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Proposed bylaw amendments for vote at annual meeting

GEHA members will vote on this year's Board candidates as well as proposed amendments to the Association bylaws at the upcoming annual membership meeting.

2017 GEHA annual meeting
April 5, 2017
Noon to 2 p.m. (luncheon starts at noon, meeting starts at 12:30 p.m.)
Adams Pointe Conference Center Courtyard by Marriott
1400 NE Coronado Drive
Blue Springs, Missouri

Click to open the full bylaws.

Explanation of Proposed Amendments to the Bylaws

1. Establishment of Regular Membership (Section 3.1).

Section 3.1 of the current Bylaws of the Government Employees Health Association, Inc. (the “Association”) provides that an employee or annuitant of the Federal Government may become regular members by enrolling in a benefit plan sponsored by the Association.

The proposed amendment to Section 3.1 of the Bylaws clarifies that an employee or annuitant of the Federal Government shall become regular members by enrolling in a benefit plan sponsored by the Association.

2. Establishment and Termination of Special Classes of Membership (Section 3.2).

Section 3.2 of the current Bylaws provides that the Board of Directors may use its discretion to define special classes of members as long as certain general criteria are met (e.g., persons who have shown an attachment to the Association and its purposes by virtue of legislative or regulatory mandate). Section 3.2 does not currently describe how eligible persons in special classes become special members or when special membership terminates. 

The proposed amendment to Section 3.2 of the Bylaws specifies the particular criteria the Board of Directors may use to define special classes of members, which are: (a) employment or service with the Association, (b) previous enrollment in a plan sponsored by the Association, (c) in accordance with Section 409 of the Indian Health Care Improvement Act or (d) prior employment with the Federal Government. 

The proposed amendment to Section 3.2 of the Bylaws specifies how eligible persons in special classes become special members and when special membership terminates, which is as follows: eligible persons become special members by enrolling in a benefit plan sponsored by the Association, and special membership terminates when a person is no longer enrolled in such a benefit plan.

3. Board of Directors Oversight and Composition (Section 5.1).

Section 5.1 of the current Bylaws does not address the responsibility of the Association’s Board of Directors for oversight of the affairs of the Association and the composition of the Boards of Directors, and does not clearly identify the staggered terms of the Board members.

The proposed amendment to Section 5.1 specifies the responsibility of the Board of Directors for oversight and control of the affairs of the Association. The proposed amendment to Section 5.1 also clarifies the staggered terms and commencement of the term of the Board members. Finally, the proposed amendment to Section 5.1 also specifies that at least a majority of the directors must be members of the Association.

4. Annual Meetings of the Board of Directors (Section 5.3).

Section 5.3 of the current Bylaws requires the Association’s Board to elect at its annual meeting the officers of the Association, which include a President, Vice President, and Secretary. Section 5.3 of the current Bylaws also provides that the elected officers will serve for terms of three years.

The proposed amendment to Section 5.3 requires the Association’s Board to elect at its annual meeting the officers of the Association, which will include a President, Lead Director (instead of a Vice President) and Secretary. Section 5.3 of the current Bylaws also provides that the elected officers will serve for terms of three years, unless earlier terminated by a majority vote of the directors.

5. Quorum of the Board of Directors (Section 5.4).

Section 5.4 of the current Bylaws provide that five directors plus one constitutes a quorum of the Association’s Board of Directors.

The proposed amendment to Section 5.4 provides that 50% of the Board of Directors plus one constitutes a quorum of the Association’s Board of Directors.

6. Special Meetings of the Board of Directors (Section 5.5).

The current Bylaws do not specifically address special meetings of the Board of Directors.

The proposed amendment to Section 5.5 specifies that special meetings of the Board of Directors may be called as often as necessary by the President, Lead Director or a majority of the Board of Directors.

7. Office of President (Section 5.6).

Section 5.6 of the current Bylaws does not specifically state that the President is an ex-officio member of the Board of Directors. Section 5.6 of the current Bylaws does state that the President will establish the committees of the Board of Directors and the President will appoint the chairpersons for such committees.

The proposed amendment to Section 5.6 of the Bylaws relating to office of the President: (a) specifies that the President will be an ex-officio member of the Board of Directors, (b) clarifies that the President will preside at all meetings of the membership and the Board of Directors, other than any executive session of the directors who are not employed as employees of the Association, and (c) eliminates the ability of the President to establish committees of the Board of Directors and to appoint the chairpersons for such committees. 

8. Office of Lead Director (Section 5.7)

Section 5.7 of the current Bylaws sets forth a description of the office of the Vice President.

The proposed amendment to Section 5.7 of the Bylaws eliminates the description of the office of the Vice President, and sets forth a description of the office of Lead Director. The description provides that the Lead Director will: (a) be a director who is selected by the Board to serve as Lead Director and who is not employed as an employee of the Association, (b) preside at Board meetings when the President is absent, (c) when present, preside at all executive sessions of the independent (i.e., not employed as an employee of the Association) directors, and (d) serve as the principal liaison between the President and the other independent directors.

9. Director Vacancy Declared (Section 5.9).

Section 5.9 of the current Bylaws sets forth in general terms when a director may be declared by the Board of Directors to have vacated his or her directorship.

The proposed amendment to Section 5.9 of the Bylaws specifically quantifies when a director may be declared by the Board of Directors to have vacated his or her directorship. Specifically, if a director fails to attend at least three meetings of the Board of Directors in any 12-month period, the director’s office may be declared vacant by a majority vote of the Board of Directors present at a regular or special meeting.

10. Vacancy in Board (Section 5.10).

Section 5.10 of the Bylaws only requires the Board of Directors to addresses vacancies in the Board when there are less than nine (9) members of the Board of Directors. In that situation, Section 5.10 requires the remaining members of the Board to appoint such additional members as necessary so there are at least nine (9) members of the Board of Directors.

The proposed amendment to Section 5.10 of the Bylaws would implement the same procedure to appoint additional directors when there are fewer than nine (9) members of the Board, as well as when there are fewer than a majority constituting members of the Association. In either of those situations, the remaining members of the Board must act to appoint such additional members as necessary to meet those minimum standards. The proposed also clarifies that the Board members appointed will serve until the next annual meeting when a successor will be elected to serve the remainder of the unexpired term.

11. Director and Officer Fees and Expenses (Section 5.11).

Section 5.11 of the current Bylaws generally provides that the Board of Directors has authority to make reasonable allowances to directors and officers for services and certain expenses.

The proposed amendment to Section 5.11 of the Bylaws clarifies that the Board of Directors will be compensated for services rendered to the Association as determined by a majority vote of the Board (in addition to having authority to make reasonable allowances to directors and officers for services and certain expenses).

12. Committees (Section 5.16).

The current Bylaws of the Association do not specifically address the establishment of committees, and the standing committees of the Board.

The proposed amendment to the Bylaws would add a new Section 5.16 that addresses the establishment of committees, and the standing committees of the Board. Section 5.16 would provide that the Board may designate and appoint committees by resolution, which will specify the powers and authority of the committee, and the term of service on such committees will be one year, unless otherwise specified. The designation or delegation of powers to a committee does not relieve the Board of any responsibilities imposed on it by law. Each committee must be chaired by a director, and may have members who are not directors. 

The new proposed Section 5.16 describes the standing committees of the Board, each of which must consist of at least three (3) members and are as follows: the Executive Committee, Nominating and Governance Committee, Audit Committee and Compensation Committee. The proposed Section 5.16 also specifies that the Executive Committee, which has the full power and authority of the Board when full Board meetings are not practicable, will consist of the President, Lead Director, the Chairs of the standing committees, and other members of the Board who are selected by a majority vote of the Board. In additional, the new proposed Section 5.16 specifies that all of the individuals serving on the Nominating and Governance Committee must be members of the Association, and the Nominating and Governance Committee will propose at least one person to fill each vacancy on the Board.

13. Annual and Special Meetings of the Members (Section 6.1).

Section 6.1 of the current Bylaws provides that the President will appoint a nominating committee of at least four members of the Board who will nominate a person for each vacancy on the Board at least one month before the annual meeting in April. Section 6.1 of the current Bylaws also provides that special meetings of the members may be called by the President.

The proposed amendment to Section 6.1 of the Bylaws removes the President’s unilateral appointment of a nominating committee, and states that the Board will nominate candidates for election by the membership at the annual meeting. The proposed amendment to Section 6.1 also provides that special meetings of the members may be called by the Lead Director or a majority of the Board of Directors, in addition to the President.

14. Notice of Meeting (Section 6.2).

Section 6.2 of the current Bylaws states that notice of regular or special meetings of the membership may be sent in the Association newsletter or other allowable method.

The proposed amendment to Section 6.2 of the Bylaws clarifies that another allowable method includes electronic means.

15. Order of Business at Annual Member Meetings (Section 6.4).

Section 6.4 of the current Bylaws sets forth the order of business at the annual meeting of the membership, which includes a roll call of the Board and officers, approval of prior minutes, reports of standing committees, reports of special committees, reports of officers, unfinished business, new business, election of Board members, and other business for the good of the Association.

The proposed amendment to the Bylaws removes the former Section 6.4 specifying the order of business at the annual meeting.

16. Contracting Authority (Article Eight).

Article Eight of the current Bylaws does not expressly permit the Board of Directors to contract with the Federal Government to provide benefits under the Federal Employees Health Benefits Program and to provide other benefits to former employees of the Federal Government.

The proposed amendment to Article 8 of the Bylaws expressly permits the Board of Directors to contract with the Federal Government to provide benefits under the Federal Employees Health Benefits Program and to provide other benefits to former employees of the Federal Government.

17. Indemnification and Insurance (Article Fourteen).

Article Fourteen of the current Bylaws provides a general indemnification of directors, officers and employees of the Association against third party claims, except when such persons are adjudged to have been fraudulent, dishonest or to have engaged in willful misconduct.

The proposed amendment adds new Sections 14.1 through 14.8 to the Bylaws. The new Sections 14.1-14.4 describe the indemnification of directors, officers and executive employees and other agents of the Association in greater detail, and separately addresses general indemnity and indemnity for derivative actions. The proposed amendment provides for mandatory indemnification by the Association when a director, officer, employee, or agent is successful on the merits or otherwise in defense of any third party claims covered by the indemnification provisions of the Bylaws. The proposed amendment also specifies that any indemnification, unless ordered by a court, will occur only as authorized and determined by the Board of Directors, usually by a majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding.

The proposed amendment also adds new Sections 14.5 and 14.6. The new Section 14.5 provides that expenses incurred in defending an action, suit or proceeding may be paid by the Association in advance as authorized by the Board of Directors upon receipt of an undertaking by or on behalf of the director, officer, employee, or agent to repay such amount unless determined that he or she is entitled to be indemnified by the Association as authorized in the Bylaws. The new Section 14.6 clarifies that the indemnification provisions in the Bylaws are not exclusive of any other rights to which those seeking indemnification may be entitled under the law or otherwise.

In addition, the proposed amendment adds a new Section 14.7, which provides that the Association may purchase and maintain insurance against any liability asserted against a director, officer, employee, or agent, whether or not the Association would have the power to indemnify him or her against such liability under the provisions of the Bylaws.

Finally, the proposed amendment adds a new Section 14.8, which defines certain terms used in Article Fourteen.