The Medicare Program Will Soon Take on Postal Service Retirees Health Benefits.
Why is the government doing this?
As with so many decisions, money is likely the driving force. In 2018, about 500,000 retirees received health benefits, with the Postal Service Retiree Health Benefits Fund paying most of the costs. To address the fund’s shortfall, the Postal Service Reform Act (PSRA) of 2022, enacted in April 2022, could save about $50 billion over the next decade while adding $5.6 billion in costs to Medicare during that span and probably much more in later years.
To understand the impact of the change, here are the basics of the current system. The Postal Service participates in the FEHB Program, administered by OPM. Eligible individuals can choose from a variety of coverage options, including HMO plans, PPO plans, and high-deductible plans sponsored by various insurance companies. These plans will continue to pay for healthcare services after age 65, even if retirees don’t enroll in Part B.
Under the new system, PSRA requires most new retirees from the United States Postal Service (USPS) to enroll in Medicare Part B when eligible. It also establishes the Postal Service Health Benefits (PSHB) program, which will be available to USPS employees, annuitants, and their eligible family members starting January 1, 2025 – replacing FEHB.
- Starting January 1, 2025, PSHB plans will be available only to Postal Service employees, annuitants, and their eligible family members.
- FEHB plans for current employees and retirees will end on December 31, 2024 so they will not be able to enroll in or continue with FEHB plans.
- To continue with a PSHB plan, future retirees who are Medicare-eligible will have to enroll in Medicare Part B medical insurance. (Generally those age 65 or older and individuals under 64 who have a disability, kidney failure or ALS.)
- USPS retirees who are eligible for Medicare Part B, but do not have it, can sign up between April 1, 2024, and September 1, 2024 (during a six-month special enrollment period) without having to pay a penalty. The USPS is covering the cost of the penalty for any annuitants who do choose to sign up.
- All employees and retirees should watch for information about new PSHB plans and enroll in one during the 2024 Open Season that will run Nov. 11 to Dec. 9.
If you are impacted by this bill, consider getting ahead of it by comparing private Medicare insurance plans and costs to the PSHB program. Contact us at 858-432-2322.
