By John Hatton / NARFE – February 19, 2021
The start of another Congress marks the start of a new round of discussions about postal reform legislation. As much as circumstances may change, due to the COVID-19 pandemic or changing economic trends or otherwise, the U.S. Postal Service continues to operate within the same basic legislative framework that it has since 2006. As such, solutions to challenges arising under that framework are likely to at least borrow from past proposals.
Notably, one major component to leading postal reform bills over the last several Congresses, “Medicare integration,” is sure to remain part of the conversation. Enacting some form of this proposal would provide a substantial source of financial savings for the Postal Service by alleviating much of its remaining financial obligation for future retiree health benefits.
When postal retirees are covered by both Medicare and their federal retiree health benefits plan, Medicare provides primary coverage, shifting costs for retiree health care from the Postal Service to Medicare. Unsurprisingly, this concept remains popular with many postal stakeholders and Postal Service leadership.
The question is what form Medicare integration will take: Full Medicare integration or prospective and optional Medicare integration for postal retirees?
Full Medicare integration mandates Medicare enrollment for current postal retirees, requiring them to pay additional premiums through Medicare Part B for mostly duplicative health insurance or they lose their earned retiree health benefits. This reverses the decision these retirees made to decline Medicare coverage and replaces it with a paternalistic government mandate, at significant additional cost to the retiree.
For organizations that represent postal retirees such as the National Active and Retired Federal Employees Association (NARFE), full Medicare integration is a problem. From my experience representing their interests through NARFE, postal retirees care deeply about maintaining a strong and vibrant public postal service that meets the needs of American citizens. They believe that dependable mail delivery is an inherently governmental function.
But as employees of the Postal Service, they earned valuable pension and retiree health benefits, in addition to their pay, in exchange for years of hard work. They justifiably expect the U.S. government to live up to its end of the bargain. Changing their health benefits – and increasing costs – for postal retirees after they have retired and are living on a fixed income fails to do so.
It would also set a dangerous precedent for other federal employees and retirees, threatening the basic trust that the federal government – directed by Congress – will keep its promises to all middle-class retirees.
Under “full Medicare integration,” a 90-year-old postal retiree and his wife, living on a fixed income and already paying $7,301 per year for their popular Blue Cross Blue Shield standard plan, could be forced to pay another $3,564 a year to keep that coverage – close to $11,000 in premiums. That is a lot, especially when these additional costs were previously declined and now must be absorbed while living on a fixed income.
While there are benefits to having both Part B and federal retiree health insurance – less out-of-pocket costs from co-pays and deductibles for most plans – it is currently the retiree’s choice as to whether to accept that trade-off.
Fortunately, there are solutions to this problem that allow the Postal Service to achieve significant savings and preserve choice for current postal retirees. Current postal retirees could be given the option to enroll in Medicare without the late enrollment fees that currently apply.
Or they could also be enrolled automatically with the opportunity to opt out. Postal retiree health plans could provide Medicare Part B premium credits to further encourage enrollment, as some current federal retiree plans already do. Or Congress could only apply the requirement to future retirees.
Congress has all these options, or some combination of them, at their disposal. The new Congress provides a new opportunity to make reasonable adjustments to the Medicare integration concept to uphold promises to postal retirees.
Postal retirees have put in years of hard work. They have earned what they are owed – which is and should be backed by the full faith and credit of the U.S. government. It is not their obligation to fix Postal Service finances, years after they have retired. All they ask of Congress is to uphold promises made to them and allow them to make their own decisions about their health benefits.
Congressional flexibility in this regard could help propel legislative efforts that would have a real, positive impact on the future of the Postal Service for years to come.
John Hatton is Senior Director of Legislative and Political Affairs for the National Active and Retired Federal Employees Association (NARFE).
Source: Postal Consumers