28.307-1
Group insurance plans
Contractors under cost-reimbursement contracts must obtain agency approval for group insurance plans and ensure the government shares in any premium refunds or credits.
Overview
FAR 28.307-1 addresses requirements for contractors purchasing group insurance plans under cost-reimbursement contracts. Contractors must obtain prior approval from the contracting agency before acquiring group insurance, and any significant changes to plan benefits that could increase government costs also require approval. Additionally, the regulation mandates that the government must share in any premium refunds or credits resulting from the group insurance plan, with consideration given to special reserves and future refunds to which the contractor may be entitled. This ensures transparency and equitable cost-sharing between the contractor and the government regarding insurance-related expenses and benefits.
Key Rules
- Prior Approval for Group Insurance
- Contractors must submit group insurance plans for agency approval before purchase under cost-reimbursement contracts. Any significant benefit changes that may increase costs also require approval.
- Government Share in Premium Refunds or Credits
- The insurance plan must allow the government to share in any premium refunds or credits, factoring in special reserves and future refunds due to the contractor.
Responsibilities
- Contracting Officers: Review and approve group insurance plans and any significant benefit changes; ensure government receives appropriate share of refunds or credits.
- Contractors: Submit group insurance plans and significant changes for approval; structure plans to allow government participation in refunds or credits.
- Agencies: Oversee compliance and provide regulatory guidance for approvals.
Practical Implications
- This section ensures government oversight of insurance costs and prevents unapproved increases in government liability. Contractors must plan for approval timelines and structure insurance agreements to comply with refund-sharing requirements. Failure to comply can result in disallowed costs or contract disputes.