From PostalReporter.com reader: Have you listened to this? Postal Service Health Benefits and the FEHBP All postal retirees and future postal retirees should. If the Postal Service Reform Act (H.R. 5714) passes, a retired postal couple would be hit with an extra $4,000 per year in health insurance premiums for Medicare Part B and Part D.
Only 36 FEHB health plans nationwide would be available to postal workers and retirees. Most HMOs would be excluded. The USPS long-term goal is to push everyone over 65 into Medicare. Actuaries predict Medicare will be bankrupt in 12 years.
Postal Service Reform Act (H.R. 5714) excerpt:
TITLE I–POSTAL SERVICE BENEFITS REFORM
This bill requires the Office of Personnel Management (OPM) to establish a Postal Service Health Benefits Program within the Federal Employees Health Benefits Program to offer health benefits plans for U.S. Postal Service (USPS) employees, annuitant retirees, and their families at rates that reflect the cost of benefits provided solely to the USPS risk pool. To obtain or continue federal coverage, Medicare-eligible postal retirees must be enrolled in part A (Hospital Insurance) and part B (Supplementary Medical Insurance Benefits for Aged and Disabled) of title XVIII (Medicare) of the Social Security Act. Each plan must provide Medicare part D (Voluntary Prescription Drug Benefit Program) prescription drug benefits.
Postal retirees not previously enrolled in Medicare will be transitioned automatically into Medicare part B, with their premiums reduced by 75% in the first year, 50% in the second year, and 25% in the third year, after which they will pay the full premium.
The USPS’s annual prefunding payments to the Postal Service Retiree Health Benefits Fund must be recomputed each year based on economic and actuarial methods to liquidate 100% of the USPS’s actuarial liability by September 30, 2055. The bill cancels the unpaid final 6 of 10 prefunding payments that the USPS was obligated to pay into the fund from August 1, 2012, to September 30, 2016.
The OPM must use postal-specific demographic and economic assumptions in its valuations of the USPS’s Civil Service Retirement System (CSRS) and Federal Employees Retirement System (FERS) pension accounts. Under CSRS and FERS, any projected USPS funding surpluses shall be returned to the USPS through amortized annual installments.
note: The Postmaster General and other USPS Headquarters officials are exempt from this transition
Postal Service Health Benefits and the FEHBP
Insurance expert and author Walton Francis joins host Mike Causey to talk about how the pending Postal Service Reform Act, could affect the health care benefits of both postal and non-postal workers. Walton J. Francis is well known to federal and postal workers and retirees as the editor of CHECKBOOK’s Guide to Federal Health Plans for Federal Employees & Annuitants.
The House Committee on Oversight and Government Reform recently considered the Postal Service Reform Act (H.R. 5714). The bill proposes shifting postal retirees’ primary health care coverage from the Federal Employees Health Benefits Program (FEHBP) to Medicare. Proponents call this a consensus proposal for integrating the FEHBP with Medicare. It is not. The proposal’s impact on postal retirees and taxpayers alike could be substantial.
For taxpayers, the House bill would shift unfunded postal obligations to Medicare’s unfunded long-term obligations. Today, Medicare is burdened by an enormous 75-year unfunded obligation that ranges from $32.4 trillion to $43.5 trillion, depending on the assumptions.[1] The bill also perpetuates 100 percent wraparound, supplemental insurance, which provides “first dollar” coverage and “free” medical care. This arrangement drives excessive Medicare use, and thus imposes ever higher costs on both Medicare beneficiaries and taxpayers alike.[2]
For postal annuitants, the bill would result in these retirees facing either a significant reduction in retirement income because of additional premium costs, or a loss of existing benefits offered through the FEHBP. Under the proposal, postal annuitants would be forced to enroll in Medicare Part B, required to pay the premiums for Part B, and continued premium payments in the FEHBP if they want to maintain any FEHBP benefits or choice among FEHBP plans. Paying two premiums instead of one is an unforeseen and unbudgeted cost to these retirees.
The House postal-retiree health care proposal misses the underlying challenges facing the FEHBP and its uneasy co-existence with Medicare. The proposal fails to address past policy mistakes, makes the interaction between both programs worse by cementing a bad wraparound supplementation model, and puts postal annuitants in the cross hairs for a major economic penalty. For a postal-annuitant couple with an average pension of $36,000 a year,[33] being forced to pay about $3,000 for two Medicare Part B premiums to avoid losing all health insurance is not a light tap on the wallet.
Walton Francis points out a key issue, and supports it with data from OPM, implementing this change to USPS health care will increase costs for the USPS and increase monthly premiums for postal employees and retirees who will be forced out of the FEHBP risk pool into a unique PSHBP risk pool. The data he has obtained from OPM shows a cost transfer (to Medicare, USPS call this savings) by forcing 93,000 retirees into Medicare of about $500 million annually. The problem is that postal employees are more costly health care users than the rest of the Federal Government. So putting postal employees into a their own risk pool will increase the per participant cost. The impact of this is a cost of approximately $700 million annually. The net impact is a increase in annual cost of approximately $200 million annually. This will be paid in part by USPS employees and retirees through higher premiums (than would have been paid if still in FEHBP) and by the USPS. This will increase, not decrease USPS costs for retiree health care. Combined with the other negative aspects of this proposed legislatively forced change in USPS healthcare make this a very bad deal that would be costly to all and very costly to some retirees forced to take Medicare that they do not want or need.
to be under medicare, you should consider taking A&B, NOT Medicare Advantage which has the Plan D…..By keeping high option FEHBP and medicare A&B, you have 100% coverage of medical expenses except for a few copays for meds, you still have caremark for name brand meds and generic that are over $10/90 days, and your FEH BP will pay the medicare deductibles for the year so you don’t have to fret over unexpected medical bills….not even a copay at the doctor’s office….SO, NOT SUCH A BAD DEAL, and if you itemize the medicare premium is part of medical expenses. In the end, we have the best health insurance coverage any one could ever dream of having……Think long and hard before taking medicare advantange, with the Plan D for drugs……..not such a bad deal in the long run…..even $700./month for a couple is cheap when even one needs hospitalization….A nice cushion to know that
you don’t have to worry about medical expenses eating up your life savings…..
Barbara, Can you please expound on the retirees FEHB until age 65, then what happens to them , and what is on the table for retirees immediately with medicare integration facing us, and its waiting for the present Postal employees and upon retirement walk into a mess for healthcare. Any assistance you can share with the masses please help all of us out. Many Many Thanks for what you’ve done thus far.
I believe Carper a Democrat senator came up with this bill. They are stabbing us in the back.
I thought like a lot of workers that the union, and the Dems had our backs.
if you don’t like what’s going on. Who, do you look to , those who are in power, right.
I hear a lot of excuses, but the buck stops somewhere. I like, many workers supported
who said they supported us, I wish I was wrong but I don’t see any silver lining in
this cloud.
Same old babble that the Postal Service, and only the Postal service, has this evil health care obligation! And our great nation should not be required to pay for this awful cost of health care. The lazy Postal Employee must pay! And also the Federal employee’s health care is subsidized by the American tax payer by 75 percent. And how awful that the Federal employee’s retirement and health care is guaranteed by the tax payer. Never mind that the Federal employee must subsidize the businessmen of America! The business cheap bastards pay as little as possible, while the tax payer pays for the earned income tax credit, welfare, food stamps, Medicaid, and for the farmers, farm price subsidizes, and crop insurance. And don’t forget tax abatement and every other form of wealthfare. The Heritage Foundation can go to hell! It’s very nice that the Federal employee is expected to subsidize every one else, however we can’t expect to receive even a pencil .