Federal workers get voluntary disability coverage—but insurers get a new market
H.R. 8731 — Federal Employee Short-Term Disability Insurance Act of 2026 · Filed by Eleanor Norton (D-DC) · Introduced May 11, 2026 · Referred to committee
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What it does
This bill creates a voluntary short-term disability insurance program for federal employees, covering non-work injuries, family care leave, and parental/adoption leave. Employees pay 100% of premiums (deducted from pay), and the Office of Personnel Management contracts with private insurance carriers to deliver benefits of up to 70% of salary for up to 12 months, with waiting periods of 8, 31, 91, or 181 days depending on employee choice.
Why we flagged it
The bill's core function is to expand voluntary insurance benefits available to federal employees for non-work-related disability and family leave. It is a straightforward benefits program, not a deregulation, tax measure, or rider.
What the text implies
- Section 8806 preempts state and local disability insurance laws and premium taxation, creating a federal carve-out that may limit state regulatory authority over disability products sold to federal employees.
- The 'without regard to any statute requiring competitive bidding' language in Section 8803 grants OPM broad discretion to award contracts based on 'qualifications, price, and reasonable competition'—a standard looser than formal competitive procurement, potentially favoring incumbent carriers.
The full analysis lists 4 implications of this text.
Who stands to gain
disability insurance carriers (AIG, Prudential, Principal, Fidelity & Deposit, Assurant); insurance brokers and administrators; reinsurance companies