H.R. 8731: Federal Employee Short-Term Disability Insurance Act of 2026

This bill, titled the Federal Employee Short-Term Disability Insurance Act of 2026, aims to establish a short-term disability insurance program specifically for federal employees. The program would provide voluntary insurance coverage for federal employees who experience non-work-related injuries or disabilities. Here is a breakdown of the key components and provisions of the bill:

Purpose

The primary purpose of this bill is to offer federal employees insurance against loss of income that can result from:

• Short-term injuries or disabilities.
• Short-term leave taken for caring for a family member.
• The birth of a child.
• Making arrangements for adoption or becoming a foster parent.

Non-Work Related Disability Insurance

The bill proposes to add a new chapter (Chapter 88) to Title 5 of the United States Code to address non-work-related short-term disability insurance.

Eligibility and Availability

• The Director of the Office of Personnel Management (OPM) will establish and manage the insurance program.
• The insurance will cover disabilities and leave that are not covered under existing federal worker's compensation laws.
• Coverage will not be available for injuries or disabilities caused by:
• Willful misconduct of the employee.
• Intending to cause injury or disability to themselves or others.
• Intoxication.

Contracting Authority

The OPM will have the authority to contract with insurance providers without going through competitive bidding processes. However, contracts must ensure fair competition and reasonable pricing. Each contract will specify details about the coverage, premiums, duration of coverage periods, and procedures for establishing eligibility.

Benefits

• Benefits may last for up to 12 months for each instance of eligibility.
• The benefit amount will be capped at 70% of the employee's annual salary or a specified maximum based on pay grade.
• Contracts must not include pre-existing condition exclusions, and premium rates must not be higher based on these conditions.
• Incentives will be included to encourage employees to return to work.

Premiums

Employees who opt for this insurance will have to cover 100% of their premiums, which will be deducted directly from their paychecks.

Preemption of State Laws

This legislation would take precedence over any state, local, or tribal laws regarding non-work-related disability insurance. Moreover, no additional taxes or fees related to premiums for these policies can be imposed by governments.

Administrative Functions

The OPM will prescribe necessary regulations to implement the program and work with relevant agencies for payroll processing and benefit administration.

Reporting and Oversight

The carriers providing insurance will be required to submit regular reports to the OPM, and all federal agencies must provide necessary information and records. The OPM will periodically review the program for effectiveness and competitiveness.

Judicial Jurisdiction

Federal courts will have jurisdiction over legal claims related to this chapter after individual administrative remedies have been exhausted.

Duration and Renewal of Contracts

Contracts for insurance will typically cover terms of 3 to 7 years and may be renewed automatically unless notice is given otherwise.

Relevant Companies

• None found