Federal Employees Benefits Improvement Act of 1985

Federal Employees Benefits Improvement Act of 1985 - Amends current law with respect to amounts held in contingency reserves under the Employees Health Benefits Fund to change from "employees" to "enrollees" those persons eligible for rebates from such reserves.

Increases the maximum Government contribution for an enrollee in the Federal Employee Health Benefit Plan from 75 to 100 percent of the subscription charge.

Reinstates contracting authority under the plan for health services for medically underserved populations.

Eliminates the requirement of three medical specialties for group-practice prepayment plans.

Directs the Office of Personnel Management (OPM) to report, by March 1, 1986, to the House Committee on Post Office and Civil Service and the Senate Committee on Governmental Affairs on: (1) the adequacy of current sources in assisting individuals in making an informed choice for a health plan; and (2) authorizing direct reimbursement for services provided by nonphysician health practitioners.

Directs OPM to provide a three week period during which enrollees in health benefits plans may change or cancel their enrollments before any contract term in which the rates or benefits of a plan will change, a new plan will be offered, or an existing plan will be terminated.

Authorizes an enrollee to transfer such enrollment at other times and under other conditions as prescribed by OPM.

Authorizes Federal health plans to require a referral by a psychiatrist as a condition for reimbursement of clinical social workers. Prohibits such plans from requiring that services be performed under the supervision of a psychiatrist or other health practitioner.

Expresses the sense of the Congress that: (1) Federal health plan participants should receive adequate insurance coverage for treatment of mental illness, alcoholism, and drug addiction; and (2) OPM should encourage participating plans to provide adequate benefits relating to such illnesses.

Amends the Civil Service Retirement Spouse Equity Act of 1984 to make technical changes with respect to the applicability of survivor benefits. Directs OPM to prescribe regulations under which an employee or Member may designate a portion of such employee's annuity to be used as the base for the survivor annuity for a former spouse.