Federal Employee Short-Term Disability Insurance Act of 2026
Sponsored By: Representative Norton, Eleanor Holmes [D-DC-At Large]
Introduced
Summary
Establishes voluntary short-term disability insurance for federal employees to cover pay loss from non-work injuries, caring for a family member, birth, adoption, or foster placement. The new Title 5 chapter sets benefits, premiums, contracts, and program rules.
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- Federal employees and families: Offers voluntary coverage paid entirely by employees through payroll withholding. Benefits can pay up to 12 months per qualifying event and are capped at 70% of pay or 70% of the GS-15 maximum.
- Agencies and program administration: Gives the Director of the Office of Personnel Management authority to create and run the program, select carriers, and use contracts that run 3 to 7 years. The Director coordinates enrollment, payroll withholding, reporting, and rules on how benefit receipt affects pay and retention.
- Insurers and market rules: Requires fully insured contracts that reflect benefit costs, mandates internal and independent dispute resolution, and allows underwriting for later enrollments under permitted standards. State and local laws and most taxes on premiums are preempted to align with contract terms.
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Bill Overview
Analyzed Economic Effects
3 provisions identified: 2 benefits, 0 costs, 1 mixed.
Voluntary federal short-term disability
If enacted, the bill would create a voluntary short-term disability insurance program for federal civilian employees, USPS, and Postal Regulatory Commission staff. If you enroll, you would pick a waiting period (day 8, 31, 91, or 181) and could get up to 70% of your annual basic pay, capped at 70% of the GS-15 top rate. Benefits could pay up to 12 months per qualifying instance and would be reduced by other payments for the same condition like workers' compensation or disability retirement. Plans could not deny or charge more for preexisting conditions, but would not cover injuries from willful misconduct, intentional self-harm, or intoxication.
How OPM would run the program
If enacted, OPM would contract with private insurers to operate the program under 3–7 year contracts that may auto-renew each January 1 unless 180 days' notice is given. You would pay 100% of premiums, withheld from your pay, and coverage would continue only while you remain in federal service and keep paying premiums. Carriers would keep separate accounts, pay claims, run internal dispute procedures and offer independent third‑party review, and they must provide reporting to OPM. OPM could use the Employees' Life Insurance Fund to cover start-up administrative costs (carriers must reimburse), and underwriting rules may apply for later enrollments. Judicial review in federal court would be possible only after contract remedies are exhausted. The chapter's contracts would be exempt from federal cost accounting rules under 41 U.S.C. §1502, and the chapter would apply to contracts that take effect for the first calendar year more than 18 months after enactment.
No state taxes on premiums
If enacted, federal contract terms would override state, territorial, tribal, and local laws about these non-work disability policies. States and localities could not impose taxes, fees, or other payments on premiums for these policies. States could still tax an insurer's net income or profit generally. State subrogation or reimbursement rules would not apply to these benefits unless OPM adopts them.
Sponsors & CoSponsors
Sponsor
Norton, Eleanor Holmes [D-DC-At Large]
DC • D
Cosponsors
There are no cosponsors for this bill.
Roll Call Votes
No roll call votes available for this bill.
View on Congress.gov