LETTER TO (SANITIZED) FROM ANDREW E. RUDDOCK

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP87-00868R000100100028-5
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 6
• Document Creation Date: December 22, 2016
• Document Release Date: November 9, 2009
• Sequence Number: 28
• Publication Date: May 5, 1966
• Content Type: LETTER

UNITED STATES CIVIL SERVICE COMMIS
BUREAU OF RETIREMENT AND INSURANCE
WASHINGTON, D.C. 20415
May 5, 1966
STAT!
STAY
President
Government Employees Health
Association, Inc.
Post Office Box 463
Washington, D. C. 20004
This letter is our annual reminder to all carriers participating..in
the Federal Employees Health Benefits Program concerning the submission
of rate and benefit proposals for the next contract term beginning Janu-.
ary 1, 1967.
1. DEADLINE DATES FOR PROPOSALS
Deadline dates for the submission of proposed changes in health
benefits plans are established by regulation. The last day for
proposals for changes in benefits is June 30, 1966 - for changes
in subscription charges, August 31~ 19 No extensions beyond
these dates can be granted and we cannot consider until January 1,
1967 any proposals received after these dates.
For the reasons mentioned in item 10, we would appreciate your
firm proposals for first, your benefits and second, your rates (or
both together if feasible) as soon as you can possibly submit them,
leaving the deadline dates for necessary last minute changes.
2. OPEN SEASON
As has been announced in the Federal Register of April 26, the
Commission proposes to hold an open season. for employees and an-
nuitants during the period November 14 - 30, 1966, with enrollment
changes to be effective the first pay period in January 1967. Any
carrier comments on the open-season proposal must be submitted to
us before May 27 to be considered. Although the Commission's final
_Uecision will not be made until after that date, you should assume
in your planning that an open season will be scheduled. by the Commis-
sion as proposed. Information following in this letter is based on
this assumption. If the Commission's final decision is not to have
an open season you will he promptly informed.
4,
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Several details about the distribution of brochures are still
to be worked out so we will let you know later what arrangements
will be made. In view of the fact that we have not had a general
distribution of brochures since the open season in October 1963,
we tentatively an to have each employee and annuitant receive
'a revised brochure of theplan in which he is currently enrolled,
with revised brochures of other plans being available upon reqest.
The new brochures will be a different color than any previously
used and the brochure of each plan will probably include a listing
of the material changes being made in its benefits and rates for
1967.
4. CHANGES IN BENEFITS-
You Z nJ(/y
are free to propose increases or reductions in benefits. For
the last two yecirs wehave discouraged material changes in benefits
because open seasons have not been scheduled. If you have held back
some proposals for desirable adjustments in your plan because they
would have resulted in benefit reductions, now is the time to submit
them.
We proposed last year'that each carrier bring its plants benefits
for mental illness up to the minimum specifications recommended by
the National Institute of Mental Health. We said this should be
done "at latest, for the year beginning January'1, 1967". Some plans
have been gradually improving mental illness benefits over the past
two yearn, some have indicated they would improve this year, a few
have done nothing. Regardless of the category in which you fall,
we request that you carefully match your plan's benefits for mental
illness against the suggested minimum specifications and propose
the necessary changes to substantially meet the recommended minimal
levels, especially for out-of-hospital care. We cannot continue to
justify inadequacies in the protection afforded by plans under the
Federal employee program in this area where the need, is so vital.
We are not enclosing the specifications.since they have been sent
to carriers on two occasions but if you have misplaced your copies
we will be glad to send you another.
We also urge carriers to review their plans to be sure that they
do not, by technical construction of the benefit language, exclude
new surgical and medical procedures which have been developed during
the last few years and are being used with some frequency -for
example, hemodialysis.
5. INCORPORATION OF BROCHURES IN CONTRACT
For many of the plans participating in the program the brochure has
been successfully incorporated by reference in the contract as the
statement of benefits provided by the plan. At least one of these
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plans is underwritten by an insurance company and the brochure
is similarly made part of the policy issued by the underwriter.
Since we have consistently held, with your concurrence, that
emgloyecs are entitled to rely on the statements - _the brochure,.
1tis for all n;trnoses the contract statement of benefits. As
you know, our major effort in achieving agreement on benefits
and changes in benefits is in the drafting of the brochure lan-
guage. Thereafter, we attempt to make the contract (or under-
writers policy) conform to the brochure. Incorporation of the
brochure in the contract eliminates this last unnecessary and
time-consuming chore.
Therefore, where it is not already,being done and unless there
is some legal impediment to such a procedure, we are strongly
urging that contracts for 1967 be revised to incorporate the
brochure as the. statement of the benefits provided. Contract
provisions not contained in or appropriate for the brochure will,
of course, remain in the contract or policy.
6. METHOD OP SUBMITTING BENEFIT PROPOSALS
Written benefit-change proposals should be submitted in duplicate.
The proposed changes, should not only be specifically described but
also be in proper form for inclusion in your brochure. Try the
language for each proposed change in the appropriate place in the
brochure to see if it fits, and whether the intent is clear and
not in conflict with other provisions. In fact, we would prefer
that, in addition to the specific proposals for changes, you send
us a current brochure marked up to show the revisions you believe
are necessary to reflect the changes. This would also be the time
to review the entire brochure to see that it accurately reflects
the benefits you intend your plan to provide.
7. PROPOSALS TO ELIMINATE LOW OPTIONS
Assuming there will be an open season, we will approve proposals
to eliminate low options, except in the two Governmentwide plans
which are required by law to offer two options. If a low option
is withdrawn, employees enrolled in it will automatically be trans-
fe_rred to the high option of the some plan unless they change to
another plan during the open season. 1 reserves attributable to
the 'Cow option wi11The available for use by the remaining option.
Plans with a small low-option enrollment are especially urged to
enns'det making such n proposal.
8. CHANGES IN SUBSCRIPTION CHARGES
Although final proposals for rate changes are not due until August 31,
1966, if you know that increases are necessary we ask that you submit
tentative proposals with presently available justification on or befores
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June 30, This will give us more time to review your needs and
still leave you free to revise your proposals any time up to
August 31.
Please show in your proposal your best estimate as to what portion
of an increase (or decrease) is attributable to each specific change
in benefits and, by option, what portion is necessary because of
past and anticipated claims experience. Justification of an increase
for experience-rated plans should be based on and accompanied by a
forecast similar to that which you gave us last year. Your calcula-
tions should take into account the amount payable(or available in
whole or part to group-practice plans upon justification) from the
Contingency Reserve held in the Health Benefits Fund.
Proposals for changes in subscription charges should be submitted
as biweekly net-,to-carrier contract rates(not brochure rates which
include a 4% overlay for Administrative and Contingency Reserves).
9. POSSIBLE INCREASE IN GOVERNMENT CONTRIBUTION
Although we cannot predict what legislation Congress will enact,
it is quite likely that legislation will be passed to increase
the Government contribution. The amount of the increase, if any,
and its effective dat6 will very likely be known before the deadline
dates for proposals.' However, we would suggest that you do not let
such an increase influence your determination as to the need for or
amount of a change in rate.
We appreciate that an increase in the Government contribution may
be an influencing factor on your benefit proposals. We wish,
therefore, that we could be more definite in this regard, but
all we can offer as a guide is:
a) The President's recommendation is that the Government's
biweekly contribution be increased in two stages; to
$1.49 self only and $3.61 family effective January 1,
1967, and to $1.68 and $4.10 effective January 1,
1968. These figures include the 4% overlay for Adminis-
trative and Contingency Reserves.
b) A bill (H.R. 14122) recently passed by the House of Rep-
resentatives and now being considered by the Senate would
increase the Government's biweekly contribution to the
$1.68 and $4.10 mentioned in (a) effective July 1, 1966.
In either case, the Government contribution co' 1d not exceed 57. of
the subscription charge, and would no longer be determined by the
charge for the least expensive option offered by the Governmentwide
plans, As stated, we cannot say at this time what, if anything,
will be enacted,
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10. IMPORTANT - PLEASE RUSH
In order to have brochures at agency field installations for
distribution to employees in time for the proposed open season
on November 14, the Government Printing Office will have to start
printing them on September 1. This means that we must have com-
pleted consultation with you on brochure language and have final
galley proofs, except for possible changes in rates, by August 31
at the latest. To do this we have to start sending first-copy
for some of the plans to GPO before June 30.
As you can see, the schedule will be extremely tight this year.
Anything you can do to get your proposals in early and in brochure
language form and to expedite clearances of proofs as we get them
to you will help to get the job done on time. Brochures that are
late will just not be available to employees during the open season.
Andrew E. Ruddock
Director
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