5 U.S.C. § 9003 — Contracting authority

Page 1285 TITLE 5—GOVERNMENT ORGANIZATION AND EMPLOYEES § 9003 Secretary of Defense may determine that a non- appropriated fund instrumentality of the De- partment of Defense is covered under this chap- ter or is covered under an alternative long-term care insurance program. (c) GENERAL REQUIREMENTS.—Long-term care insurance may not be offered under this chapter unless— (1) the only coverage provided is under quali- fied long-term care insurance contracts; and (2) each insurance contract under which any such coverage is provided is issued by a quali- fied carrier. (d) DOCUMENTATION REQUIREMENT.—As a condi- tion for obtaining long-term care insurance cov- erage under this chapter based on one’s status as a qualified relative, an applicant shall provide documentation to demonstrate the relationship, as prescribed by the Office. (e) UNDERWRITING STANDARDS.— (1) DISQUALIFYING CONDITION.—Nothing in this chapter shall be considered to require that long-term care insurance coverage be made available in the case of any individual who would be eligible for benefits imme- diately. (2) SPOUSAL PARITY.—For the purpose of un- derwriting standards, a spouse of an individual described in paragraph (1), (2), (3), or (4) of sec- tion 9001 shall, as nearly as practicable, be treated like that individual. (3) GUARANTEED ISSUE.—Nothing in this chapter shall be considered to require that long-term care insurance coverage be guaran- teed to an eligible individual. (4) REQUIREMENT THAT CONTRACT BE FULLY INSURED.—In addition to the requirements oth- erwise applicable under section 9001(9), in order to be considered a qualified long-term care insurance contract for purposes of this chapter, a contract must be fully insured, whether through reinsurance with other com- panies or otherwise. (5) HIGHER STANDARDS ALLOWABLE.—Nothing in this chapter shall, in the case of an indi- vidual applying for long-term care insurance coverage under this chapter after the expira- tion of such individual’s first opportunity to enroll, preclude the application of under- writing standards more stringent than those that would have applied if that opportunity had not yet expired. (f) GUARANTEED RENEWABILITY.—The benefits and coverage made available to eligible individ- uals under any insurance contract under this chapter shall be guaranteed renewable (as de- fined by section 7A(2) of the model regulations described in section 7702B(g)(2) of the Internal Revenue Code of 1986), including the right to have insurance remain in effect so long as pre- miums continue to be timely made. However, the authority to revise premiums under this chapter shall be available only on a class basis and only to the extent otherwise allowable under section 9003(b). (Added Pub. L. 106–265, title I, § 1002(a), Sept. 19, 2000, 114 Stat. 764; amended Pub. L. 107–314, div. A, title XI, § 1101(b), Dec. 2, 2002, 116 Stat. 2660.) Editorial Notes REFERENCES IN TEXT Section 7702B(g)(2) of the Internal Revenue Code of 1986, referred to in subsec. (f), is classified to section 7702B(g)(2) of Title 26, Internal Revenue Code. AMENDMENTS 2002—Subsecs. (b) to (f). Pub. L. 107–314 added subsec. (b) and redesignated former subsecs. (b) to (e) as (c) to (f), respectively. § 9003. Contracting authority (a) IN GENERAL.—The Office of Personnel Man- agement shall, without regard to section 6101(b) to (d) of title 41 or any other statute requiring competitive bidding, contract with one or more qualified carriers for a policy or policies of long- term care insurance. The Office shall ensure that each resulting contract (hereafter in this chapter referred to as a ‘‘master contract’’) is awarded on the basis of contractor qualifica- tions, price, and reasonable competition. (b) TERMS AND CONDITIONS.— (1) IN GENERAL.—Each master contract under this chapter shall contain— (A) a detailed statement of the benefits of- fered (including any maximums, limitations, exclusions, and other definitions of benefits); (B) the premiums charged (including any limitations or other conditions on their sub- sequent adjustment); (C) the terms of the enrollment period; and (D) such other terms and conditions as may be mutually agreed to by the Office and the carrier involved, consistent with the re- quirements of this chapter. (2) PREMIUMS.—Premiums charged under each master contract entered into under this section shall reasonably and equitably reflect the cost of the benefits provided, as deter- mined by the Office. The premiums shall not be adjusted during the term of the contract unless mutually agreed to by the Office and the carrier. (3) NONRENEWABILITY.—Master contracts under this chapter may not be made automati- cally renewable. (c) PAYMENT OF REQUIRED BENEFITS; DISPUTE RESOLUTION.— (1) IN GENERAL.—Each master contract under this chapter shall require the carrier to agree— (A) to provide payments or benefits to an eligible individual if such individual is enti- tled thereto under the terms of the contract; and (B) with respect to disputes regarding claims for payments or benefits under the terms of the contract— (i) to establish internal procedures de- signed to expeditiously resolve such dis- putes; and (ii) to establish, for disputes not resolved through procedures under clause (i), proce- dures for one or more alternative means of dispute resolution involving independent third-party review under appropriate cir- cumstances by entities mutually accept- able to the Office and the carrier. (2) ELIGIBILITY.—A carrier’s determination as to whether or not a particular individual is Page 1286 TITLE 5—GOVERNMENT ORGANIZATION AND EMPLOYEES § 9003 eligible to obtain long-term care insurance coverage under this chapter shall be subject to review only to the extent and in the manner provided in the applicable master contract. (3) OTHER CLAIMS.—For purposes of applying chapter 71 of title 41 to disputes arising under this chapter between a carrier and the Office— (A) the agency board having jurisdiction to decide an appeal relative to such a dis- pute shall be such board of contract appeals as the Director of the Office of Personnel Management shall specify in writing; and (B) the district courts of the United States shall have original jurisdiction, concurrent with the United States Court of Federal Claims, of any action described in section 7104(b)(1) of title 41 relative to such a dis- pute. (4) RULE OF CONSTRUCTION.—Nothing in this chapter shall be considered to grant authority for the Office or a third-party reviewer to change the terms of any contract under this chapter. (d) DURATION.— (1) IN GENERAL.—Each master contract under this chapter shall be for a term of 7 years, un- less terminated earlier by the Office in accord- ance with the terms of such contract. How- ever, the rights and responsibilities of the en- rolled individual, the insurer, and the Office (or duly designated third-party administrator) under such contract shall continue with re- spect to such individual until the termination of coverage of the enrolled individual or the effective date of a successor contract thereto. (2) EXCEPTION.— (A) SHORTER DURATION.—In the case of a master contract entered into before the end of the period described in subparagraph (B), paragraph (1) shall be applied by sub- stituting ‘‘ending on the last day of the 7- year period described in paragraph (2)(B)’’ for ‘‘of 7 years’’. (B) DEFINITION.—The period described in this subparagraph is the 7-year period begin- ning on the earliest date as of which any long-term care insurance coverage under this chapter becomes effective. (3) CONGRESSIONAL NOTIFICATION.—No later than 180 days after receiving the second report required under section 9006(c), the President (or his designee) shall submit to the Commit- tees on Government Reform and on Armed Services of the House of Representatives and the Committees on Governmental Affairs and on Armed Services of the Senate, a written recommendation as to whether the program under this chapter should be continued with- out modification, terminated, or restructured. During the 180-day period following the date on which the President (or his designee) sub- mits the recommendation required under the preceding sentence, the Office of Personnel Management may not take any steps to rebid or otherwise contract for any coverage to be available at any time following the expiration of the 7-year period described in paragraph (2)(B). (4) FULL PORTABILITY.—Each master con- tract under this chapter shall include such provisions as may be necessary to ensure that, once an individual becomes duly enrolled, long-term care insurance coverage obtained by such individual pursuant to that enrollment shall not be terminated due to any change in status (such as separation from Government service or the uniformed services) or ceasing to meet the requirements for being considered a qualified relative (whether as a result of dis- solution of marriage or otherwise). (e) EFFECT OF GOVERNMENT SHUTDOWN.—Cov- erage under a master contract under this chap- ter for long-term care insurance for an employee or member of the uniformed services enrolled under such contract and who, due to a lapse in appropriations, is furloughed or excepted from furlough and working without pay shall con- tinue during such lapse and may not be can- celled as a result of nonpayment of premiums or other periodic charges due to such lapse. (Added Pub. L. 106–265, title I, § 1002(a), Sept. 19, 2000, 114 Stat. 764; amended Pub. L. 111–350, § 5(a)(18), Jan. 4, 2011, 124 Stat. 3842; Pub. L. 116–92, div. A, title XI, § 1111(a)(3), Dec. 20, 2019, 133 Stat. 1601.) Editorial Notes AMENDMENTS 2019—Subsec. (e). Pub. L. 116–92 added subsec. (e). 2011—Subsec. (a). Pub. L. 111–350, § 5(a)(18)(A), sub- stituted ‘‘section 6101(b) to (d) of title 41’’ for ‘‘section 5 of title 41’’. Subsec. (c)(3). Pub. L. 111–350, § 5(a)(18)(B), substituted ‘‘chapter 71 of title 41’’ for ‘‘the Contract Disputes Act of 1978’’ in introductory provisions. Subsec. (c)(3)(A). Pub. L. 111–350, § 5(a)(18)(C), struck out ‘‘(after appropriate arrangements, as described in section 8(c) of such Act)’’ after ‘‘specify in writing’’. Subsec. (c)(3)(B). Pub. L. 111–350, § 5(a)(18)(D), sub- stituted ‘‘section 7104(b)(1) of title 41’’ for ‘‘section 10(a)(1) of such Act’’. Statutory Notes and Related Subsidiaries CHANGE OF NAME Committee on Government Reform of House of Rep- resentatives changed to Committee on Oversight and Government Reform of House of Representatives by House Resolution No. 6, One Hundred Tenth Congress, Jan. 5, 2007. Committee on Oversight and Government Reform of House of Representatives changed to Com- mittee on Oversight and Reform of House of Represent- atives by House Resolution No. 6, One Hundred Six- teenth Congress, Jan. 9, 2019. Committee on Oversight and Reform of House of Representatives changed to Committee on Oversight and Accountability of House of Representatives by House Resolution No. 5, One Hun- dred Eighteenth Congress, Jan. 9, 2023. Committee on Governmental Affairs of Senate changed to Committee on Homeland Security and Gov- ernmental Affairs of Senate, effective Jan. 4, 2005, by Senate Resolution No. 445, One Hundred Eighth Con- gress, Oct. 9, 2004. EFFECTIVE DATE OF 2019 AMENDMENT Amendment by Pub. L. 116–92 applicable to any con- tract for long-term care insurance under this chapter entered into before, on, or after Dec. 20, 2019, see sec- tion 1111(c) of Pub. L. 116–92, set out as a note under section 8956 of this title. REGULATIONS For provisions requiring promulgation of regulations related to payment of unpaid premiums during fur- Page 1287 TITLE 5—GOVERNMENT ORGANIZATION AND EMPLOYEES § 9005 lough resulting from a lapse in appropriations, includ- ing provision for direct payment to carrier for certain individuals, see section 1111(b) of Pub. L. 116–92, set out as a note under section 8956 of this title. § 9004. Financing (a) IN GENERAL.—Each eligible individual ob- taining long-term care insurance coverage under this chapter shall be responsible for 100 percent of the premiums for such coverage. (b) WITHHOLDINGS.— (1) IN GENERAL.—The amount necessary to pay the premiums for enrollment may— (A) in the case of an employee, be withheld from the pay of such employee; (B) in the case of an annuitant, be with- held from the annuity of such annuitant; (C) in the case of a member of the uni- formed services described in section 9001(3), be withheld from the pay of such member; and (D) in the case of a retired member of the uniformed services described in section 9001(4), be withheld from the retired pay or retainer pay payable to such member. (2) VOLUNTARY WITHHOLDINGS FOR QUALIFIED RELATIVES.—Withholdings to pay the pre- miums for enrollment of a qualified relative may, upon election of the appropriate eligible individual (described in section 9001(1)–(4)), be withheld under paragraph (1) to the same ex- tent and in the same manner as if enrollment were for such individual. (c) DIRECT PAYMENTS.—All amounts withheld under this section shall be paid directly to the carrier. (d) OTHER FORMS OF PAYMENT.—Any enrollee who does not elect to have premiums withheld under subsection (b) or whose pay, annuity, or retired or retainer pay (as referred to in sub- section (b)(1)) is insufficient to cover the with- holding required for enrollment (or who is not receiving any regular amounts from the Govern- ment, as referred to in subsection (b)(1), from which any such withholdings may be made, and whose premiums are not otherwise being pro- vided for under subsection (b)(2)) shall pay an amount equal to the full amount of those charges directly to the carrier. (e) SEPARATE ACCOUNTING REQUIREMENT.— Each carrier participating under this chapter shall maintain records that permit it to account for all amounts received under this chapter (in- cluding investment earnings on those amounts) separate and apart from all other funds. (f) REIMBURSEMENTS.— (1) REASONABLE INITIAL COSTS.— (A) IN GENERAL.—The Employees’ Life In- surance Fund is available, without fiscal year limitation, for reasonable expenses in- curred by the Office of Personnel Manage- ment in administering this chapter before the start of the 7-year period described in section 9003(d)(2)(B), including reasonable implementation costs. (B) REIMBURSEMENT REQUIREMENT.—Such Fund shall be reimbursed, before the end of the first year of that 7-year period, for all amounts obligated or expended under sub- paragraph (A) (including lost investment in- come). Such reimbursement shall be made by carriers, on a pro rata basis, in accord- ance with appropriate provisions which shall be included in master contracts under this chapter. (2) SUBSEQUENT COSTS.— (A) IN GENERAL.—There is hereby estab- lished in the Employees’ Life Insurance Fund a Long-Term Care Administrative Ac- count, which shall be available to the Office, without fiscal year limitation, to defray rea- sonable expenses incurred by the Office in administering this chapter after the start of the 7-year period described in section 9003(d)(2)(B). (B) REIMBURSEMENT REQUIREMENT.—Each master contract under this chapter shall in- clude appropriate provisions under which the carrier involved shall, during each year, make such periodic contributions to the Long-Term Care Administrative Account as necessary to ensure that the reasonable an- ticipated expenses of the Office in admin- istering this chapter during such year (ad- justed to reconcile for any earlier overesti- mates or underestimates under this subpara- graph) are defrayed. (Added Pub. L. 106–265, title I, § 1002(a), Sept. 19, 2000, 114 Stat. 766.) § 9005. Preemption (a) CONTRACTUAL PROVISIONS.—The terms of any contract under this chapter which relate to the nature, provision, or extent of coverage or benefits (including payments with respect to benefits) shall supersede and preempt any State or local law, or any regulation issued there- under, which relates to long-term care insurance or contracts. (b) PREMIUMS.— (1) IN GENERAL.—No tax, fee, or other mone- tary payment may be imposed or collected, di- rectly or indirectly, by any State, the District of Columbia, or the Commonwealth of Puerto Rico, or by any political subdivision or other governmental authority thereof, on, or with respect to, any premium paid for an insurance policy under this chapter. (2) RULE OF CONSTRUCTION.—Paragraph (1) shall not be construed to exempt any company or other entity issuing a policy of insurance under this chapter from the imposition, pay- ment, or collection of a tax, fee, or other mon- etary payment on the net income or profit ac- cruing to or realized by such entity from busi- ness conducted under this chapter, if that tax, fee, or payment is applicable to a broad range of business activity. (Added Pub. L. 106–265, title I, § 1002(a), Sept. 19, 2000, 114 Stat. 768; amended Pub. L. 107–104, § 2, Dec. 27, 2001, 115 Stat. 1001.) Editorial Notes AMENDMENTS 2001—Pub. L. 107–104 designated existing provisions as subsec. (a), inserted heading, and added subsec. (b).