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December 27, 2015
The Postal Service’s healthcare prefunding requirement would be restructured and Saturday mail delivery eliminated under President Obama’s fiscal 2015 budget plan.
The proposal (see page 101) recommends deferring the healthcare fixed payments due in 2014 and half of the payments in 2015 and 2016. That would provide USPS with $9 billion in relief.
The prefunding payments go toward financing future retiree healthcare.
Starting in 2017, the payments would be restructured into a 40 year amortization schedule and the $16.7 billion in payments the agency defaulted on in 2012 and 2013 would be added to that schedule.
The Obama recommendation takes a different tack from the Senate Homeland Security and Governmental Affairs Committee bill (S.1486) that seeks to overhaul the USPS healthcare system totally.
The bill would require eligible retirees to use Medicare parts A, B and D to cover hospital stays, doctor’s visits and prescription drug coverage, which would help the Postal Service reduce the billions of dollars in pre-funding payments the agency pays every year for future retirees.
Similar to the Obama plan, the bill would amortize the prefunding payments and fold into that those payments the agency defaulted on.
The bill passed in committee and is waiting for a vote in the Senate.
The Obama proposal would also immediately end Saturday mail delivery, whereas the Senate committee bill would allow the Postal Service to move to five day delivery if mail delivery volume falls below 140 billion pieces annually starting in 2017.
The proposed budget would also return to the Postal Service the surplus payments it has made to the Federal Employees Retirement System.
The calculation the Office of Personnel Management uses for FERS payments doesn’t taking into account that Postal workers have a shorter life expectancy and their pay tops out lower than most federal workers.
A new formula would reduce Postal Service payments and return about $5 billion to the agency in overpayments.