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HR8731119th CongressWALLET

Federal Employee Short-Term Disability Insurance Act of 2026

Sponsored By: Representative Norton, Eleanor Holmes [D-DC-At Large]

Introduced

Summary

Creates a voluntary short-term disability insurance program for Federal employees. It covers non-work injuries and provides paid leave options to care for family, including birth, adoption, and foster placement.

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  • Federal employees gain a voluntary benefit that can pay up to 12 months per eligible instance. Benefits equal the lesser of 70% of an employee’s current pay or 70% of the GS-15 maximum, and premiums are 100% paid by enrolled employees and withheld from pay.
  • Families and new parents can use the benefit to care for a family member, to bond after birth, or to arrange foster or adoptive placement. Employees pick a waiting period of 8, 31, 91, or 181 days; shorter waits increase premiums.
  • Administration and insurers are governed by the Office of Personnel Management Director through contracts with licensed carriers. Contracts run 3 to 7 years, must be fully insured, forbid preexisting-condition exclusions, require separate accounting, and allow internal and third-party dispute review as specified in the contract.

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Bill Overview

Analyzed Economic Effects

4 provisions identified: 1 benefits, 0 costs, 3 mixed.

Voluntary short-term disability for federal workers

If enacted, the bill would create a voluntary short-term disability program for civilian federal employees, including USPS and Postal Regulatory Commission workers. Enrolled employees would be able to get up to 12 months of pay replacement for each non-work disability, family-care leave (including birth), or foster/adoption-arrangement leave. Benefits would equal the lesser of 70% of your annual pay (bonuses excluded) or 70% of the GS-15 top basic pay. You would pick a waiting period (8, 31, 91, or 181 days); earlier starts would mean higher premiums. Enrollees would pay 100% of the premiums, which would be withheld from pay.

Federal preemption and premium tax ban

If enacted, contract terms under the program would override State, territorial, tribal, and local laws about non-work disability insurance to the extent the contract specifies. States and localities could not impose taxes, fees, or other monetary charges on premiums for these federal policies, though broad taxes on insurers' net income could still apply. State subrogation or reimbursement rules would not apply to benefits unless OPM adopts them in the contract.

Insurer contracts and enrollment rules

If enacted, the OPM Director could contract with private carriers to run plans under 3 to 7 year contracts that may auto-renew each January 1. Contracts would have to list benefits, exclusions, premium rules, enrollment rules, and eligibility. Carriers would have to offer internal claims processes, alternative dispute resolution, and independent third-party review for unresolved claims. If you try to enroll after the first open enrollment, carriers could apply underwriting, which could mean higher premiums or denial of later enrollment.

OPM startup funding and reporting

If enacted, OPM could use the Employees' Life Insurance Fund to pay reasonable startup and implementation costs before the first contract year. Carriers would have to repay those advances (including lost investment income) and make periodic contributions to a new administrative account to cover OPM's expenses. Carriers would also have to provide reports and records to OPM, and OPM would review plans to ensure competitiveness.

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.

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