HR 8731
Federal Employee Short-Term Disability Insurance Act of 2026
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Bill overview
This bill, the Federal Employee Short-Term Disability Insurance Act of 2026, proposes a voluntary short-term disability insurance program for federal employees. It aims to provide coverage for disabilities that aren't work-related, including injuries, family care leave, childbirth, and adoption arrangements. The bill amends Title 5 of the U.S. Code to establish this new program, outlining key aspects such as definitions, eligibility, benefits, premiums, and contracting procedures. It also establishes administrative functions and preempts state laws related to disability insurance.
Key provisions
- Establishes a voluntary short-term disability insurance program for federal employees.
- Covers injuries, family care leave, childbirth, and adoption arrangements.
- Defines key terms related to the program, including ‘employee,’ ‘injury,’ and ‘family member.’
- Outlines contracting procedures for insurance carriers, prioritizing qualifications and price.
- Specifies benefit levels, including a maximum of 70% of annual rate of pay.
- Establishes a waiting period for benefits, offering multiple options.
- Requires insurance contracts to be fully insured and exclude preexisting condition exclusions.
- Creates a fund to cover implementation costs and administrative expenses.
Who is affected
- Federal employees
- Postal Service employees
- Families of federal employees
- Insurance companies
Notable changes
Sponsors
Official sponsors from legislative records.
Primary sponsor
Eleanor Holmes [D-DC-At Large] Norton
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119th CONGRESS — 2d Session
H. R. 8731
IN THE HOUSE OF REPRESENTATIVES
A BILL
To provide a short-term disability insurance program for Federal employees for disabilities that are not work-related, and for other purposes.
This Act may be cited as the Federal Employee Short-Term Disability Insurance Act of 2026
.
The purpose of this Act is to offer voluntary insurance to Federal employees for protection against the loss of pay resulting from—
short-term injury or disability;
short-term leave taken for the purpose of caring for a family member;
the birth of a child of such an employee; or
making arrangements to adopt a child or to become a foster parent.
Title 5, United States Code, is amended by inserting after chapter 87 the following:
For purposes of this chapter—
the term Director means the Director of the Office of Personnel Management;
the term employee means—
an employee defined in section 8901(1); and
an officer or employee of the United States Postal Service or of the Postal Regulatory Commission;
the term injury or disability, with respect to an employee, means that such employee is unable to perform the essential functions of such employee’s position of employment with the Federal Government;
the term State includes the District of Columbia.
for an injury or disability not covered under chapter 81;
for leave to care for, or leave to make arrangements to care for, a member of family, including the birth of a child; and
for leave to make arrangements—
to become a foster parent; or
to adopt a child.
Insurance shall not be available under this chapter if the injury or disability of an employee is—
caused by such employee's intention to bring about such injury or disability to himself or to another individual; or
proximately caused by the intoxication of such employee.
In addition to the requirements otherwise applicable under section 8801(5), an insurance contract under this chapter must be fully insured, whether through reinsurance with other carriers or otherwise.
The Director shall, without regard to any statute requiring competitive bidding, contract with one or more carriers for a policy or policies of disability insurance as described under this chapter. The Director shall ensure that each resulting contract is awarded on the basis of contractor qualifications, price, and reasonable competition.
a detailed statement of the benefits offered (including any maximums, limitations, exclusions, and other definitions of benefits);
the premiums charged (including any limitations or other conditions on their subsequent adjustment);
the duration of the enrollment period; and
such other terms and conditions (including procedures for establishing eligibility for insurance under this chapter) as may be determined by the Director, consistent with the requirements of this chapter.
Premiums charged under a contract under this section shall reasonably and equitably reflect the cost of the benefits provided, as determined by the Director.
to provide payments or benefits described in section 8804(c) to an employee if such employee is entitled thereto under the terms of the contract; and
with respect to disputes regarding claims for payments or benefits under the terms of the contract—
to establish internal procedures designed to resolve such disputes expeditiously; and
to establish, for disputes not resolved through procedures under clause (i), procedures for one or more alternative means of dispute resolution involving independent third-party review under circumstances acceptable to the Director.
A contract described in paragraph (1) may be made automatically renewable, for a term of 1 year each January 1, unless written notice of non-renewal is given either by the Director or the carrier not less than 180 days before the renewal date, or unless modified by mutual agreement.
A contract described in paragraph (1) shall include such provisions as may be necessary to ensure that, once an employee becomes duly enrolled, insurance coverage pursuant to that enrollment shall be terminated only if the individual is separated from Federal service or, where appropriate, for non-payment of premiums.
shall not provide for a preexisting condition exclusion; and
shall not charge higher premiums, deny coverage, or drop coverage of an employee with a preexisting condition.
A contract providing benefits under this chapter shall provide incentives for an employee who is receiving benefits under such contract to return to work.
The period for which benefits are payable to an employee under this subsection shall begin after the completion of a waiting period, subject to the requirement in subparagraph (C). An employee shall elect one of the following waiting period options:
An employee who elects to receive benefits earlier shall pay a higher premium.
A waiting period selected under subparagraph (A) shall begin on the first day of an employee’s injury or disability.
Each eligible individual obtaining insurance coverage under this chapter shall be responsible for 100 percent of the premiums for such coverage.
The amount necessary to pay the premiums for enrollment shall be withheld from the pay of the enrolled individual.
The carrier participating under this chapter shall maintain records that permit it to account for all amounts received under this chapter (including investment earnings on those amounts) separate and apart from all other funds.
Nothing in this chapter shall, in the case of an enrolled individual applying for an extension of insurance coverage under this chapter after the expiration of such enrolled individual’s first opportunity to enroll, preclude the application of underwriting standards for later enrollment.
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, territorial, tribal, or local law, or any regulation issued thereunder, which relates to non-work related disability insurance or contracts.
No tax, fee, or other monetary payment may be imposed or collected, directly or indirectly, by any State, territory, tribe, or locality, 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.
Paragraph (1) shall not be construed to exempt any company or other entity issuing a policy of insurance under this chapter from the imposition, payment, or collection of a tax, fee, or other monetary payment on the net income or profit accruing to or realized by such entity from business conducted under this chapter, if that tax, fee, or payment is applicable to a broad range of business activity.
No law of a State, territory, tribe, or locality, pertaining to subrogation or reimbursement with respect to benefits provided under this chapter, shall operate except as expressly adopted by the Director.
A contract under this chapter shall contain provisions requiring the carrier to furnish such reasonable reports as the Director determines to be necessary to enable the Director to carry out the Director’s functions under this chapter.
Each Federal agency shall keep such records, make such certifications, and furnish the Director, the carrier, or both, with such information and reports as the Director may require.
The Director shall conduct periodic reviews of each plan under this chapter to ensure its competitiveness.
The district courts of the United States have original jurisdiction, concurrent with the United States Court of Federal Claims, of a civil action or claim against the United States under this chapter after such administrative remedies as required under section 8803(c) have been exhausted, but only to the extent judicial review is not precluded by any dispute resolution or other remedy under this chapter.
Except as otherwise provided in this chapter, the Director shall prescribe regulations necessary to carry out this chapter and to make arrangements as necessary with other agencies and payroll systems to implement the program.
Except as otherwise provided by law, the Director shall specify in regulation the treatment of time spent by an individual in receipt of benefits under this chapter for the purposes of periodic increases in pay, retention purposes, and other rights, benefits, and conditions of employment for which length of service is a factor.
The carrier shall provide for periodic coordinated enrollment, promotion, and education efforts, as specified by the Director.
The cost accounting standards issued pursuant to section 1502 of title 41 shall not apply with respect to an insurance contract under this chapter.
Section 1005(f) of title 39, United States Code, is amended by inserting 88,
after 87,
.
The analysis for part III of title 5, United States Code, is amended by adding at the end of subpart G the following:
Insurance8801
The amendment made by subsection (a) shall apply to contracts that take effect with respect to the first calender year that begins more than 18 months after the date of enactment of this section.