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Healthcare Reference Materials

Leave Without Pay Status and Insufficient Pay

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, 2012; returns to pay status on July 1, 2012; returns to leave without pay status on September 1, 2012; returns to pay status on January 1, 2012; and then back to leave without pay status on March 1, 2013. 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, 2013, the 365th day in continuous leave without pay status.

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, 2012, 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, 2012; pay status on July 1, 2012; and leave without pay status on January 1, 2013 (a new 365-day eligibility period begins).

Her enrollment terminates at the end of the pay period that includes December 31, 2013, 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.

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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 premiums (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 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)

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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, 2012 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 2012). The remaining $100 he prepaid (the amount due for January 2013) 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.

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When You Allow Your Enrollment to Terminate

Your enrollment will terminate if you:

  • do not sign and return the written notice within 31 days of receiving the notice (45 days if you live overseas), or
  • return the signed notice, electing to terminate your enrollment.

In either event, your employing office must terminate your enrollment on the Notice of Change in Health Benefits Enrollment (SF 2810). It must note in the remarks section: "Employee (did not timely return written notice)(elected to terminate the enrollment) during a period of (leave without pay status)(insufficient pay)." The file copy of the notice (or if you elected to terminate your enrollment, your signed notice) should be attached to the SF 2810 and filed in the permanent side of the Official Personnel Folder. Your employing office will distribute copies of the SF 2810 to your payroll office and carrier.

The effective date of your enrollment termination is retroactive to the end of the last pay period that premiums were withheld from your pay.

Effect of Termination

If you decide not to continue your coverage, your enrollment is terminated, not canceled. This means that you are entitled to a 31-day extension of coverage and conversion privilege. You do not have to wait until the next Open Season to reenroll.

A termination is not considered a break in the continuous enrollment necessary for continuing coverage during retirement.

You are not eligible for temporary continuation of coverage (TCC) when your coverage terminates during leave without pay status or insufficient pay. TCC is only available when your coverage terminates because of separation from employment.

Retroactive Reinstatement of Terminated Coverage

If you couldn't return the notice within the required time frame for reasons beyond your control, you may ask your employing office to reinstate your coverage. You must file the request within 30 calendar days from the date you were given notification of the termination by your employing office. You must describe the circumstances that prevented you from returning the notice on a timely basis and include the signed written notice electing to continue coverage and agreeing to either pay the premium directly or incur a debt.

If your employing office decides to reinstate your enrollment, it completes parts A, D, and H of the Notice of Change in Health Benefits Enrollment (SF 2810); notes in the remarks section "Employee reinstated"; and distributes copies of the SF 2810 to your payroll office and carrier.

If your employing office rejects your reinstatement request, it must notify you of your reconsideration rights.

When You may Enroll after Termination

If you terminated your enrollment while you were in leave without pay status, you may reenroll within 60 days of returning to pay status in a position in which you are eligible for FEHB coverage.

If you terminated your enrollment while your pay was insufficient, you may reenroll within 60 days after the end of the first pay period your pay becomes sufficient to cover the premium.

Your reenrollment takes effect the first day of the first pay period after your employing office receives your request to reenroll and that follows a pay period in which you were in pay status for any part of that pay period.

You can reenroll in any plan or option available to you. You are not restricted to enrolling into the same plan and option you had when your coverage terminated.

If you do not reenroll during the 60-day time period, you must wait for an Open Season to enroll, unless another qualifying event occurs before the next Open Season. This would be considered a break in the continuous coverage necessary for continuing coverage into retirement.

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Special Circumstances

Student Trainees

If you are a student trainee with a career or career-conditional appointment, your enrollment continues during periods of leave without pay status as long as you are participating in the Student Career Experience Program (5 CFR 213.3202(b)). If you want to continue your enrollment during periods of leave without pay status, you must continue to pay the employee share of the premiums.

Active Duty Military Service

Under the Uniformed Service Employment and Reemployment Rights Act of 1994 (USERRA), if you enter active duty military service for more than 30 days, you may continue your health benefits enrollment for up to 24 months, unless you elect to have your enrollment terminated before you enter active duty. (You are considered to be on military furlough for health benefits purposes.) During the first 365 days in leave without pay status, you are required to pay only the employee share of the premium and you may postpone payment. After the first 365 days, you must pay both the employee and Government shares plus a 2 percent administrative charge directly to your employing office on a current basis. Your eligibility under USERRA ends 24 months after your absence for service in the uniformed service began or 90 days after your service ends, whichever is earlier.

While Receiving Compensation

Your enrollment may continue when you receive compensation under the Federal Employees' Compensation law for the first 365 days while in leave without pay status. After that period, you must meet the same participation requirements as for continuing an enrollment after retirement. OWCP, not your employing office, is responsible for determining your eligibility.

Part-time Employees

If you are a part-time career employee who receives a prorated Government contribution, during periods of leave without pay status you must pay the same health benefits premiums that are withheld from your pay while you are in pay status in your regularly scheduled tour of duty.

Temporary Appointments

If you are a temporary employee enrolled for FEHB coverage, during periods of leave without pay status you must continue to pay both the employee and Government shares of the premiums.

If you accept a temporary position while your enrollment is continuing during leave without pay status, your enrollment must be transferred to the employing office for your temporary position.

If you are still in leave without pay status when your temporary employment ends, your enrollment must be transferred back to your original employing office. The original employing office must determine the remaining length of time you are entitled to continued coverage while in leave without pay status. If you are no longer being carried as an employee in your original position when your temporary position expires, your enrollment must be terminated.

The two employing offices involved must coordinate these actions so that withholdings and contributions are made timely. The employing office that first becomes aware of the situation must contact the other employing office and arrange for transfer of the enrollment, if appropriate.

Family and Medical Leave

Under the Family and Medical Leave Act (FMLA) of 1993 (Public Law 103-3), you are entitled to up to 12 weeks of unpaid leave for certain medical and family needs. See Pay and Leave and 5 CFR Part 630 for information about family and medical leave.

FMLA leave usually runs concurrently with the 365 day period of coverage during leave without pay status allowed under the FEHB law. In these cases the regular rules for coverage during periods in leave without pay status apply. If you are granted leave under FMLA that exceeds the 365 days of continued coverage allowed under the FEHB law, you must pay your share of premiums directly to your employing office on a current basis during the period that exceeds 365 days. (This may happen if you have already used an extensive amount of leave without pay before you invoke your rights under FMLA).

If your coverage is terminated for nonpayment during FMLA leave, you may reenroll when you return to pay and duty status.

Appointments to Employee Organizations

If you go into leave without pay status to serve as a full-time officer or employee of an employee organization, you may elect to continue health benefits coverage within 60 days from the start of the leave without pay status.

The health benefits coverage continues for the length of the appointment, even if the leave without pay status lasts longer than 365 days. You must pay to your employing office the full cost of your health plan premiums. There is no Government contribution. You must pay your premiums to your employing office before, during, or within three months after the end of each pay period. You will be eligible for premium conversion if the employee organization adopts the OPM premium conversion plan.

Your employing office must keep you informed of all developments that affect health benefits. It must also adjust your share of the premium and the agency contributions when appropriate.

Your coverage will terminate if you do not pay your premiums within this time frame, subject to the 31-day extension of coverage and conversion right. Your coverage cannot resume until you enter in pay and duty status in Federal service. Exception: your coverage will be restored retroactively if your employing office finds that you were unable to make the premium payments for reasons beyond your control and you make the payments at the first opportunity.

Appointment to State or Local Governments or Institutions of Higher Education, Indian Tribal Government, or other Organizations

If you go into leave without pay status while assigned to a State or local government, institution of higher education, Indian tribal government, or certain other organizations specified in 5 CFR Part 334 , you are entitled to continue health benefits coverage for the length of the assignment, even if the leave without pay status lasts longer than 365 days.

You must elect to continue your health benefits coverage and pay the employee share of your premiums to your employing office before, during, or within three months after the end of each pay period. Your employing office must continue to pay its contributions as long as you make your payments.

Your employing office must keep you informed of all developments that affect health benefits. It must also adjust your share of the premium and the agency contributions when appropriate. Your coverage will terminate if you do not pay your premiums, subject to the 31-day extension of coverage and conversion right. Your coverage cannot resume until you enter on pay and duty status in Federal service. Exception: your coverage will be restored retroactively if your employing office finds that you were unable to make the premium payments for reasons beyond your control and you made the payments at the first opportunity.

If you elect to be covered under a State or local government's health benefits program that OPM determines to be similar to the FEHB Program, you are not entitled to continue coverage under the FEHB Program. Send your request for OPM's determinations to Office of Personnel Management, Healthcare and Insurance, P.O. Box 436, Washington, D.C. 20044.

Transfers to International Organizations

You may continue health benefits coverage if you are transferred to an international organization as provided in 5 U.S.C. 3582. You must elect to continue health benefits coverage and pay the employee share of your premiums to your employing office before, during, or within three months after the end of each pay period. Your employing office must continue to pay its contributions as long as you make your payments. You will be eligible for premium conversion if the organization agrees to adopt the OPM premium conversion plan.

Your employing office must keep you informed of all developments that affect health benefits. It must also adjust your share of the premium and the agency contributions when appropriate.

Your coverage will terminate if you do not pay your premiums, subject to the 31-day extension of coverage and conversion right. Your coverage cannot resume until you enter on pay and duty status in Federal service. Exception: your coverage will be restored retroactively if your employing office finds that you were unable to make the premium payments for reasons beyond your control and you made the payments at the first opportunity.

If you do not elect to continue your health benefits enrollment, you are not considered to be a Federal employee for health benefits purposes while employed by the international organization.

Regulations governing these transfers are in 5 CFR part 352.

If You Pay Your FEHB Premiums over less than 12 Months

If your annual salary is normally paid over a period of less than 12 months (such as a teacher on a 10-month contract), your employing office will prorate your annual health benefits contributions over the number of salary installments during the year, so that you don't pay any additional premiums during your expected nonpay period. If you enter a leave without pay status during your normal working period, you must pay premiums for that period the same as other employees in leave without pay status.

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