The Postal Service Reform Act of 2022 (PSRA)
Why is the government doing this?
As with so many decisions, money is likely the driving force. In 2018, there were about 500,000 retirees receiving health benefits with the Postal Service Retiree Health Benefits Fund paying most of the costs. The PSRA could save about $50 billion over the next decade while adding $5.6 billion in cost to Medicare during that span, and probably much more in later years.
As postal retirees navigate these healthcare changes, it is also a good time to review life insurance for retirees to ensure full financial protection alongside Medicare coverage.
To understand the impact of the change, here are the basics on the current system. The Postal Service participates in the FEHB Program, which is administered by OPM. Eligible individuals can choose from a variety of coverage options, including health maintenance organization plans, preferred provider organization plans, and high-deductible plans, sponsored by a multitude of 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, the Postal Service Reform Act of 2022 requires most new retirees from the United States Postal Service (USPS) to enroll in Medicare Part B when they are eligible. The PSRA 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.
- They will not be able to enroll in or continue with FEHB plans.
- FEHB plans for current employees and retirees will end on December 31, 2024.
- To continue with a PSHB plan, future retirees who are Medicare-eligible will have to be enrolled 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 and September 1 (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 set to be impacted by this bill, consider getting ahead of it by comparing private Medicare insurance plans and costs to the PSHB program. Contact Terri Yurek Insurance Services
