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Insurance Services Programs

FEHB Handbook

Leave Without Pay Status and Insufficient Pay
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COVERAGE

Continued Coverage

Generally, your enrollment may continue for up to 365 days of leave without pay unless you want it to terminate or do not respond to your employing office's notice about continuing coverage during a period in leave without pay status. You must pay the employee share of premiums for every pay period that your enrollment continues.

Termination

Your enrollment will terminate at the end of the pay period which includes the 365th day in consecutive leave without pay status. You will have a 31-day extension of coverage and conversion rights.

4-Month Rule

The 365 days of continued enrollment during leave without pay status is not considered to be broken by any period(s) in pay status of less than 4 consecutive months. If you are in leave without pay status and return to pay status for less than 4 consecutive months, then return to leave without pay status, you do not begin a new 365-day period of continued enrollment. Instead, the second (and any other) period in leave without pay status is treated as continuation of the first. If you are in a pay status during any part of a pay period, the entire pay period is not counted toward the 365-day limit.

If you return to pay status for at least 4 consecutive months during which you are paid for at least part of each pay period, you are entitled to begin a new 365-day period of continued enrollment while in leave without pay status.

Example 1

Arthur is in leave without pay status on January 1, 1999; returns to pay status on July 1, 1999; returns to leave without pay status on September 1, 1999; returns to pay status on January 1, 2000; and then back to leave without pay status on March 1, 2000.

Since each return to pay status was for less than 4 months, his enrollment terminates at the end of the pay period that includes May 1, 2000, the 365th day in continuous leave without pay status.

Example 2

Francine is in leave without pay status and returns to work on one occasion. The period in pay status is over 4 months. She is in leave without pay status on January 1, 1999; pay status on July 1, 1999; and leave without pay status on January 1, 2000 (a new 365-day eligibility period begins).em>

Her enrollment terminates at the end of the pay period that includes December 31, 2000, the 365th day in continuous leave without pay status.

Return to Pay Status After 365 Days in Leave Without Pay Status

If your enrollment terminated because you exhausted the 365 days continuation of coverage while in leave without pay status, you must elect to enroll when you return to pay status (if you are eligible). If you enroll, and then work less than 4 months, your enrollment must again be terminated on the last day of your last pay period in pay status. You are not eligible for another 365-day period of continued coverage unless you are in pay status for at least 4 months.

Your employing office should have a follow-up system that will trigger an enrollment termination at the end of the pay period that includes the 365th day of leave without pay status.

WHEN YOU ENTER LEAVE WITHOUT PAY OR INSUFFICIENT PAY STATUS

Employing Office Notification

Employing offices must be able to identify through timekeeping/payroll data all employees in leave without pay status and employees with insufficient pay to cover the premiums. Tracking such employees via the SF 50 is not reliable since one is not issued when an employee enters leave without pay status for less than 30 days or when an employee has insufficient pay.

Your employing office must give you a written notice as soon as it becomes aware that premium payments cannot be withheld from your salary because you are in leave without pay status or your pay is insufficient to cover your premiums. Your employing office may use the sample notice provided here or any other notice that adequately explains your options. This notice constitutes due process.

The notice:

  • informs you of your options regarding continuing or terminating your enrollment;
  • explains the effect of a termination;
  • explains that if you decide to continue coverage, you must agree to pay the premium directly, incur a debt, or it may give you the option to pre-pay premiums;
  • provides a space for you to continue or terminate your enrollment;
  • states that if you do not return the notice within 31 days after receiving the notice (45 days if you live overseas), your enrollment will automatically terminate.

If your employing office cannot give you the written notice in person, it must send the notice by first class mail. Electronic mail cannot be used to give the written notice because you may not be at your desk to receive it. Your receipt is especially important because if you do not timely respond, your coverage will be terminated.

Your employing office must keep track of whether you signed and returned the notice within the required time frame. A notice that is mailed is considered to be received by you 5 days after the date of the notice. When you mail the signed form, the date of the postmark is considered to be the date the notice is returned to your employing office.

Sample Notice

FEDERAL EMPLOYEE
HEALTH BENEFITS (FEHB) OPTIONS
WHILE IN LEAVE WITHOUT PAY
OR INSUFFICIENT PAY STATUS

Name of Employee:

Date:

You must respond within 31 days (45 days for employees residing overseas) of this notice or your FEHB enrollment will automatically terminate.

Each pay period you are enrolled in the FEHB Program, you are responsible for payment of the employee share of the premium. When you enter leave without pay status, or your pay is insufficient to cover the premium, you must

  • terminate the enrollment; or
  • continue the enrollment and agree to pay the premium or incur a debt or prepay premiuims (optional).

TERMINATING THE ENROLLMENT: If you elect to terminate your enrollment (or the enrollment automatically terminates), the termination will take effect at the end of the last pay period in which premiums were withheld from pay. FEHB coverage will continue at no cost to you for an additional 31 days. During the 31 days, you and your covered family members may convert to an individual contract with your insurance carrier. The termination is not considered a break in the continuous coverage necessary for continuing FEHB coverage into retirement. However, the period during which the termination is in effect does not count toward satisfying the required 5 years of continuous coverage. When you return to pay and duty status, or at the end of the first pay period your pay becomes sufficient to cover your premium, you must reenroll within 60 days if you want FEHB coverage.

CONTINUING THE ENROLLMENT AND AGREEING TO PAY THE PREMIUM: If you elect to continue your coverage, you must elect to pay the premiums directly or to incur a debt in the amount of the unpaid premiums, or to pre-pay premiums (optional). If you elect to pay directly, mail a check or money order payable to (name) . Include on the check your name, social security number, a note that the payment is for "FEHB premium", and the pay period for which the payment is being made. Mail to: (address) .

If you elect to incur a debt, or if you elect to pay directly but fail to pay the entire amount due, you will receive a notice stating the total amount due. The notice will be sent when you return to pay status, your pay becomes sufficient, or you separate from employment. By electing to continue coverage you agree to repay the resulting debt in full and to allow the debt to be collected by withholdings from any salary payments to you from the Federal Government, up to (amount) . If the amount due cannot be withheld in full from salary, it will be recovered from a lump sum payment of accrued leave, income tax refunds, amounts payable under the Civil Service Retirement System or Federal Employees Retirement System, or any other source normally available for the recovery of a debt due the United States.

If you elect to pre-pay your premiums, the amount you prepay in advance may either be deducted from your pay or you may pay out-of-pocket.

Please check the appropriate space(s) below, sign, and return this notice to your employing office at: (address) .

After reading and understanding the above, I elect to:

  • Continue the enrollment (Check one):

_________ Submit direct payments

_________ Incur a debt

_________ Pre-pay premium

 

____________________________
(Signature)

____________________________

(Date)

  • Terminate the enrollment

____________________________
(Signature)

____________________________

(Date)

Refer questions to: (Name)
(Telephone)

WHEN YOU CHOOSE TO CONTINUE YOUR ENROLLMENT

If you elect to continue coverage during leave without pay status or insufficient pay, you can choose either to pay the premiums directly or to incur a debt. Your employing office may also offer a pre-pay option.

You Must Pay the Employee Share

You must still pay the employee share of health benefits premiums if you are in leave without pay status for an entire pay period, or if your pay during a pay period doesn't cover the full amount of withholdings due, unless you want your enrollment to terminate. Your employing office must notify you of the choices available to you and provide you with a method to make direct premium payments.

If you elect to continue your enrollment but you don't make direct premium payments, your employing office must advance you enough pay to cover the employee share of the premiums, as explained below. See "Employing Office Notification" for notification requirements when you enter leave without pay status or when your pay becomes insufficient to make the withholdings.

Pay-As-You-Go Option

Under this option, you pay your share of FEHB premiums directly to your employing agency while on leave without pay. These payments generally will be made with after-tax monies, since there is no pay from which to make deductions.

If you choose this option, you are agreeing that if you do not pay the premiums, you will be incurring a debt to your employing office. You will have to repay this amount once you return to pay status. If you do not return to work or your employing office cannot recover the debt in full from your salary, it may recover the debt from:

  • a lump sum payment of accrued leave;
  • income tax refunds;
  • amounts payable under the Civil Service Retirement System or Federal Employees Retirement System; or
  • any other source normally available for the recovery of a debt due the United States.

Catch-up Option

Under the catch-up option, you agree in advance of the leave without pay period that:

  • You will continue FEHB coverage while on leave without pay;
  • Your employer will advance your share of FEHB premiums to OPM during your leave without pay period; and
  • You will repay the advanced amounts when you return from leave without pay.

The repayment of the amount owed will be treated on a pre-tax basis, if it's deducted from pay and you participate in premium conversion at the time the deduction is made.

If you choose to repay the amount owed to your agency directly out-of-pocket your taxable income is not reduced.

Prepay Option

Your agency may (but is not required to) offer you the option to prepay your FEHB premiums from salary before you go on a period of leave without pay.

The amount of FEHB premiums you prepay in advance may either be deducted from your pay or paid directly "out-of-pocket" to your agency. Payments made "out-of-pocket" do not reduce your taxable income. The amount of FEHB premiums that you prepay will be treated on a pre-tax basis, if it is deducted from your pay and you participate in premium conversion.

IRS rules limit the amount you may prepay on a pre-tax basis. If your period of leave without pay will span two tax years, the amount that you may prepay on a pre-tax basis may not exceed the amount of FEHB premiums due for the remainder of the current tax year. If you wish to prepay the amounts due for the subsequent tax year as well, the deductions must be made after-tax. You may use the "pay-as-you-go" or "catch-up" options for amounts due in the subsequent tax year.

Example

Max participates in premium conversion and has $100 per month in FEHB premiums deducted from his pay. He will go on leave without pay for three months beginning on October 31, 2000 and opts to continue his FEHB coverage. Max uses the pre-pay option to pay the $300 in FEHB premium payments that will be due while he is on leave without pay. He will receive pre-tax treatment on $200 of his FEHB premium prepayment (the amount he will owe for November and December 2000). The remaining $100 he prepaid (the amount due for January 2001) must be given after-tax treatment.

Employing Office Forwards both Government and Employee Shares each Pay Period

Public Law 104-208 requires your employing office to forward the full FEHB premium (both Government and employee contributions) to OPM on a current basis when you are in leave without pay status or when your pay is insufficient to make the withholdings. Your employing office must advance you salary to cover the employee share of your health benefits premiums when you are in leave without pay status and you do not make direct premium payments to your employing office, effective with the pay period beginning on or after September 30, 1996.

Recovering Salary Advances for Paying the Employee Share of Premiums

When your employing office advances your salary (the Catch-up Option) to cover the employee share of your health benefits premiums, you incur a debt to your employing office for the advance payments. It can recover that amount in the same manner as pay advanced to new appointees under 5 U.S.C. 5524a(c). It can offset against your accrued pay, amount of retirement credit, any other amounts due you from the U.S. or District of Columbia Governments, or in any other method provided by law.

The employing office that advanced your salary is permanently responsible for collecting the debt and must retain your written notice electing to continue FEHB coverage.

Since you must sign a statement agreeing that your debt may be withheld in full from future pay when you receive advance salary to cover your health benefits premiums, under 5 CFR 550.1102(b) your employing office is not required to offer you a hearing before it can begin its recovery of advance payments. However, your employing office must give you a notice that it intends to recover the advanced pay.

Coordination of Debt Repayments with Retirement or Workers' Compensation

When you apply for disability retirement or workers' compensation benefits, your annuity or compensation is generally payable from the day following your last day of pay. If you are eligible to continue health benefits coverage, the employee share is withheld from your annuity or compensation retroactive to the beginning date of the annuity or compensation payments.

If you have not made payments to your employing office for coverage during leave without pay status (either directly or through collection of the debt), your employing office recovers withholdings and contributions for the period in the same way as it adjusts errors in withholdings and contributions.

If you paid your employing office for coverage during leave without pay status and withholdings are being made from your annuity or compensation benefits for the same period, your employing office must refund these amounts to you to avoid double payments covering the same period. Your employing office makes the refund in the same way that it adjusts errors. In retirement cases, your employing office must refund the amount it received from you for periods after your last day in pay because these amounts are withheld from your annuity.

When your annuity doesn't begin on the day following your last day of pay, your employing office will not refund payments you made for time in leave without pay status until it receives OPM's notice that your disability retirement application was approved. This may happen when you don't meet the requirements for an annuity on the day after your last day of pay (e.g., you are receiving a disability annuity under CSRS and you don't complete 5 years of service until a later date). If your employing office isn't able to determine if withholdings from your annuity will cover all periods of leave without pay status after the last day of pay, it may request that OPM verify the correct period to be covered by the refund. Its request may be attached to your health benefits documents when they are sent to OPM with the final Individual Retirement Record (SF 2806 for CSRS or SF 3100 for FERS).

In workers' compensation cases, your employing office may request that the Office of Workers' Compensation Programs verify the dates that health benefits premiums have been withheld from your compensation benefits before it will refund any amounts you paid to it.

When you are a retiring employee and are indebted to your employing office for advanced pay to cover the employee share of your health benefits premium for a period that you weren't entitled to annuity or compensation benefits, the debt may be recovered by offset from your annuity. See chapter 4 of the CSRS and FERS Handbook for Payroll and Personnel Offices.

Current Basis

Premium payments are due to your employing office after each pay period in which you are covered, according to the schedule it sets. If your employing office doesn't receive your payment by the due date, it will send you a notice stating that for your coverage to continue, you must make payment within 15 days (45 days if you live overseas) after you receive the notice. If you don't make any further payments, your enrollment will be terminated 60 days (90 days if you live overseas) after the date of the notice.

If you were unable to make timely premium payments for reasons beyond your control, you may ask your employing office to reinstate your coverage. Your request must be made in writing within 30 days from the termination date and must include documentation of the reasons. If your employing office grants your request, your enrollment will be restored retroactive to the termination date. If your request is denied, you may ask your employing office to reconsider its decision.

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