A bill re-introduced in Congress aims to offer more affordable short-term disability coverage to feds, but proposed law is not expected to pass.
Last month, Eleanor Norton, the representative in the House for Washington, DC, proposed the “Federal Employee Short-Term Disability Insurance Act of 2022.” This is the sixth version of such a bill that has been introduced in Congress since 2011, with none of the previous iterations getting close to passing.
Although Feds have access to some of the top-rated health insurance, FEHB does not provide income that is lost when employees are unable to work for a considerable period of time, such as in the months following surgery. As well, the Long-Term disability insurance that is also currently available for federal employees is only for those unable to work (without accommodation, at least) for a year or more. The long-term insurance is also only available to feds after they’ve served in the government for at least 18 months.
Short-Term Disability Coverage
Should the bill become law, it would mandate that the federal government contracts with one or more private insurance companies to offer insurance for lost income due to injuries, illnesses, or other health-related conditions that don’t stem from their occupation. (Medical conditions and injuries that are sustained on the job, or directly because of it, are covered by the worker’s compensation program offered via the Federal Employees’ Compensation Act.)
Here's how it would work:
- The short-term disability coverage premiums would be paid completely by the employee with post-tax dollars (the government would pay 0% of the cost.)
- Benefits would be payable for up to 12 months.
- No pre-existing conditions would exclude feds from purchasing the insurance.
- The large pool of plan participants would allow lower costs for feds than if the insurance was bought privately.
When an earlier version of the act was proposed in 2011, OPM investigated the feasibility of offering such insurance for feds and found, even with minimum coverage, the cost of individual employees would be $1000 per year at the least. The current bill, HR-6932, has just a 2% chance of passing according to the website govtrack.us.
Until Next Time,
**Written by Benjamin Derge, Financial Planner, ChFEBC℠ The information has been obtained from sources considered reliable but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Benjamin Derge and not necessarily those of RJFS or Raymond James. Links are being provided for information purposes only. Expressions of opinion are as of this date and are subject to change without notice. Raymond James is not affiliated with and does not endorse, authorize, or sponsor any of the listed websites or their respective sponsors.