With a few weeks to go Open season begins, the Office of Personnel Management is putting the finishing touches on how it plans to implement the Postal Service Health Benefits (PSHB) program for the USPS.

OPM’s final regulations for the PSHB program, which it published last weekdetailed many technical factors to run the program. The PSHB will cover nearly 2 million USPS employees, retirees and their family members starting in 2025.

Part of the final rule, which has received attention from many stakeholders, clarifies how Medicare Part D and prescription drug coverage will work for Medicare-eligible USPS annuitants and their family members. According to OPMPSHB plans are required to integrate Medicare Part D and offer prescription drug coverage to eligible postal annuitants through what the program calls an “Employer Group Waiver Plan” (EGWP).

During the Open Season, all Eligible for Medicare Postal retirees will be automatically enrolled in an EGWP through the PSHB program. The EGWP will include prescription drug coverage through Medicare Part D. Individuals who are not eligible for Medicare, such as those living overseas, will receive prescription drug benefits through their PSHB plan.

Notably, under the final rule, Medicare-eligible USPS enrollees who opt out of Part D coverage will lose access to any underlying prescription drug coverage through the PSHB. Despite concerns that arose in reaction to the proposed regulations, OPM maintained the same plans it initially proposed to opt out of Part D.

“OPM appreciates these comments and the thoughtful concerns they raised,” OPM wrote in the final rule. “OPM believes that the proposed approach – that Part D-eligible Postal Service annuitants and their eligible family members who opt out of the Medicare Part D plan offered by their PSHB plan will lose prescription drug benefits in the framework of their PSHB plan – is the most coherent. with the (Postal Service Reform Act) and its policy objectives.

There will also be “seamless coordination” between PSHB and Medicare, OPM said, and the cost of Part D will be included in the PSHB premium. In other words, Medicare-eligible USPS retirees who opt out of Part D coverage would pay the same premium rate, but would lose their prescription drug benefits.

For this reason, OPM said it expects “very few” USPS annuitants and their family members to opt out of Medicare Part D.

“The vast majority of Part D eligible individuals will benefit from retaining their PSHB prescription drug coverage,” OPM wrote.

Concerns About ‘Removal of Choice’ for USPS Retirees

After reviewing OPM’s final rule, the National Active and Retired Federal Employees Association (NARFE) questioned what the organization called a “removal of choice” for prescription drug coverage for postal retirees eligible for Medicare.

In an October 28 letter to OPMNARFE National President William Shackelford said there may be certain circumstances in which individuals find a PSHB plan to be a better alternative to a Medicare Advantage plan. For example, some enrollees may consider opting out of Part D to avoid the Income Related Monthly Adjustment Fee (IRMAA), or to be able to use prescription drug coupons.

“Whether the benefits of (Medicare PDP) coverage in reducing drug costs to the individual are outweighed by income-based Medicare premium surcharges or the inability to combine drug company discounts with coverage insurance, some Post Office retirees could have an interest in keeping their PSHB. drug plan,” Shackelford wrote. “Yet OPM’s final rule requires these Postal Service retirees to accept the more expensive option or lose drug coverage completely through PSHB.”

However, some federal benefits experts said that even accounting for IRMAA fees and drug coupons, the savings are unlikely to outweigh the benefits of remaining in Medicare. From a cost perspective, some experts said postal retirees are typically better to keep Medicare Part D.

Some flexibilities added to help correct “errors”

Generally, Postal Service registrants will only be able to make changes to their registrations during the open season or if they experience a qualifying life event, such as marriage or the birth of a child. Outside of these occasions, PSHB enrollees will retain their selected enrollments for the entire 2025 plan year.

But several commenters on OPM’s proposed PSHB regulations had expressed concerns that some annuitants might opt ​​out of Medicare Part D without realizing it. all the consequences — that they would lose their coverage for prescription drugs, while paying the same premium rate.

In the PSHB final rule, OPM made an adjustment to try to combat what the agency called a “high risk of confusion” by USPS annuitants about the rules relating to Medicare Part D The new flexibility included in the final rule is intended to prevent “potential consequences” that Medicare-eligible annuitants may face based on their decisions during Open Season.

OPM said annuitants who opt out of Part D “due to an error” will potentially have some flexibility to change their enrollments outside of Open Season. If it is determined that there was an entry error, the participant would have 90 days, or longer in some cases, to make a different selection.

OPM did not specifically define what an “error” would entail, but said it would “extensively” use PSHB enrollment flexibility for the initial plan year for the PSHB program. The flexibility, however, is limited only to new enrollments in an EGWP Part D, OPM said.

“OPM seeks to ensure that any person who opts out does so based on an informed understanding of the consequences and that any person who opts out in error can have their Part D EGWP enrollment corrected,” OPM wrote.

During the opening season, which this year runs from November 11 to December 9, postal employees and annuitants will have time to review their registrations and, if they wish, to make changes to their health insurance options. Participants in the Federal Employees Health Benefits (FEHB) program can also take a look and make changes to their enrollments during open season.

Postal participants who do not make a selection during Open Season will be automatically enrolled in the same plan they had through FEHB, provided the same carrier is part of the new PSHB program. If an equivalent plan option does not exist, Postal participants will be automatically enrolled in the lowest cost option for which they are eligible.

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