
the employee's enrollment would be changed to a self and family
enrollment that would cover the child. An employee who did not
change his or her enrollment voluntarily would be enrolled for
self and family in the same plan in which the employee was
already covered as an individual, unless that plan does not
provide full benefits and services where the child resides. In
the latter event, the employee would be enrolled for self and
family under the low-option Service Benefit Plan.
Lastly, the new subsection (f) would bar the employee from
discontinuing the self and family enrollment as long as the
order remains in effect and the child continues to meet the
definition in section 8901(5) or unless the employee can show
that the child has other health insurance.
Section 3. Federal Employees' Retirement System Annuity Supplemental
Computation
This section amends 8421a(b) of title 5 with respect to
FERS annuitants who retire before age 62 and who receive a
special annuity supplement. The supplement must be reduced by
$1 for every $2 of earnings that exceed a minimum level
established by the Social Security Administration.
The section delays the adjustment of the annuity supplement
until July 1 to allow annuitants and OPM time to gather and
process the necessary information. This section does not
deprive any annuitant of a benefit. It simply ensures that the
correct level of benefits is being paid.
V. Regulatory Impact Statement
S. 1688 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act. With a
greater number of children enrolled in the Federal Employee
Health Benefits Program, states would realize decreased
expenditures in Medicaid and the State Children's Health
Insurance Program.
VI. Congressional Budget Office Cost Estimate
U.S. Congress,
Congressional Budget Office,
Washington, DC, October 4, 2000.
Hon. Fred Thompson,
Chairman, Committee on Governmental Affairs, U.S. Senate, Washington,
DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 1688, the Federal
Employees Health Benefits Children's Equity Act of 1999.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Charles L.
Betley.
Sincerely,
Barry B. Anderson
(For Dan L. Crippen, Director).
Enclosure.
S. 1688--Federal Employees Health Benefits Children's Equity Act of
1999
Summary: Under current law, the Federal Employees Health
Benefits program (FEHB) has no authority to enforce compliance
with a child support order to provide health insurance for an
employee's children. S. 1688 would authorize the mandatory
enrollment into family plan coverage and the deduction of
premium contributions from the salaries of such employees who
otherwise would not participate in FEHB or employees who elect
self-only coverage, unless the employee provides documentation
that insurance is provided from another source or the support
order has ended.
Because the federal government contributes larger amounts
to the premiums for employees with family coverage, the bill
would increase discretionary costs of benefits for federal
employees by about $3 million in 2001 and $56 million over the
2001-2005 period.
Government contributions to FEHB for federal retirees are
considered mandatory spending. Because some employees would
retire while still subject to support orders, S. 1688 would
increase the FEHB costs of annuitants and therefore would be
subject to pay-as-you-go procedures. However, the mandatory
costs in FEHB would be less than $500,000 in 2001, and would
sum to about $4 million over the 2001-2005 period. Direct
spending would increase for the health benefits of postal
employees and annuitants subject to the bill's provisions, but
these costs are classified as off-budget and would not be
subject to pay-as-you-go procedures.
The bill would also reduce mandatory federal and state
outlays for Medicaid and the State Children's Health Insurance
Program (SCHIP) because some children with parents who are not
complying with medical support orders would end up on those
programs' rolls, with mandatory federal savings of about $16
million over the 2001-2005 period. Finally, the bill would
modify the earnings test that applies to supplemental benefits
paid by the Federal Employees' Retirement System (FERS), but
this provision would not have significant budgetary effects
over the 2001-2005 period.
The bill includes no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA).
With a greater number of children enrolled in the FEHB
programs, states would realize decreased expenditures in
Medicaid and SCHIP totaling about $12 million over the 2001-
2005 period.
Estimated cost to the Federal Government: The estimated
budgetary impact of S. 1688 is shown in the following table.
The bill would add to discretionary spending by all federal
agencies for employee health benefits and would affect
mandatory spending in budget functions 550 (health) and 600
(income security).
----------------------------------------------------------------------------------------------------------------
Outlays by fiscal year, in millions of
dollars--
--------------------------------------------
2001 2002 2003 2004 2005
----------------------------------------------------------------------------------------------------------------
CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Incremental cost of family coverage under FEHB for more federal 3 7 12 16 18
employees.........................................................
CHANGES IN DIRECT SPENDING
Postal Service contributions to FEHB............................... 2 4 0 0 0
FEHB payments for retirees......................................... * * 1 1 2
Medicaid and SCHIP................................................. -1 -2 -3 -5 -5
--------------------------------------------
Total changes \1\.............................................. * 2 -2 -4 -3
----------------------------------------------------------------------------------------------------------------
\1\ In addition to the FEHB, Medicaid, and SCHIP effects, the bill would affect direct spending under the
Federal Employees' Retirement System, but CBO estimates that those effects would be less than $500,000 a year
over the 2001-2005 period.
* = less than $500,000.
Note: Components may not add to totals because of rounding.
Basis of estimate: CBO's estimate of the federal costs of
S. 1688 is based on assumptions about the number of employees
who would be required to obtain family coverage who do not
already do so, and the federal share of the change in spending
by plans participating in FEHB for newly covered employees and
children. In addition, CBO estimated savings for Medicaid and
SCHIP based on assumptions about the number of children who
would be covered by those programs under current law, but who
would be covered by FEHB under the bill. Finally, the estimate
of savings from the FERS annuity supplement policy change is
based on the number of FERS retirees subject to the earnings
test and the increased recoveries that can be expected from
applying the tests over a longer period.
Spending subject to appropriation
S. 1688 would increase the number of federal employees who
obtain FEHB family coverage because they are required to do so
by a child support order by an estimated 11,500 workers. Data
from the Census Bureau (Current Population Survey, April 1996
supplement) indicates that about 1 percent of the population,
ages 18 through 64, fails to comply with a medical support
order. Assuming that the rate of noncompliance among federal
employees is similar to the national rate, after adjusting for
the different age distribution of federal workers, CBO
estimates that about 23,000 federal employees (not including
postal workers) are not in compliance with a medical support
order. Because administrative barriers in the child support
enforcement system limit how many support orders are enforced,
CBO expects that about half of those federal employees would be
brought into compliance with medical support orders.
CBO also expects that it would take about four years to
identify and bring into compliance those 11,500 employees.
Because federal employment is likely to remain close to current
levels over the next five years, we assume that newly applied
medical support orders would be approximately balanced by
orders that end or by other employee attrition.
Based on information from the Office of Management and
Budget (OPM), CBO estimates that the costs incurred by FEHB
plans for single-parent families average two-thirds of the cost
for two-parent families. For the purposes of this estimate, we
assume that 90 percent of the employees brought into compliance
with medical support orders under S. 1688 have self-only
coverage under current law. For those employees, the estimated
increase in federal spending would be about $900 per family
policy in 2001, which is the difference between the federal
share of the annual premium for self-only coverage and two-
thirds of the federal share of the premium for family coverage,
on average. Once expected compliance is fully phased-in (in
2004), the incremental cost of FEHB coverage for conversion
from self-only to family coverage would cost about $9 million a
year in 2001 dollars.
CBO assumes that the remaining 10 percent of the affected
employees would be brought into compliance with medical support
orders would have no FEHB coverage under current law. For those
employees, the estimated effect on federal spending in 2001
would be about $3,500 per family policy, which is two-thirds of
the federal share of the average annual premium for family
coverage. The annualized cost of providing family coverage for
those employees with no FEHB coverage under current law would
be about $4 million a year in 2001 dollars.
Assuming that agency appropriations would be increased to
maintain current levels of staffing and to reflect anticipated
inflation in the cost of FEHB coverage, CBO estimates that
implementing S. 1688 would increase discretionary spending for
FEHB by $3 million in 2001 and by $56 million over the 2001-
2005 period.
Direct spending
Health Care Costs. Enacting S. 1688 would increase costs to
the U.S. Postal Service by about $2 million in fiscal year 2001
and $4 million in 2002 because an estimated 6,000 postal
employees would be subject to medical support orders. By 2003,
CBO anticipates that the Postal Service would increase postal
rates and offset such costs. Postal Service spending and
collections are classified as off-budget and thus the charges
incurred by S. 1688 would not be subject to pay-as-you-go
procedures.
A federal employee would be subject to the mandatory family
enrollment until a support order expires. Some of the 11,500
employees affected by the bill would be required to cover their
children after they retire from active federal employment,
shifting the classification of costs from discretionary to
mandatory spending. However, there are fewer support orders for
older employees, and most children covered under such orders
are likely to be close to reaching adulthood. Based on the rate
of retirement of federal employees and assumptions about the
rate of expiration of support orders, CBO estimates that the
increase in direct spending by FEHB for payments to cover
affected retirees would be negligible in 2001, but would total
$4 million over the 2001-2005 period.
The bill would reduce spending by Medicaid and SCHIP. CBO
estimates that 15 percent of the 17,500 employees and postal
workers would have children who would enroll in those programs
under current law if medical support orders are not enforced.
(That is slightly lower than the estimated rate for the general
population, reflecting an assumption that the children of
federal workers are somewhat less likely to have low-enough
incomes to qualify for such programs.) CBO estimates the
Medicaid savings based on the average costs per child,
multiplied by an average of 1.5 children covered under each
support order. After accounting for anticipated inflation, the
estimated federal share of Medicaid savings would be $1 million
in 2001 and $16 million over the 2001-2005 period.
Some SCHIP savings also would occur, but CBO estimates that
such savings would be less than $500,000 annually.
Modify Earnings Test for FERS Annuity Supplement. The
Federal Employees' Retirement System pays supplemental benefits
to certain nondisabled retirees until they reach age 62 and
become eligible for Social Security. These supplemental
benefits are subject to an earnings test. Individuals with
earnings that exceed a certain level in a calendar year (about
$10,000 in 2000) have their supplemental benefits reduced
during the 12-month period starting on January 1 of the
following year. S. 1688 would make reductions from the earnings
test effective for the 12-month period starting on July 1 of
the following year.
Under the current earnings test, OPM pays unreduced
supplemental benefits for the first two or three months of each
year until it receives the wage information needed to
administer the earnings test. This inevitably leads to
overpayments, which OPM does not try to recover. The bill's
provisions would increase spending on supplemental benefits in
2001 (a one-time cost of moving the effective date to July 1)
before yielding savings in later years by eliminating
overpayments.
According to OPM, about 700 retirees currently have their
supplemental benefits reduced because of the earnings test.
(this figure will raise in the future as the number of FERS
retirees grows.) CBO estimates that the earnings test reduces
their supplemental benefits by 50 percent--a reduction of about
$100 per month for current retirees. CBO estimates that S. 1688
would increase spending on supplemental benefits by about
$240,000 in 2001 and reduce spending in later years. Annual
savings would grow slowly and would reach $1 million in 2010.
Pay-as-you-go considerations: The Balanced Budget and
Emergency Deficit Control Act sets up pay-as-you-go procedures
for legislation affecting direct spending or receipts. The net
changes in outlays that are subject to pay-as-you-go procedures
are shown in the following table. For the purposes of enforcing
pay-as-you-go procedures, only the effects in the budget year
and the succeeding four years are counted.
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-----------------------------------------------------------------------------------------
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
--------------------------------------------------------------------------------------------------------------------------------------------------------
Changes in outlays............................................ -1 -2 -3 -4 -3 -4 -4 -4 -4 -4
Changes in receipts........................................... Not Applicable
--------------------------------------------------------------------------------------------------------------------------------------------------------
Intergovernmental and private-sector impact: S. 1688
contains no intergovernmental or private-sector mandates as
defined in UMRA. With a greater number of children enrolled in
the FEHB program, states would realize decreased expenditures
in Medicaid and SCHIP totaling about $12 million over the 2001-
2005 period.
Previous CBO cost estimate: On May 16, 2000, CBO
transmitted a cost estimate for H.R. 2842, a similar bill
ordered reported by the House Committee on Government Reform on
March 30, 2000. The two bills are essentially identical, as are
our cost estimates.
Estimate prepared by: Federal Costs: FEHB--Charles L.
Betley, Child Support--Sheila Dacey, Other Costs--Eric Rollins,
impact on state, local, and tribal governments: Leo Lex, impact
on the private sector: Paige Piper/Bach.
Estimate approved by: Peter H. Fontaine, Deputy Assistant
Director for Budget Analysis.
VII. Changes in Existing Law
In compliance with paragraph 12 of rule XXVI of the
Standing Rules of the Senate, changes in existing law made by
S. 1688, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, and existing law in which no
change is proposed is shown in roman):
UNITED STATES CODE
TITLE 5--GOVERNMENT ORGANIZATION AND EMPLOYEES
* * * * * * *
PART III--EMPLOYEES
* * * * * * *
Subpart G--Insurance and Annuities
* * * * * * *
CHAPTER 84--FEDERAL EMPLOYEES' RETIREMENT SYSTEM
* * * * * * *
SEC. 8421A. REDUCTIONS OF ACCOUNT OF EARNINGS FROM WORK PERFORMED WHILE
ENTITLED TO AN ANNUITY SUPPLEMENT
(a) The amount of the annuity supplement to which an
individual is entitled under section 8421 for any month
(determined without regard to subsection (c) of such section)
shall be reduced by the amount of any excess earnings of such
individual which are required to be charged to such supplement
for such month, as determined under subsection (b).
(b) The amount of an individual's excess earnings shall be
charged to months as follows:
(1) * * *
* * * * * * *
(5) Notwithstanding paragraphs (1) through (4), the
reduction required by subsection (a) shall be effective
during the 12 month period beginning on the first day
of the seventh month after the end of the calendar year
in which the excess earnings were earned.
* * * * * * *
CHAPTER 89--HEALTH INSURANCE
* * * * * * *
SEC. 8905. ELECTION OF COVERAGE
(a) * * *
(b) * * *
* * * * * * *
(f)(1)(A) An unenrolled employee who is required by a court
or administrative order to provide health insurance coverage
for a child who meets the requirements of section 8901(5) may
enroll for self and family coverage in a health benefits plan
under this chapter.
(B) The employing agency of an employee described under
subparagraph (A) shall enroll the employee in a self and family
enrollment in the option which provides the lower level of
coverage under the service benefit plan if the employee--
(i) fails to enroll for self and family coverage in a
health benefits plan that provides full benefits and
services in the location in which the child resides;
and
(ii) does not provide documentation demonstrating
that the required coverage has been provided through
other health insurance.
(2)(A) An employee who is enrolled as an individual in a
health benefits plan under this chapter and who is required by
a court or administrative order to provide health insurance
coverage for a child who meets the requirements of section
8901(5) may change to a self and family enrollment in--
(i) the health benefits plan in which the employee is
enrolled; or
(ii) another health benefits plan under this chapter.
(B) The employing agency of an employee described under
subparagraph (A) shall change the enrollment of the employee to
a self and family enrollment in the plan in which the employee
is enrolled if--
(i) such plan provides full benefits and services in
the location where the child resides; and
(ii) the employee--
(I) fails to change to a self and family
enrollment; and
(II) does not provide documentation
demonstrating that the required coverage has
been provided through other health insurance.
(C) The employing agency of an employee described under
subparagraph (A) shall change the coverage of the employee to a
self and family enrollment in the option which provides the
lower level of coverage under the service benefit plan if--
(i) the plan in which the employee is enrolled does
not provide full benefits and services in the location
in which the child resides; or
(ii) the employee fails to change to a self and
family enrollment in a plan that provides full benefits
and services in the location where the child resides.
(3)(A) Subject to subparagraph (B), an employee who is
subject to a court or administrative order described under this
section may not discontinue the self and family enrollment in a
plan that provides full benefits and services in the location
in which the child resides for the period that the court or
administrative order remains in effect if the child meets the
requirements of section 8901(5) during such period.
(B) Enrollment described under subparagraph (A) may be
discontinued if the employee provides documentation
demonstrating that the required coverage has been provided
through other health insurance.
[(f)] (g) An employee, annuitant, former spouse, or person
having continued coverage under section 8905a of this title
enrolled in a health benefits plan under this chapter may
change his coverage or that of himself and members of his
family by an application filed within 60 days after a change in
family status or at other times and under conditions prescribed
by regulations of the office.
[(g)] (h)(1) Under regulations prescribed by the Office,
the Office shall, before the start of any contract term in
which--
(A) * * *
(B) * * *
(C) * * *
provide a period of not less than 3 weeks during which any
employee, annuitant, former spouse, or person having continued
coverage under section 8905a of this title enrolled in a health
benefits plan described by such section shall be permitted to
transfer that individual's enrollment to another such plan, or
to cancel such enrollment, at such other times and subject to
such conditions as the Office may prescribe in regulations.
(2) * * *
(3) * * *
* * * * * * *