With just a few weeks left until the start of open season, the Office of Personnel Management is finalizing the implementation plan for the Postal Service Health Benefits (PSHB) program for the USPS.
The final rule for the PSHB program, released by OPM last week, details many technical elements of implementing the program. PSHB is expected to cover approximately 2 million USPS employees, retirees, and their families starting in 2025.
A portion of the final regulation that received the attention of many stakeholders clarifies how Medicare Part D and prescription drug coverage will work for Medicare-eligible USPS pensioners and their families. are. According to OPM, PSHB plans are required to integrate Medicare Part D and provide prescription drug coverage to eligible postal pensioners through what the program calls “Employer Group Waiver Plans” (EGWPs) .
During open season, all Medicare-eligible postal retirees are automatically enrolled in EGWP through the PSHB program. EGWP includes prescription drug coverage through Medicare Part D. Individuals who are not eligible for Medicare, such as those living overseas, receive prescription drug benefits through PSHB plans.
Specifically, the final rule states that Medicare-eligible USPS enrollees who opt out of Part D coverage will no longer have access to underlying prescription drug coverage through the PSHB. Despite the concerns raised in response to the proposed regulations, OPM maintained the same plan it originally proposed for opting out of Part D.
“OPM appreciates these comments and the thoughtful concerns they raised,” the final rule states. “OPM believes that under its proposed approach, Part D-eligible Postal Service pensioners and their eligible family members who opt out of a Medicare Part D plan offered by a PSHB plan will not receive prescription drug benefits under the PSHB plan. I believe that the ‘losing’ approach is the most consistent.” (Postal Reform Act) and its policy goals. ”
OPM said there will also be “seamless coordination” between PSHB and Medicare, and Part D costs will be included in PSHB premiums. In other words, Medicare-eligible USPS retirees who opt out of Part D coverage will pay the same premium rates but will lose their prescription drug benefits.
As a result, OPM said it expects “very few” USPS pensioners and their families to opt out of Medicare Part D.
“The vast majority of individuals covered by Part D would be better off maintaining their PSHB prescription drug coverage,” OPM wrote.
Concerns about ‘deprivation of choice’ for USPS retirees
After reviewing OPM’s final rule, the National Association of Active and Retired Federal Employees (NARFE) questioned what the organization said was the “removal of option” for prescription drug coverage for Medicare-eligible postal retirees. I threw it.
In some circumstances, an individual may decide that a PSHB plan is a better alternative to a Medicare Advantage plan, NARFE National President William Shackelford wrote in an Oct. 28 letter to OPM. He said it might be possible. For example, some enrollees may consider opting out of Part D to avoid being charged the Income-Related Monthly Adjustment Amount (IRMAA) or to be able to use prescription drug coupons. .
“If the drug cost reduction effect of individual (Medicare PDP) insurance is outweighed by income-based Medicare premium premiums and the inability to combine insurance coverage with drug company discounts, then Some people may be better off keeping the PSHB’ drug coverage plan,” Shackelford wrote. “However, OPM’s final rule forces these Postal Service retirees to accept more expensive options or lose drug coverage through PSHB altogether.”
But some federal benefit experts say the cost savings are unlikely to offset the benefits of staying in Medicare, even when IRMAA fees and drug coupons are taken into account. From a cost perspective, some experts say postal service retirees are usually better off keeping Medicare Part D.
Added some flexibility to fix “errors”
Generally, Postal registrants can only change their registration during open season or if they experience a qualifying life event, such as marriage or the birth of a child. Except for these opportunities, PSHB enrollees will maintain their selected enrollment for the entire 2025 plan year.
However, several commenters on OPM’s proposed PSHB regulation raised the possibility that some pensioners may opt out of Medicare Part D without fully understanding the consequences, i.e., pay the same premium rate but not receive prescriptions. They had expressed concern about potentially losing coverage for their medications.
In PSHB’s final rule, OPM made one adjustment to address what the agency said was a “high risk of confusion” from USPS pensioners regarding the Medicare Part D rules. The new flexibilities included in the final rule are intended to prevent “potential confusion.” “Consequences that Medicare-eligible pensioners may face based on decisions made during open season.”
OPM said pensioners who opted out of Part D “due to error” may have some flexibility to change their enrollment outside of the open season. If it is determined that there was a registration error, participants will have 90 days, and possibly more, to make an alternative selection.
OPM did not specifically define what “errors” would be involved, but said it would “extensively” utilize PSHB enrollment flexibilities in the first plan year of the PSHB program. However, OPM states that flexibility is limited only to new enrollments in Part D EGWP.
“OPM is committed to ensuring that individuals who opt out do so with a full understanding of the consequences, and to ensuring that those who inadvertently opt out can correct their Part D EGWP registration,” OPM wrote. are.
During the open season, which runs from November 11 to December 9 this year, postal workers and pensioners will have time to check their coverage status and change their health insurance options if necessary. Participants in the Federal Employee Health Benefits (FEHB) program can also review and change their enrollment during open season.
Postal participants who do not elect during the open season will be automatically enrolled in the same plan they obtained through FEHB, as long as the same carrier participates in the new PSHB program. If there is no comparable plan option, Postal participants will be automatically enrolled in the lowest cost option for which they are eligible.
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