article: SECTION 1. SHORT TITLE. This Act may be cited as the ``Federal Employees Health Care Freedom of Choice Act''. SEC. 2. AMENDMENTS TO TITLE 5, UNITED STATES CODE. (a) Definitions.--Section 8901 of title 5, United States Code, is amended-- (1) in paragraph (10) by striking ``and'' after the semicolon; (2) in paragraph (11) by striking the period and inserting a semicolon; and (3) by adding at the end the following: ``(12) the term `high deductible health plan' means a plan described by section 8903(5) or section 8903a(d); and ``(13) the term `medical savings account' has the meaning given such term by section 220(d) of the Internal Revenue Code of 1986.''. (b) Authority To Contract for High Deductible Health Plans.-- Section 8902 of title 5, United States Code, is amended by adding at the end the following: ``(p)(1) The Office shall contract under this chapter for a high deductible health plan with any qualified carrier that-- ``(A) offers such a plan; and ``(B) as of the date of enactment of the Federal Employees Health Care Freedom of Choice Act, offers a health benefits plan under this chapter. ``(2) The Office may contract under this chapter for a high deductible health plan with any qualified carrier that-- ``(A) offers such a plan; but ``(B) does not satisfy the requirement under paragraph (1)(B).''. (c) Description of High Deductible Health Plans and Benefits To Be Provided Thereunder.-- (1) In general.--Section 8903 of title 5, United States Code, is amended by adding at the end the following: ``(5) High deductible health plans.--(A) One or more plans described by paragraph (1), (2), (3), or (4), which-- ``(i) are high deductible health plans (as defined by section 220(c)(2) of the Internal Revenue Code of 1986); and ``(ii) provide benefits of the types referred to by section 8904(a)(5). ``(B) Nothing in this section shall be considered-- ``(i) to prevent a carrier from simultaneously offering a plan described by subparagraph (A) and a plan described by paragraph (1) or (2); ``(ii) to require that a high deductible health plan offer two levels of benefits; or ``(iii) to allow, in any contract year, for-- ``(I) more than one plan to be offered which satisfies both subparagraph (A) and paragraph (1) (subject to clause (ii)); and ``(II) more than one plan which satisfies both subparagraph (A) and paragraph (2) (subject to clause (ii)).''. (2) Types of benefits.--Section 8904(a) of title 5, United States Code, is amended by inserting after paragraph (4) the following: ``(5) High deductible health plans.--Benefits of the types named under paragraph (1) or (2) of this subsection or both.''. (3) Conforming amendments.--(A) Section 8903a of title 5, United States Code, is amended by redesignating subsection (d) as subsection (e) and by inserting after subsection (c) the following: ``(d) The plans under this section may include one or more plans, otherwise allowable under this section, that satisfy the requirements of clauses (i) and (ii) of section 8903(5)(A).''. (B) Section 8909(d) of title 5, United States Code, is amended by striking ``8903a(d)'' and inserting ``8903a(e)''. (4) References.--Section 8903 of title 5, United States Code, is amended by adding at the end (as a flush left sentence) the following: ``The Office shall prescribe regulations under which the requirements of section 8902(c), 8902(n), 8909(e), and any other provision of this chapter that applies with respect to a plan described by paragraph (1), (2), (3), or (4) of this section shall apply with respect to the corresponding plan under paragraph (5) of this section. Similar regulations shall be prescribed with respect to any plan under section 8903a(d).''. (d) Contributions Toward High Deductible Health Plans and Medical Savings Accounts.-- (1) Amendments.-- (A) In general.--Title 5, United States Code, is amended by redesignating section 8906a as section 8906b and by inserting after section 8906 the following: ``Sec. 8906a. Contribution provisions relating to certain individuals enrolled in high deductible health plans ``(a) In the case of an employee or annuitant who enrolls in a high deductible health plan, section 8906 shall apply in accordance with its terms, except as otherwise provided in this section. ``(b) Instead of the amount that would otherwise apply under the provisions of section 8906(d), the amount to be withheld under such provisions from the pay or annuity of an employee or annuitant described in subsection (a), for any biweekly or other period, shall be the equivalent (expressed in terms of such periods) of the amount by which-- ``(1) the applicable average subscription charge, as determined under section 8906(a) for the contract year involved, exceeds ``(2) the total Government contribution allowable for such contract year (as defined in subsection (h)), but not to exceed 100 percent of the subscription charge for the plan in which such employee or annuitant is enrolled. ``(c) Instead of the amount that would otherwise apply under the provisions of section 8906(b), in the case of an employee or annuitant described in subsection (a), the biweekly or other periodic Government contribution under such provisions toward the subscription charge for the plan in which such employee or annuitant is enrolled shall be the amount by which such charge exceeds (if at all) the amount which under subsection (b) is required to be withheld from the pay or annuity of the employee or annuitant involved. ``(d)(1) Subject to paragraph (2), there shall be paid to the medical savings account of each employee or annuitant described in subsection (a), at the same time that the Government contribution under section 8906 is made (or would, but for this section, be made) for the benefit of such employee or annuitant, the amount by which-- ``(A) the total Government contribution allowable for the contract year involved (as defined in subsection (h)), exceeds ``(B) the amount of the Government contribution which under subsection (c) is required to be made toward the subscription charge for the plan in which such employee or annuitant is enrolled. No election to decline any contributions under this subsection shall be available to an employee or annuitant. ``(2) No contribution under this subsection shall be made to any medical savings account of an employee or annuitant for any period if, as of the first day of the month before the month in which such period commences, such employee or annuitant (or the spouse of such employee or annuitant, if coverage is for self and family) is entitled to benefits under part A of title XVIII of the Social Security Act. ``(3) The Office shall by regulation prescribe the time, form, and manner in which an employee or annuitant shall identify any medical savings account to which contributions for such employee or annuitant shall be made under this subsection. ``(4) Subsections (f) and (g) of section 8906 shall apply with respect to contributions under this subsection. ``(e) Any adjustment in the amount of any contribution under section 8906 that is required by subsection (b) or (c) of this section beginning in any contract year shall take effect-- ``(1) in the case of an employee, at the point in such year described in the second sentence of section 8906(b)(1); and ``(2) in the case of an annuitant, at the point in such year described in the third sentence of section 8906(b)(1). ``(f)(1) This section shall not apply to any employee or annuitant with respect to any period for which such employee or annuitant would not otherwise be eligible for a Government contribution under section 8906 (determined disregarding this section). ``(2) Neither subsection (b) nor (c) shall apply with respect to an employee or annuitant for any period for which-- ``(A) such employee or annuitant is ineligible for any contribution under subsection (d) by reason of paragraph (2) thereof; or ``(B) the amount of the contribution under subsection (d) for such employee or annuitant would otherwise be zero. ``(g) The Office shall by regulation provide for the application of section 8906(c) to the extent necessary to reflect any change in the ratio of individual to Government contributions resulting from the application of this section. ``(h) For purposes of this section, the term `total Government contribution allowable', as used with respect to a contract year, means the maximum Government contribution that could be made for health benefits for an employee or annuitant for such contract year, as determined under paragraph (1) of section 8906(b) (as well as paragraph (3) thereof, if appropriate, but disregarding paragraph (2) thereof and the provisions of this section).''. (B) Technical and conforming amendments.--(i) The table of sections at the beginning of chapter 89 of title 5, United States Code, is amended by striking the item relating to section 8906a and inserting the following: ``8906a. Contribution provisions relating to certain individuals enrolled in high deductible health plans. ``8906b. Temporary employees.''. (ii) Section 8913(b)(4) of title 5, United States Code, is amended by striking ``8906a(a)'' and inserting ``8906b(a)''. (2) High deductible health plans to be disregarded in determining government contributions.--Section 8906 of title 5, United States Code, is amended by adding at the end the following: ``(j) Notwithstanding any other provision of this section, there shall not be taken into account, for purposes of computing any average under subsection (a), any subscription charge for any high deductible health plan or any individuals enrolled therein.''. (3) Coordination provision.--Nothing in this section or in any amendment made by this section shall be considered to affect any authority under section 1005(f) of title 39, United States Code, to vary, add to, or substitute for any provision of chapter 89 of title 5, United States Code, as amended by this section. (4) Technical amendment.--The second sentence of section 8909(a) of title 5, United States Code, is amended by inserting ``(not including any Government contributions under section 8906a to a medical savings account)'' after ``of this title''. (e) Information to Individuals Who May Be Eligible for Government Contributions to a Medical Savings Account.--Section 8907 of title 5, United States Code, is amended by adding at the end the following: ``(c) In addition to any information otherwise provided for under this section, the Office shall make available to all employees and annuitants eligible to enroll in a high deductible health plan, in a form acceptable to the Office after consultation with the carrier, information relating to-- ``(1) the conditions under which a Government contribution shall be made under this chapter to a medical savings account; ``(2) the amount of the Government contribution payable under this chapter to a medical savings account (or how such amount may be ascertained); and ``(3) any other matter which the Office considers appropriate in connection with medical savings accounts.''. (f) Effective Date.--The amendments made by this section shall apply with respect to contract years beginning on or after January 1, 1999. The Office of Personnel Management shall take appropriate measures to ensure that coverage under a high deductible health plan under chapter 89 of title 5, United States Code (as amended by this section) shall be available as of the beginning of the first contract year described in the preceding sentence. SEC. 3. AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986. (a) Inclusion of Employees Enrolled in FEHBP High Deductible Health Plan.--Clause (iii) of section 220(c)(1)(A) of the Internal Revenue Code of 1986 (defining eligible individual) is amended by striking ``or'' at the end of subclause (I), by striking the period at the end of subclause (II) and inserting ``, or'', and by adding at the end the following new subclause: ``(III) the high deductible health plan covering such individual is provided under chapter 89 of title 5, United States Code.''. (b) Contributions Limited to Federal Contribution.--Subsection (b) section 220 of such Code (relating to limitations) is amended by adding at the end the following new paragraph: ``(8) Denial of deduction for individuals covered by high deductible federal employee health benefits plan.--The limitation under this subsection for any month with respect to any individual shall be zero if, as of the first day of such month, such individual is covered under a high deductible health plan provided under chapter 89 of title 5, United States Code. For purposes of applying section 106(b) for such month-- ``(A) the preceding sentence shall not apply, and ``(B) paragraph (4) shall not apply to any individual who is entitled to receive any amount for such month by reason of being an annuitant (as defined in section 8901(3) of such title 5).''. (c) Numerical Limitations, Etc., Not To Apply.-- (1) In general.--Subsection (i) of section 220 of such Code is amended by adding at the end the following new paragraph: ``(6) Exception for individuals covered by federal employee health benefits plans.--This subsection shall not apply to any individual who is an eligible individual by reason of subsection (c)(1)(A)(iii)(III). Medical savings accounts established by such individuals shall not be taken into account in determining whether the numerical limitations under subsection (j) are exceeded.''. (2) Exception from reporting.--Paragraph (4) of section 220(j) of such Code is amended by adding at the end the following new subparagraph: ``(E) Exception for accounts of individuals covered by federal employee health benefits plans.--No report shall be required under this paragraph with respect to a medical savings account of an individual if such account was established at the time such individual was an eligible individual by reason of subsection (c)(1)(A)(iii)(III).''.
summary: Federal Employees Health Care Freedom of Choice Act - Amends provisions of Federal law relating to the Federal Employees' Health Benefits Program (FEHBP) to authorize, and in certain circumstances require, the Office of Personnel Management (OPM) to contract with qualified carriers for a high deductible health plan (as defined in existing Internal Revenue Code medical savings account provisions). Requires that such a plan provide benefits of the types provided by service benefit plans, indemnity benefit plans, or both. Sets forth special contribution requirements applicable to employees or annuitants enrolled in such plans, including mandating certain payments to the medical savings account of each individual so enrolled. Requires OPM to make information available to such individuals regarding the circumstances in which a Government contribution will be made to a medical savings account and the amount of that contribution. (Sec. 3) Amends Internal Revenue Code medical savings account provisions to modify the definition of "eligible individual" to add references to high deductible plans provided under the FEHBP. Regulates the medical savings account deduction for FEHBP individuals. Exempts FEHBP individuals from numerical limits on the number of taxpayers having medical savings accounts.