The Office of Personnel Management is outlining plans to move nearly 2 million individuals covered by the Federal Employee Health Benefits (FEHB) program to a new postal-only health insurance marketplace.
OPM is developing the Postal Service health benefits program required under the Postal Service Reform Act signed a year ago.
The agency is anticipating a much busier open season next year in 2024 than in previous years, as 1.7 million postal employees, annually…
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The Office of Personnel Management is outlining plans to move nearly 2 million individuals covered by the Federal Employee Health Benefits (FEHB) program to a new postal-only health insurance marketplace.
OPM is developing the Postal Service health benefits program required under the Postal Service Reform Act signed a year ago.
The agency expects a much busier open season next year in 2024 than in previous years, as 1.7 million postal employees, annuities and eligible family members will have to switch to the new postal-only insurance marketplace.
Lori Bodenheimer, OPM associate director for health care and insurance, said the agency is seeking to provide clarity to individuals and providers about the upcoming changes through an interim final rule released Thursday.
“[There’s] We have a lot of work ahead of us, and it’s really gained quite a bit of momentum. this [interim final rule] It was important to lay the foundation for how we see the program run,” Bodenheimer said in an interview.
The project is a cross-agency effort between OPM’s Health and Insurance, Retirement Services and Chief Information Officers. OPM, in its fiscal year 2024 budget request to Congress, said 2024 would be a “pivotal year” for launching the PSHB.
“What makes us a combination of excited and terrified at the same time, is that we’ve been given this opportunity to create a new health benefits program for a large population, and so we want to do it absolutely right, with the best interests of the enrollees always in mind,” Bodenheimer said.
OPM estimates that the non-postal federal workforce will see a small reduction in their FEHB premiums when the PSHB is introduced.
The Congressional Budget Office estimates that postal enrollees in the PSHB may also see slightly lower premiums, since postal retirees will primarily be covered under Medicare Parts A and B.
OPM, however, acknowledged in its interim final rule that the actual total costs and benefits associated with the Postal Service Reform Act — as well as the creation of the PSHB — are “highly uncertain.”
“The segmentation of the current FEHB risk pool will result in premiums reflecting each individual risk pool’s health care utilization and costs, which are assumed to be higher for Postal Service enrollees than non-postal,” OPM’s interim final rule states.
The Postal Service Reform Act eliminated a USPS requirement to prefund future retiree health benefits and forgave $57 billion in scheduled payments and did not contribute to the fund.
“Certainly, creating the Postal Service health benefits program was a significant part of the potential cost savings for the Postal Service, but it wasn’t the only thing in this law that was designed to help them save money,” Bodenheimer said.
USPS will return to a pay-as-you-go system for funding retiree health benefits beginning in June 2026, based on OPM calculations outlined in the law. OPM will recalculate USPS’s obligation to pay health benefits to those retirees each June.
OPM stated in its interim final rule that eliminating the prefunding mandate would improve the long-term financial stability of the USPS.
“With greater financial stability for the Postal Service, current Postal Service employees, Postal Service annuitants, and their family members will also see greater stability in their future health insurance coverage and other benefits,” the agency wrote.
Bodenheimer said OPM will begin accepting applications from providers looking to offer the plan in June and will accept applications by the end of August.
“We have to evaluate both and decide which carrier should be approved as a postal health benefit plan,” he said.
Next year, OPM will review the plan proposal and discuss those rates and benefits.
Bodenheimer said most FEHB providers, in an informal survey, expressed interest in offering plans for PSHB. Other providers, he added, said they were “tentative” about their plans until they see the interim final rule from OPM.
“We are engaged in dialogue [and] conversation, and want to make sure that every postal-eligible person has enough choice to have a good amount of plans to choose from — even some of the smaller plans that they may currently be enrolled in,” Bodenheimer said.
OPM and USPS, as well as several subsidiary 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 about $51 million per year to administer the program.
OPM expects 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 future USPS annuitants and their eligible family members who are entitled to Medicare Part A to enroll in Part B, unless an exception applies.
USPS annuitants are enrolled in Medicare and enrolled in a PSHB plan so that Medicare will serve as their primary coverage and their PSHB plan as secondary coverage.
OPM estimates that in 2021, 75% of Postal Service employees age 65 and older were enrolled in Medicare Part B annually.
Although current USPS retirees are not required to enroll in Medicare Part B, OPM estimates that approximately 100,000 USPS annuities and their eligible family members will be eligible to enroll in Part B during the six-month special enrollment period beginning April 1, 2024. .
The Centers for Medicare and Medicaid Services will introduce a six-month special enrollment period, which will allow USPS annuitants and their family members to enroll in Medicare Part B without incurring late enrollment penalties.
PSHB plans will offer the same enrollment types as FEHB plans, including self-only, self-plus-one, and self 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 ensure that messaging to enrollees is accurate and understandable.
If postal enrollees 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 has no membership fees.
“We wanted people to have a choice as they make this transition, which, quite frankly, is going to be difficult for a lot of people. Even in the normal FEHB open season, people are often overwhelmed by their choices and sometimes they don’t make any changes.”
Bodenheimer said this is consistent with what OPM does for FEHB enrollees in a plan that no longer participates in the program.
“Each year there may be an FEHB plan that decides to no longer participate, and if one loses annual coverage, they don’t get it back,” he said. “So there’s always a process to make sure they maintain an enrollment, even if they come later or [at] Next open season and say ‘I want out of this plan.’