E7-4695. Federal Long Term Care Insurance Program: Miscellaneous Changes, Corrections, and Clarifications

AGENCY:

Office of Personnel Management.

ACTION:

Final regulation.

SUMMARY:

The Office of Personnel Management (OPM) is issuing a final rule to make miscellaneous changes, corrections, and clarifications to the Federal Long Term Care Insurance Program (FLTCIP) regulations.

DATES:

Effective Date: April 16, 2007.

FOR FURTHER INFORMATION CONTACT:

Edward M. DeHarde, Center for Employee and Family Support Policy, Strategic Human Resources Policy Division, Office of Personnel Management, 1900 E Street, NW., Washington, DC 20415; or call him at 202-606-0004.

SUPPLEMENTARY INFORMATION:

The current FLTCIP regulations were published in the Federal Register at 70 FR 30605, May 27, 2005. In those regulations OPM replaced references to “Federal civilian and Postal employees and members of the uniformed services” with “active workforce member” in several places. We are making a similar change in two additional places: § 875.405 and § 875.410. We are also correcting a section reference in § 875.209 of the previously published regulations.

In addition, § 875.408 of the FLTCIP regulations discusses incontestability, a provision that allows coverage based on an erroneous application to continue under certain circumstances. The FLTCIP contractor often doesn't learn that coverage is based on an erroneous application until someone files a claim, and the contractor becomes aware that the information on the individual's application differed from what is shown in the individual's medical records. If the erroneous coverage has been in effect less than two years, or if the application contained knowingly false or misleading information, the contractor may rescind (void) the coverage and refund the individual's premiums. Section 875.104 of the FLTCIP regulations contains procedures for resolving disputes concerning eligibility for benefits and payment of claims. These final regulations clarify that the claims dispute procedures apply only to persons who have valid coverage under the Program. They do not apply to individuals whose erroneous coverage is rescinded.

A proposed rule was published to amend 5 CFR part 875 in the Federal Register at 71 FR 19459, April 14, 2006. OPM requested comments by June 13, 2006. We received one comment by that date, from an FLTCIP enrollee. The issues raised by this commenter are discussed below.

The commenter did not address the miscellaneous changes, corrections, and clarifications that were contained in the proposed regulation. Instead, the commenter suggested that OPM should specifically list in the regulations which injuries qualify for coverage under FLTCIP to ensure that enrollees with similar injuries receive similar coverage. The comment received is beyond the scope of the proposed change to FLTCIP regulations. In addition, coverage under FLTCIP is not based on an enrollee's injury or medical diagnosis; it is based on an enrollee's established inability to perform defined activities of daily living or an enrollee's severe cognitive impairment. Therefore, for the reasons supplied in the proposed rule, the proposed rule amending 5 CFR part 875 which was published in the Federal Register at 71 FR 19459, April 14, 2006, is adopted as a final rule without change.

Executive Order 12866, Regulatory Review

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

Regulatory Flexibility Act

I certify that these regulations will not have a significant economic impact on a substantial number of small entities because they affect only enrollees in the Federal Long Term Care Insurance Program.

List of Subjects in 5 CFR Part 875

• Administrative practices and procedures
• Employee benefit plans
• Government contracts
• Government employees
• Health insurance
• Military personnel
• Retirement

Office of Personnel Management.

Linda M. Springer,

Director.

Accordingly, OPM is amending 5 CFR part 875, as follows:

PART 875—FEDERAL LONG TERM CARE INSURANCE PROGRAM

1. The authority citation for 5 CFR part 875 continues to read as follows:

Authority: Authority: 5 U.S.C. 9008.

2. In § 875.104 add paragraph (f) to read as follows:

§ 875.104

What are the steps required to resolve a dispute involving benefit eligibility or payment of a claim?

* * * * *

(f) The procedures described in paragraphs (a), (b), (c), (d), and (e) of this section apply only if you have valid coverage under the FLTCIP. If the Carrier determines that your coverage was based on an erroneous application and voids the coverage as described in § 875.408 of this part, these provisions do not apply. The Carrier will provide you with information on your review rights in its rescission letter (letter voiding your coverage).

3. In § 875.209 revise the last sentence of paragraph (b) to read as follows:

§ 875.209

How do I demonstrate that I am eligible to apply for coverage?

* * * * *

(b) * * * The incontestability provisions in § 875.408 do not apply to this section.

4. In § 875.405 revise the first sentence of paragraph (a)(1) to read as follows:

§ 875.405

If I marry, may my new spouse apply for coverage?

(a)(1) If you are an active workforce member and you have married, your spouse is eligible to submit an application for coverage under this section within 60 days from the date of your marriage and will be subject to the underwriting requirements in force for the spouses of active workforce members during the most recent open season. * * *

* * * * *

5. In § 875.408 revise paragraph (a) to read as follows:

§ 875.408

What is the significance of incontestability?

(a) Incontestability means coverage issued based on an erroneous application may remain in effect. Such coverage will not remain in effect under any of the following conditions:

(1) If your coverage has been in force for less than 6 months, the Carrier may void your coverage upon a showing that information on your signed application that was material to your approval for coverage is different from what is shown in your medical records.

(2) If your coverage has been in force for at least 6 months but less than 2 years, the Carrier may void your coverage upon a showing that information on your signed application that was material to your approval for coverage is different from what is shown in your medical records and pertains to the condition for which benefits are sought.

(3) After your coverage has been in effect for 2 years, the Carrier may void your coverage only upon a showing that you knowingly and intentionally made a false or misleading statement or omitted information in your signed application for coverage regarding your health status that was material to your approval for coverage.

(4) If your coverage is voided, as described in paragraph (a)(1), (a)(2), or (a)(3) of this section, no claims will be paid. In addition, the provisions of § 875.104 relating to the procedures for resolving a dispute involving benefits eligibility or claims denials do not apply to your situation. You may request a review by the Carrier if you believe that your coverage was voided in error. You must submit your request in writing to the Carrier within 30 days of the date of the rescission letter (letter voiding your coverage).

* * * * *

6. In § 875.410 revise the first sentence to read as follows:

§ 875.410

May I continue my coverage when I leave Federal or military service?

If you are an active workforce member, your coverage will automatically continue when you leave active service, as long as the Carrier continues to receive the required premium when due. * * *