POSTAL RETIREE HEALTH BENEFITS
Unsustainable Finances Need to Be Addressed
The financial outlook of the Postal Service Retiree Health Benefits Fund (RHB Fund) is poor.
At the end of fiscal year 2017, the fund’s assets declined to $49.8 billion and unfunded liabilities rose to $62.2 billion. Based on Office of Personnel Management (OPM) projections requested by GAO, the fund is on track to be depleted in fiscal year 2030 if the United States Postal Service (USPS) continues to make no payments into the fund.
Annual payments of $1 billion or $2 billion into the fund would extend the projected depletion date by 2 to 5 years (see figure). USPS has said that its required payments to the fund are unaffordable relative to its current financial situation and outlook.
For the past 11 years USPS has incurred large operating losses that it expects will continue. Additionally, USPS has stated that its opportunities for revenue generation and cost-cutting are limited. USPS reported that it did not make required fund payments in 2017 in order to preserve liquidity and cover operational costs.
If the fund becomes depleted, USPS would be required by law to make the payments necessary to cover its share of health benefits premiums for current postal retirees.
Current law does not address what would happen if the fund becomes depleted and USPS does not make payments to cover those premiums. Depletion of the fund could affect postal retirees as well as USPS, customers, and other stakeholders, including the federal government. About 500,000 postal retirees receive health benefits and OPM expects that number to remain about the same through 2035.
Why GAO Did This Study
USPS is required to prefund its share of health benefits costs for its retirees. To do so, USPS is required to make payments into the RHB Fund, which is administered by OPM. However, USPS has not made any payments to the fund since fiscal year 2010. At the end of fiscal year 2017, USPS had missed $38.2 billion in payments, leaving the fund 44 percent funded. Pursuant to law, beginning in fiscal year 2017, OPM started drawing from the fund to cover USPS’s share of postal retirees’ health benefits premiums. GAO was asked to review issues related to the sustainability of the RHB Fund.
This report examines (1) the financial outlook for the RHB Fund and (2) policy approaches for postal retiree health benefits, among other topics. GAO evaluated financial projections for the RHB Fund from OPM. GAO reviewed laws and regulations and identified policy approaches primarily by identifying legislative proposals, and literature on actions of companies and state governments to address retiree health benefits. These approaches are not exhaustive or mutually exclusive. GAO also interviewed experts in retiree health benefits and postal stakeholders, chosen on the basis of relevant publications and prior GAO work, and interviewed and obtained written responses from OPM and USPS officials.
What GAO Found
The financial outlook of the Postal Service Retiree Health Benefits Fund (RHB Fund) is poor. At the end of fiscal year 2017, the fund’s assets declined to $49.8 billion and unfunded liabilities rose to $62.2 billion. Based on Office of Personnel Management (OPM) projections requested by GAO, the fund is on track to be depleted in fiscal year 2030 if the United States Postal Service (USPS) continues to make no payments into the fund. Annual payments of $1 billion or $2 billion into the fund would extend the projected depletion date by 2 to 5 years (see figure). USPS has said that its required payments to the fund are unaffordable relative to its current financial situation and outlook. For the past 11 years USPS has incurred large operating losses that it expects will continue. Additionally, USPS has stated that its opportunities for revenue generation and cost-cutting are limited. USPS reported that it did not make required fund payments in 2017 in order to preserve liquidity and cover operational costs. If the fund becomes depleted, USPS would be required by law to make the payments necessary to cover its share of health benefits premiums for current postal retirees. Current law does not address what would happen if the fund becomes depleted and USPS does not make payments to cover those premiums. Depletion of the fund could affect postal retirees as well as USPS, customers, and other stakeholders, including the federal government. About 500,000 postal retirees receive health benefits and OPM expects that number to remain about the same through 2035.
What GAO Recommends
Congress should consider passing legislation to put postal retiree health benefits on a more sustainable financial footing. USPS agreed that congressional action is needed and offered views on some policy approaches discussed in this report.
The Russians are behind the decline in mail volume …What a nitwit..
He wants a 40k buyout when the article says the PO is going broke. Perhaps he should ask trump for a handout from the federal tax he doesn’t pay.
And some of the worst. Which I also saw in the Phila Naval Shipyard.
Yeah and they reduced the workforce by 40% and INCREASED MANAGEMENT by 20%!!!! Fiscal idiots!!!
I am consistently amazed by how stupid the Postal Employees who respond to these threads are. What’s going on is not Rocket Science, folks. Yes, the Postal Service has been making money, yes the pre-funding has drained that money. And yes the Postal Service does not want to admit to financial gain for fear of more attached deficits, but good grief, the people on the ground level (Clerks, Carriers, Maintenance etc.) are some of the finest people on this earth. I spent 34 years with them.
So on paper the P.O. is still losing $. Haven’t heard that one before…… the unions will fight everything that could cut costs when it could mean less employees/possible union members. Sideways we keep going and the broken record continues. Noise, noise, noise
Sounds like management has been using it for a long time now !
The reason the Postal service, and only the Postal service, must pay for the cost of health care prefunded is but a political decision. Notice that not even the Mafi must prefund their health care costs. The “great leaders” of this country will do anything to destroy the Postal Service. The 68% of Postal workers that voted for President Bankruptcy asked for it. Just end the prefunding crap. what does one expect from the brain dead leaders from Washington, Dis Connected? Nothing but ways to screw workers and see that business prospers. Time for single payer health care. Great story in the New York Times dated 10/13/18 about how a certain leader avoided paying taxes for years. Why should he pay his share when the working suckers must pay for what he doesn’t want to pay? Make the rich pay their part, quit being freeloaders.
Medicare for retirement only..Get Health insurance at your job!! Dumb Ass
Postal Circus Mismanagers are a hair short of being financial criminals. carrier, clerk, mailhandler unions see, speak, hear no evil and want to maintain the status quo…President Trump sees through all the Postal Circus smoke, mirrors, and shadows on the wall and understands the 210 Billion in liabilities will only go up. no way in heck are these dolts are ever going to compete with UPS/FDX/AMZN, much less go to number 1. give the 40K BUYOUT President Trump so we can make America great again. this dog does just not hunt!
Unfortunately, the only solution our management and our politicians will consider is for employees to pay more and USPS to pay less, then when the money is gone, u pay all of it. This is the same plan for social security.
Medicare for all.
Fund the Fund..Retirees need health care too!!!! Dumber and poorer
Further proof of the USPS being mismanaged by incompetent idiots. And who gets the short end of the stick? Not the big boys. No they will just create another section within the USPS under the guise of customer service! Who pays for that and which high dollar managers got the sweet jobs because they care about customer service so much? How about a new $93 million plant in Portland Oregon. Sounds like they have lots of money to me.
After working over 30 years , there ain’t much life left , so they figure you’ll drop!
who needs health care ! We have medical marijuana!
Yeah and the reduced the workforce by 40% and INCREASED MANAGEMENT by 20%!!!! Fiscal idiots!!!