Request for Decision Involving Employee Health and Life Insurance Plans

The Administrator of the Federal Railroad Administration requested a GAO opinion on four questions as to whether: (1) the Railroad's contribution for Federal Employee Health Benefits (FEHB) insurance premiums may exceed the 75-percent ceiling established by legislation; (2) past erroneous under-deductions from employees for health and life insurance premiums may be waived without a full audit; (3) the Alaska Railroad has an obligation to identify and reimburse past over-deductions from employees for life insurance premiums; and (4) the Alaska Railroad may continue a supplemental health plan for its employees separate from the FEHB programs. Regarding the first question, GAO stated that the Railroad may not independently restructure its participation in the Federal Employee Health Benefits Act (FEHBA) program by increasing its contribution beyond the 75-percent ceiling unless it is specifically exempted. The Alaska Railroad had, in the past, contributed more than 75 percent toward employee premium costs for health insurance. GAO determined that, due to the costs of an audit, this case meets the standard for termination of collection set forth in Federal legislation. GAO determined that the Alaska Railroad is not legally obligated to assist in the prosecution of claims against its interest by conducting a special audit to identify and reimburse possible over-deductions from employees for life insurance premiums, especially where employees have the capacity to compute the correctness of their own deductions. The Railroad, however, should provide a general notice of potential discrepancy and individually audit and adjudicate claims subsequently submitted within an applicable limitations period. The Alaska Railroad may not on its own initiative or through collective bargaining impair or alter the specific limits established by Federal legislation for its contributory participation under FEHBA. However, GAO found nothing in its combined review of the Alaska Railroad Act and FEHBA that prohibits an agency from continuing pre-existing health programs. Accordingly, GAO had no objection to permitting the Alaska Railroad to continue its Alaska Railroad Medical Association Program in addition to the FEHB programs, absent congressional action to divest the Railroad of such authority.