The Office of Personnel Management outlines its plan to migrate nearly 2 million individuals covered by the Federal Employee Health Benefits (FEHB) program to a new postal health insurance-only market.
OPM is creating the Postal Service health benefit program as required by the Postal Service Reform Act signed into law a year ago.
The agency expects a busier open season next year in 2024 than in previous years, given that 1.7 million annual postal employees and bailers…
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The Office of Personnel Management outlines its plan to migrate nearly 2 million individuals covered by the Federal Employee Health Benefits (FEHB) program to a new postal health insurance-only market.
OPM is creating the Postal Service health benefit program as required by the Postal Service Reform Act signed into law a year ago.
The agency expects a busier open season next year in 2024 than in previous years, because 1.7 million postal employees, yearees and eligible family members will have to switch to the new postal insurance-only market.
Lori Bodenheimer, OPM’s associate director for health care and insurance, said the agency looks forward to giving individuals and providers clarity about the upcoming change through the temporary final rule published last Thursday.
“[There’s] A lot of work lies ahead, and it’s been picked up very, very quickly. this [interim final rule] Bodenheimer said in an interview.
The project is an interagency effort between OPM’s Medicare, Insurance, Retirement Services and Chief Information Officer. OPM said, in its fiscal year 2024 budget request to Congress, that 2024 will be a “pivotal year” for revitalizing and operating the PSHB.
“One of the things that made us a mixture of excitement and awe at the same time, is that we had this opportunity to create a new health benefit program for a large population, and so we absolutely want to do it right, with the best interests of our enrollees always in mind,” Bodenheimer said. .
OPM anticipates that the federal non-postal workforce may see a slight decrease in FEHB premiums once the PSHB launches.
The Congressional Budget Office estimates that postal enrollees in the PSHB could also see slightly lower premiums, as postal retirees will be primarily covered under Parts A and B.
However, OPM acknowledges in its provisional final rule that the actual overall costs and benefits associated with the Postal Service Reform Act — as well as the creation of the PSHB — are “highly uncertain.”
The OPM’s interim final rule states that “segmentation of the current FEHB risk pool will result in premiums that reflect health care utilization and costs for each separate risk group, which are estimated to be higher for Postal enrollees than for non-Postal.”
The Postal Service Reform Act eliminated a USPS requirement to provide health benefits to retirees well into the future, waived $57 billion in scheduled payments and did not contribute to the fund.
“Obviously creating the Postal Service health benefits program was an important part of the potential cost savings for the Postal Service, but it wasn’t the only thing in the law that was designed to help them save money,” Bodenheimer said.
USPS will return to pay-as-you-go funding for retiree health benefits beginning in June 2026, based on OPM calculations as outlined in the legislation. OPM will recalculate the USPS obligation to pay those health benefits to retirees each June.
OPM said in its provisional final rule that rescinding the pre-funding authorization would improve the long-term financial stability of the USPS.
“With greater financial stability for the Postal Service, current Postal Service employees, Postal Service retirees, and their family members will also see greater stability in future health insurance coverage and other benefits,” the agency wrote.
Bodenheimer said OPM will begin accepting applications from providers looking to submit plans in June, and will accept applications through the end of August.
“We need to evaluate and decide which carriers should be approved to be the postal health benefits plan,” she said.
Next year, OPM will review plan proposals and negotiate pricing and benefits.
Bodenheimer said that most FEHB providers, in an informal survey, expressed interest in offering plans for the PSHB. She added that other providers said they were “hesitant” about their plans until they saw the temporary final rule from OPM.
“We are engaged in talks [and] Dialogue, and you want to make sure that there’s enough choice for everyone eligible to mail to have a good amount of plans to choose from — even some of the smaller plans they may be currently enrolled in,” Bodenheimer said.
OPM and the USPS, as well as several supporting agencies, expect to spend more than $100 million to launch the PSHB, and an additional $75 million in fiscal year 2024. The agencies expect to spend approximately $51 million each subsequent year to administer the program.
OPM anticipates that it will need 153 full-time employees to manage contract oversight, program operations, systems maintenance, customer service, policy support, and general support.
The Postal Service Reform Act requires all new USPS applicants and their eligible family members who are eligible for Medicare Part A to also enroll in Part B, unless an exception applies.
USPS enrollees who are enrolled in Medicare and enrolled in a PSHB plan that would have Medicare as their primary coverage and their PSHB plan as their secondary coverage.
OPM estimates that in 2021, 75% of Postal Service students age 65 or older will be enrolled in Medicare Part B.
While current USPS retirees are not required to enroll in Medicare Part B, OPM estimates that approximately 100,000 annual USPS students and their eligible family members will be eligible to enroll in Part B during the special six-month enrollment period that begins April 1, 2024.
The Centers for Medicare and Medicaid Services will launch a special six-month enrollment period, which will allow USPS annuity filers and their family members to enroll in Medicare Part B without a late enrollment penalty.
PSHB plans will offer the same types of enrollment as FEHB plans, including self-coverage, self-coverage, and family coverage.
The USPS is tasked with educating employees and retirees about health care changes, but Bodenheimer said the agency is working with OPM to make sure messages to registrants are accurate and understandable.
If postal registrants don’t make a change by the end of the 2024 open season, Bodenheimer said OPM will move them to the lowest-cost nationwide postal plan that doesn’t have a membership fee.
“We wanted people to have a choice as they make this transition, which frankly is going to be difficult for many people. Even during a normal FEHB Open season, people are often overwhelmed with the options they have, and maybe sometimes they don’t make a change.”
Bodenheimer said this is consistent with what OPM is doing for FEHB registrants in a plan that no longer participates in the program.
“Each year, there may be a FEHB plan that decides not to participate any longer, and if the incumbent loses a coverage claim, they can’t get it back,” she said. “So there was always a process to make sure they were still registered, even if they came in later or later [at] The next open season and say, “I want out of this plan.”