Prioritizing Premium Payments from the Postal Service Retiree Health Benefits Fund

The Postal Service will cover any applicable Medicare Part B late enrollment penalties for Postal Service Medicare-covered annuitants and their Medicare-covered family members who enroll during the six-month Special Enrollment Period in 2024. This is established by section 1837(o) of the Social Security Act (42 U.S.C. 1395p). Initially, the Postal Service may instruct the Office of Personnel Management (OPM) to pay these penalties from the Postal Service Retiree Health Benefits Fund (PSRHBF) established under 5 U.S.C. 8909a until these funds are exhausted. If the PSRHBF is depleted, 5 U.S.C. 8903c(i)(4) mandates that the USPS shall pay these penalties from its funds established under 39 U.S.C. 2003.

OPM has proposed, under its administrative authority granted in 5 U.S.C. 8909a(a), to prioritize the payment of health benefit premiums for individuals described in 5 U.S.C. 8906(g)(2)(A) from the PSRHBF over the payment of late enrollment penalties as proposed in § 890.1613(c). This prioritization ensures that premium payments are not impacted, maintaining the Postal Service’s ability to cover late enrollment penalties for those enrolling during the SEP.

Medicare Part D Enrollment for Postal Service Annuitants and Family Members

Section 8903c(h) of 5 U.S.C. requires OPM to ensure that Postal Service Health Benefits (PSHB) plans provide Medicare Part D prescription drug benefits to eligible Postal Service annuitants and their family members. These benefits should be offered through employment-based retiree health coverage via a prescription drug plan or through contracts between a PSHB plan and a PDP sponsor, as defined in section 1860D-41(a)(13) of the Social Security Act.

Under chapter 89, carriers must offer uniform benefits and premium rates for plan options. This means that all individuals enrolled in a particular plan option and enrollment type will receive the same benefit package at the same premium rate. Therefore, an individual eligible for Medicare Part D benefits will receive the same benefits as those not eligible for Part D but enrolled in the same plan option and type.

OPM proposes that PSHB carriers ensure their Medicare Part D prescription drug benefits are equal to or better than the PSHB plan’s prescription drug benefits. OPM retains the authority to determine the necessary integration of Medicare Part D benefits into the PSHB Program. Individuals may still enroll in a Medicare Part D plan outside of their PSHB plan at their own expense, but these individually purchased plans will not provide EGWP benefits.

Group Enrollment into Part D EGWPs

Employers can group enroll individuals covered under their group health plans into Medicare Part D EGWPs, simplifying the enrollment process and ensuring retirees have access to necessary prescription drug benefits. OPM plans to operationalize group enrollment to support seamless Part D EGWP enrollment for eligible Postal Service annuitants and family members. This process minimizes errors and aligns with the experience of individuals previously covered by FEHB plans, where single enrollment provided both medical and prescription drug coverage.

Individuals can opt out of group enrollment if they prefer other Part D coverage options, such as a standalone Part D plan or coverage under a spouse’s employment-based retiree group health plan. OPM proposes allowing PSHB carriers to automatically group enroll eligible individuals into Medicare Part D EGWPs by default, with an option to opt out.

Impact of Non-Enrollment in Part D EGWP

PSHB carriers must provide Medicare Part D coverage to eligible individuals within the PSHB program. However, enrollment in Medicare Part D is not mandatory. Postal Service annuitants and their family members can decline Part D coverage, resulting in a loss of prescription drug benefits under the PSHB plan without a reduction in premiums. These individuals would retain other PSHB benefits and could re-enroll in Part D EGWP at a later date, possibly incurring a late enrollment penalty.

OPM’s proposal aims to provide flexibility while encouraging enrollment in the Medicare Part D EGWP offered by carriers, leading to cost savings for the PSHB program. This approach is consistent with the voluntary nature of the Medicare Part D program and addresses the needs of higher-income individuals subject to IRMAA.

Carriers must ensure a smooth process for opting out of group enrollment and comply with CMS requirements for enrollment and disenrollment. Most enrollees are expected to retain their PSHB drug coverage due to seamless coordination with Medicare and the inclusion of Part D EGWP costs in their premiums.

In summary, the proposed rules aim to balance the need for seamless integration of Medicare Part D benefits into PSHB plans with the flexibility for Postal Service annuitants and their families to make informed decisions about their healthcare coverage. Comments on these proposals are invited to ensure the best outcomes for all stakeholders involved.