By Michael Sandler – January 26, 2016
Legislation aimed at improving the finances of the struggling U.S. Postal Service would force its retirees to use Medicare as their primary insurer.
The USPS currently pays for retiree healthcare through the Federal Employees Health Benefits Program (FEHBP). The Postal Accountability and Enhancement Act of 2006 requires it to fund all future obligations to the program in advance.
The USPS has paid close to $50 billion toward that obligation, but still owes another $50 billion. The agency says it could reduce that liability by up to $32 billion by requiring all its retirees enroll in Medicare Part A, B and D plans as their primary insurer.
Many private companies require full participation in Medicare for retirees. But the USPS, even though it no longer receives direct taxpayer support, cannot independently make that decision since it remains a government entity and is still subject to congressional mandates.
FEHB is more expensive than Medicare and most of its beneficiaries consider it a superior option to Medicare.
USPS is the largest single payer into Medicare, but second to the federal government if you’re looking at largest overall payer, said the office of Sen. Tom Carper (D-Del.), a sponsor of the bipartisan bill. Toni DeLancey, a USPS spokeswoman, says the agency has pumped $29 billion into the federal healthcare for the elderly since 1983.
The bill would require the postal service to create separately rated plans within FEHBP, beginning with 2017 contract year, DeLancey said. Those plans would be fully integrated with Medicare and would be offered by any existing FEHBP carrier that currently covers at least 1,500 postal employees and retirees.