AVERAGE OF SAVINGS
What is FEHBA?
The Federal Employees Health Benefits Act (FEHBA) program provides health insurance coverage to current and former federal employees, and their families. It is the largest employer-sponsored group health insurance program in the world, covering more than 8 million federal employees, retirees, former employees, and family members.
FEHBA contains a preemption provision which provides that certain contract terms in health insurance plans “shall” preempt state or local law. The language of a FEHBA Plan preempts state law, whether consistent or inconsistent with federal plan provisions, on matters of “coverage or benefits” (5 U.S.C. 8902(m)(1)). FEHBA authorizes the Office of Personnel Management (OPM) to contract with private insurance carriers to administer FEHBA plans. These OPM contracts have traditionally required the private insurance carriers to pursue subrogation and reimbursement.
How to Identify FEHBA Plans
Obtaining a copy of your client’s insurance benefit card is always the best practice to identify the appropriate entity with a possible lien interest on the settlement funds.
FEHBA plans are for federal employees like United States Postal Workers, IRS agents, Social Security Administration representatives, Border Patrol agents etc.
The most relevant law for FEHBA plans came in 2017 when the Supreme Court, held that the subrogation/reimbursement plan language contained in the health insurance contracts of Federal Employee Health Benefit plans (FEHBA) preempted state law.
“We conclude, however, that the statute, not a contract, strips state law of its force. … FEHBA contract terms have preemptive force.” Coventry Health Care of Missouri, Inc. v. Nevils, 137 S. Ct. 1190 (2017)
This decision empowered FEHBA plans to demand full reimbursement when a settlement occurs. With the holding that FEHBA preempts state law and that such preemption is constitutionally permissible, subrogation vendors handling these liens are emboldened to demand 100% reimbursement.
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