[Code of Federal Regulations]
[Title 5, Volume 2]
[Revised as of January 1, 2005]
From the U.S. Government Printing Office via GPO Access
[CITE: 5CFR890.201]

[Page 442-444]
 
                    TITLE 5--ADMINISTRATIVE PERSONNEL
 
          CHAPTER I--OFFICE OF PERSONNEL MANAGEMENT (CONTINUED)
 
PART 890_FEDERAL EMPLOYEES HEALTH BENEFITS PROGRAM--Table of Contents
 
                     Subpart B_Health Benefits Plans
 
Sec. 890.201  Minimum standards for health benefits plans.


    (a) To qualify for approval by OPM, a health benefits plan shall 
meet the following standards. Once approved, a health benefits plan 
shall continue to meet the minimum standards. Failure on the part of the 
carrier's plan to meet the standards is cause for OPM's withdrawal of 
approval of the plan in accordance with 5 CFR 890.204. A health benefits 
plan shall:
    (1) Comply with chapter 89 of title 5, United States Code, and this 
part, as amended from time to time.
    (2) Accept the enrollment, in accordance with this part, and without 
regard to age, race, sex, health status, or hazardous nature of 
employment, of each eligible employee, annuitant, former spouse, former 
employee, or child, except that a plan that is sponsored or underwritten 
by an employee organization may not accept the enrollment of a person 
who is not a member of the organization, but it may not limit membership 
in the organization on account of the prohibited factors (age, race, 
sex, health status, or hazardous nature of employment). The carrier may 
terminate the enrollment of an enrollee other than a survivor annuitant, 
a former spouse continuing coverage under Sec. 890.803, or person 
continuing coverage under Sec. 890.1103(a) (2) or (3), in a health 
benefits plan sponsored or underwritten by an employee organization on 
account of termination of membership in the organization. A carrier that 
wants to terminate the enrollment of an enrollee under this paragraph 
may do so by notifying the employing office in writing, with a copy of 
the notice to the enrollee. The termination is effective at the end of 
the pay period in which the employing office receives the notice. A 
comprehensive medical plan need not enroll an employee, annuitant, 
former employee,

[[Page 443]]

former spouse, or child residing outside the geographic areas specified 
by the plan.
    (3) Provide health benefits for each enrollee and covered family 
member wherever they may be.
    (4) Provide for conversion to a contract for health benefits 
regularly offered by the carrier, or an appropriate affiliate, for group 
conversion purposes, which must be guaranteed renewable, subject to such 
amendments as apply to all contracts of this class, except that it may 
be canceled for fraud, overinsurance, or nonpayment of periodic charges. 
A carrier must permit conversion within the time allowed by the 
temporary extension of coverage provided under Sec. 890.401 for each 
enrollee and covered family member entitled to convert. When an 
employing office gives an enrollee written notice of his or her 
privilege of conversion, the carrier must permit conversion at any time 
before 31 days after the date of notice or 91 days after the enrollment 
is terminated, whichever is earlier. Belated conversion opportunities as 
provided in Sec. 890.401(c) must also be permitted by the carrier. When 
OPM requests an extension of time for conversion because of delayed 
determination of ineligibility for immediate annuity, the carrier must 
permit conversion until the date specified by OPM in its request for 
extension. On conversion, the contract becomes effective as of the day 
following the last day of the temporary extension, and the enrollee or 
covered family member, as the case may be, must pay the entire cost 
thereof directly to the carrier. The nongroup contract may not deny or 
delay any benefit covered by the contract for a person converting from a 
plan approved under this part except to the extent that benefits are 
continued under the health benefits plan from which he or she converts.
    (5) Provide that each enrollee receive an identification card or 
cards or other evidence of enrollment.
    (6) Provide a standard rate structure which contains, for each 
option, one standard individual rate, and one standard family rate.
    (7) Maintain statistical records regarding the plan, separately from 
those of any other activities conducted or benefits offered by the 
carrier sponsoring or underwriting the plan.
    (8) Provide for a special reserve for the plan. The carrier shall 
account for amounts retained by it as reserves for the plan separately 
from reserves maintained by it for other plans. The carrier shall invest 
the special reserve and income derived from the investment of the 
special reserve shall be credited to the special reserve. If the 
contract is terminated or approval of the plan is withdrawn, the carrier 
shall return the special reserve to the Employees Health Benefits Fund. 
However, in the case of a comprehensive medical plan, the carrier, 
without regard to the foregoing provisions of this paragraph, shall 
follow such financial procedures as are mutually agreed on by the 
carrier and OPM.
    (9) Provide for continued enrollment to the end of the current pay 
period, or termination date, if earlier, of each enrollee enrolled at 
the effective date of termination of a contract. The carrier is entitled 
to subscription charges for this continued enrollment.
    (10) Provide that any covered expenses incurred from January 1 to 
the effective date of an open season change count toward the losing 
carrier's prior year deductible. If the prior year deductible or family 
limit on deductibles of the losing carrier had previously been met, the 
enrolled individual (and eligible family members) shall be eligible for 
reimbursement by the losing carrier for covered expenses incurred during 
the current year. Reimbursement of covered expenses shall apply only to 
covered expenses incurred from January 1 to the effective date of the 
open season change. This section shall not apply to any other 
permissible changes made during a contract year.
    (11) Except where OPM determines otherwise, have 300 or more 
employees and annuitants, exclusive of family members, enrolled in the 
plan at some time during the preceding two contract terms.
    (b) To be qualified to be approved by OPM and, once approved, to 
continue to be approved, a health benefits plan shall not:
    (1) Deny a covered person a benefit provided by the plan for a 
service performed on or after the effective date of

[[Page 444]]

coverage solely because of a preexisting physical or mental condition.
    (2) Require a waiting period for any covered person for benefits 
which it provides.
    (3) Have more than two options and a high deductible health plan (26 
U.S.C. 223(c)(2)(A).
    (4) Have an initiation, service, enrollment, or other fee or charge 
in addition to the rate charged for the plan, except that a 
comprehensive medical plan may impose an additional charge to be paid 
directly by the enrollee for certain medical supplies and services, if 
the supplies and services on which additional charges are imposed are 
clearly set forth in advance and are applicable to all enrollees. This 
subparagraph does not apply to charges for membership in employee 
organizations sponsoring or underwriting plans.
    (5) Paragraphs (b)(1) and (2) of this section do not preclude a plan 
offering benefits for dentistry or cosmetic surgery, or both, limited to 
conditions arising after the effective date of coverage.
    (c) The Director or his or her designee will determine whether to 
propose withdrawal of approval of the plan and hold a hearing based on 
the seriousness of the carrier's actions and its proposed method to 
effect corrective action.

[33 FR 12510, Sept. 4, 1968, as amended at 43 FR 52460, Nov. 13, 1978; 
47 FR 14871, Apr. 6, 1982; 49 FR 48905, Dec. 17, 1984; 52 FR 10217, Mar. 
31, 1987; 54 FR 52336, Dec. 21, 1989; 55 FR 9108, Mar. 12, 1990; 55 FR 
22891, June 5, 1990; 69 FR 31721, June 7, 2004]