March 2022 Update
The Postal Service Reform Act of 2022 (H.R. 3076) passed in February by a vote of 342-92 in the House of Representatives. The measure gained the support of all 222 Democrats and 120 Republicans. The Senate approved its version (S. 1720) by a vote of 79-19 on March 8th. In the Senate, 48 Democrats were joined by the two Independents and 29 Republicans in voting for the measure. The Act has now been sent to the White House for the signature of President Biden. So, let’s take a look at the final product.
A key element of the Postal Service Reform Act is that it eliminates the prefunding mandate and integrates retiree healthcare with Medicare. The Act also formalizes the obligation to deliver mail and packages six days per-week, and provides for additional accountability, transparency, and delivery performance reporting.
The Postal Service Reform Act is expected to save the Postal Service $22.6 billion over 10 years by requiring future Postal retirees to enroll in Medicare as their primary insurance. Another $27 billion would be saved by the repeal of a pre-funding requirement for retiree healthcare under the 2006 Postal Enhance and Accountability Act.
Current Postal employees would be placed in a Postal-only risk pool within the Federal Employees Health Benefit Program (FEHBP) known as the Postal Service Health Benefits Program (PSHBP). These Postal-only plans in will be ran and regulated in a way identical to current FEHBP plans. The major plans that are now available will continued to be offered in the PSHBP. While the benefits would remain equivalent, the premiums would be significantly reduced because of Postal participants being placed in a separate risk pool with new rules related to Medicare enrollment.
Active employees under the age of 64 as of January 1, 2025, when both retired and at least age 65, are required to enroll in Medicare, with a few exceptions (those enrolled in TRICARE, Indian Health Services, or those living abroad). Currently, around 80% of Postal annuitants enroll in Medicare and Postal employees have contributed over $34 billion into Medicare since 1983.
Current Postal annuitants, and those who retire before January 1, 2025, would not be required to enroll in Medicare. In addition, active Postal employees over the age of 65 may elect to stay in the Postal-only FEHBP. Annuitants who have not opted to enroll in Medicare when eligible, but have subsequently changed their mind, may enroll without a late enrollment fee.
The Postal Service Reform Act of 2022 was sent the to the White House on Monday, March 28th and President Biden has 10 days to sign the bill into law.