Federal Short-Term Disability Insurance

Summary#

This bill would create a voluntary short-term disability insurance program for Federal employees to cover non-work-related disabilities and certain family-related leave. The Office of Personnel Management (OPM) Director would set up the program and contract with private insurance carriers. Coverage would apply to short-term injury or disability not covered by workers' compensation (chapter 81), leave to care for or make arrangements to care for a family member (including the birth of a child), and leave to make adoption or foster care arrangements.

The program would require fully insured contracts with carriers licensed in all States. Contracts would run 3 to 7 years and could be automatically renewed yearly. Carriers must pay benefits promised in the contract, run internal claims procedures, and offer independent third-party dispute review if needed. The bill preempts most State, territorial, tribal, or local laws governing such insurance and bars state or local taxes on premiums.

Benefits would be equal to the lesser of 70 percent of the employee's annual pay (excluding bonuses) or 70 percent of GS-15 maximum pay, payable for up to 12 months per qualifying event. Employees would choose a waiting period before benefits begin: 8, 31, 91, or 181 days. Choosing an earlier waiting period would require paying a higher premium. The program would not allow preexisting condition exclusions, and carriers could not charge higher premiums or deny coverage because of a preexisting condition. Benefits from this program must offset other benefits for the same condition.

Employees would pay 100 percent of premiums. Premium amounts would be withheld from pay. OPM may use the Employees' Life Insurance Fund initially to pay implementation costs and would be reimbursed by the carrier. Carriers must contribute to an administrative account to cover OPM's ongoing administration costs. The law would apply to contracts that take effect in the first calendar year beginning more than 18 months after enactment.

What it means for you#

  • Federal employees could enroll in a voluntary non-work short-term disability plan.
  • If enrolled, you would pay the full premium, taken from your pay.
  • If you become disabled for a covered non-work reason, or need leave for certain family events, you could receive up to 70% of your pay (capped at the GS-15 rate) for up to 12 months per event.
  • You would choose how long to wait before benefits start (8, 31, 91, or 181 days); shorter waits mean higher premiums.
  • The plan cannot exclude you for a preexisting condition or raise your premium for one.
  • State insurance rules would largely not apply to these contract terms because the bill says federal contract terms preempt most state laws.

Expenses#

  • Employees would pay 100% of the insurance premiums; premiums would be withheld from pay.
  • OPM may use the Employees' Life Insurance Fund for initial setup costs and would be reimbursed by the carrier.
  • Carriers must contribute periodically to an administrative account to cover OPM's ongoing program costs.
  • No publicly available information on overall program cost, budget impact, or projected premium levels is provided in the bill text.

Proponents' View#

No publicly available information.

Opponents' View#

No publicly available information.