Rule2023-07080
Postal Service Reform Act; Establishment of the Postal Service Health Benefits Program
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
April 6, 2023
Effective
June 5, 2023
Issuing agencies
Personnel Management Office
Abstract
The Office of Personnel Management (OPM) is issuing an interim final rule with comment period to establish and administer the Postal Service Health Benefits (PSHB) Program pursuant to the Postal Service Reform Act of 2022 (PSRA). Under the statute, OPM must establish a PSHB Program for Postal Service employees, Postal Service annuitants, and their eligible family members, and not later than one year after the date of enactment, the OPM Director must issue regulations to carry out the statute.
Full Text
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<title>Federal Register, Volume 88 Issue 66 (Thursday, April 6, 2023)</title>
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[Federal Register Volume 88, Number 66 (Thursday, April 6, 2023)]
[Rules and Regulations]
[Pages 20383-20408]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-07080]
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Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
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Federal Register / Vol. 88, No. 66 / Thursday, April 6, 2023 / Rules
and Regulations
[[Page 20383]]
OFFICE OF PERSONNEL MANAGEMENT
5 CFR Part 890
48 CFR Parts 1602 and 1609
RIN 3206-AO43
Postal Service Reform Act; Establishment of the Postal Service
Health Benefits Program
AGENCY: Office of Personnel Management.
ACTION: Interim final rule; request for comments.
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SUMMARY: The Office of Personnel Management (OPM) is issuing an interim
final rule with comment period to establish and administer the Postal
Service Health Benefits (PSHB) Program pursuant to the Postal Service
Reform Act of 2022 (PSRA). Under the statute, OPM must establish a PSHB
Program for Postal Service employees, Postal Service annuitants, and
their eligible family members, and not later than one year after the
date of enactment, the OPM Director must issue regulations to carry out
the statute.
DATES:
Effective date: This rule is effective on June 5, 2023.
Comment date: OPM must receive comments on the rule on or before
June 5, 2023.
ADDRESSES: You may submit comments, identified by docket number or
Regulatory Information Number (RIN) and title, by the following method:
[ssquf] Federal Rulemaking Portal: <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
Follow the instructions for submitting comments. All submissions
received must include the agency name and docket number or RIN for this
document. The general policy for comments and other submissions from
members of the public is to make these submissions available for public
viewing at <a href="https://www.regulations.gov">https://www.regulations.gov</a> as they are received without
change, including any personal identifiers or contact information.
FOR FURTHER INFORMATION CONTACT: Louise Dyer Yinug, Senior Policy
Analyst, at (202) 972-0913 and Rina Shah, Senior Policy Analyst, at
(202) 631-4910.
SUPPLEMENTARY INFORMATION:
Executive Summary
This interim final rule establishes the Postal Service Health
Benefits (PSHB) Program within the Federal Employees Health Benefits
(FEHB) Program as required by the Postal Service Reform Act of 2022
(PSRA), Public Law 117-108. The PSHB Program will include health
benefits plans available only to United States Postal Service (Postal
Service or USPS) employees, Postal Service annuitants, and their
eligible family members starting January 1, 2025. For these
individuals, eligibility for enrollment or coverage in FEHB plans based
on Postal Service employment will end on December 31, 2024, and they
will be able to enroll in or be covered only by PSHB plans after that
time. Subject to limited exceptions, Postal Service annuitants who
retire and become Medicare-eligible after December 31, 2024, and their
Medicare-eligible family members will be required to enroll in Medicare
Part B as a condition of eligibility to enroll in the PSHB Program.
With the enactment of the PSRA and these implementing regulations,
the Office of Personnel Management (OPM) may now contract with carriers
to offer two categories of health benefits plans through the broad
umbrella of the FEHB Program, established under 5 U.S.C. 8901 et seq.
First, pursuant to 5 U.S.C. 8902, OPM may contract with carriers to
offer FEHB plans. Second, pursuant to 5 U.S.C. 8903c, OPM may now
contract with carriers to offer PSHB plans through the PSHB Program
within the FEHB Program. The broad umbrella of the FEHB Program
comprises both FEHB plans and PSHB plans.
Background
Section 101 of the PSRA adds new section 8903c to chapter 89 of
title 5, United States Code, and directs OPM to establish the PSHB
Program within the FEHB Program for Postal Service employees, Postal
Service annuitants, and their eligible family members. OPM will
administer the PSHB Program in accordance with chapter 89 of title 5,
United States Code, and implementing regulations (5 CFR parts 890 and
892 and 48 CFR chapter 16), including these amended regulations. Under
5 U.S.C. 8903c(c)(3), except as otherwise set forth in 5 U.S.C. 8903c,
the provisions of chapter 89 ``applicable to health benefits plans
offered by carriers under section 8903 or 8903a shall apply to plans
offered under the ``[PSHB] Program.''
The PSHB Program was authorized under the Title I Postal Service
Financial Reforms provisions in the PSRA in furtherance of Congress's
objective to ``improve the financial position of the Postal Service
while increasing transparency and accountability of the Postal
Service's operations, finances, and performance.'' \1\ OPM is issuing
this interim final rule to set forth standards to implement section 101
of the PSRA to establish the PSHB Program. The first Open Season for
the PSHB Program will begin on November 11, 2024, and run through
December 9, 2024, and the first contract year will begin January 2025.
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\1\ H. Rept. 117-89--POSTAL SERVICE REFORM ACT OF 2021, H. Rept.
117-89, 117th Cong. (2023), <a href="https://www.congress.gov/congressional-report/117th-congress/house-report/89/1">https://www.congress.gov/congressional-report/117th-congress/house-report/89/1</a>.
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Section 102 of the PSRA (``The USPS Fairness Act'') amends 5 U.S.C.
8909a which was established in the Postal Accountability and
Enhancement Act of 2006 (Pub. L. 109-435) and which required the Postal
Service to pre-fund health benefits costs for its retirees. Section 102
of the PSRA repeals the requirement to pay actuarially determined
normal cost and amortization payments into the Postal Service Retiree
Health Benefits Fund (PSRHBF) established at 5 U.S.C. 8909a, and
cancels any unpaid amounts previously required to be paid under section
8909a. Section 102(b) requires OPM to calculate an amount that the
Postal Service will pay annually into the PSRHBF using a formula set
forth at 8909a(d)(1). This amount will be calculated by June 30 of each
year beginning in 2026.
A. Legislative Requirements for Establishing the PSHB Program
Section 101 of Title I of the PSRA directs OPM to ``establish the
Postal Service Health Benefits Program within the Federal Employees
Health Benefits
[[Page 20384]]
Program'' under chapter 89 of title 5 of the United States Code. The
PSRA specifies that ``[e]xcept as otherwise provided . . . any [PSHB]
contract . . . shall be consistent with the requirements of this
chapter for contracts under section 8902 with carriers to offer health
benefits plans.'' Therefore, generally, the requirements of the FEHB
Program will apply to the PSHB Program, unless otherwise set forth in
the PSRA or in 5 CFR part 890.
B. PSHB Program Background Information
The PSRA establishes the PSHB Program within the FEHB Program. The
FEHB Program was established in 1960 and provides a choice of health
plans, including fee-for-service plans and health maintenance
organizations, to approximately 8.2 million covered individuals
including employees of the Federal Government, Federal retirees
(referred to as annuitants due to their eligibility for an annuity),
members of their families, former spouses, and other groups statutorily
eligible as enumerated in 5 U.S.C. 8901 or set forth in other
authorizing legislation. Currently, Postal Service employees, Postal
Service annuitants, and their family members are also eligible for FEHB
pursuant to 39 U.S.C. 1005.
FEHB plans cover a wide range of health services including routine
physical exams, primary and specialist doctor's visits, inpatient
hospital care, surgery, laboratory and diagnostic tests, prescription
drugs, and mental health services. Required benefits are listed in
broad categories in the FEHB statute at 5 U.S.C. 8904 and include
hospital benefits, surgical benefits, medical care and treatment, and
obstetrical benefits, among others. The benefits, coverage, and premium
details of each plan in the FEHB Program are negotiated with OPM each
year. Eligible individuals can purchase additional dental and vision
coverage through the Federal Employees Dental and Vision Insurance
Program.
Each year, OPM issues guidance for health benefits carriers
preparing FEHB plan benefits proposals. This guidance references OPM's
commitment to ensuring that the Federal Government offers competitive,
comprehensive health insurance benefits and includes OPM's policy goals
and initiatives for the year. For 2023, these goals included advancing
health equity, providing gender affirming care and services, and
addressing obesity. This guidance outlines technical requirements for
each proposal, including benefit package details such as actuarial
value, benefit changes from the previous year, and the drug formulary.
Carriers offering PSHB plans, as part of the FEHB Program, will be
subject to the same or similar guidance. The PSRA requires that
carriers offering PSHB plans will, to the greatest extent practicable,
offer benefits and cost-sharing (e.g., deductibles, copayments and
coinsurance) equivalent to the benefits and cost-sharing for FEHB plans
for that carrier in the initial contract year.
Generally, Federal employees can continue FEHB enrollment into
retirement if they have been enrolled in FEHB for five years before
retiring or, if less than five years, for all periods in which they
were eligible to enroll. FEHB enrollees can also enroll in Medicare
when they become eligible for Medicare regardless of whether they are
retired or still actively employed. Annuitants who are enrolled in FEHB
and covered by Medicare have Medicare as their primary coverage.
C. PSHB Program Eligibility
Under the PSRA, Postal Service employees whose Government
contribution under chapter 89 is paid by the Postal Service, Postal
Service annuitants whose Government contribution under chapter 89 is
required to be paid under 5 U.S.C. 8906(g)(2), and eligible family
members of those Postal Service employees and Postal Service annuitants
are eligible for coverage under the PSHB Program. Starting January
2025, these Postal Service employees and Postal Service annuitants may
not enroll in an FEHB plan. The major difference in eligibility between
PSHB plans and FEHB plans is that, generally, as a new condition of
eligibility to enroll in the PSHB Program, the PSRA requires that
Postal Service annuitants and their eligible family members who are
entitled to Medicare Part A (also referred to as ``covered Medicare
individuals''), must enroll in Medicare Part B, unless an exception
applies.
A ``covered Medicare individual'' under section 8903c(a)(1)
generally means an individual who is entitled to Medicare Part A, but
the term excludes an individual who is eligible to enroll under section
1818 or 1818A of the Social Security Act (42 U.S.C. 1395i-2, 1395i-2a).
Individuals eligible to enroll in Medicare Part A under 1818 are
individuals age 65 or older who are not otherwise eligible for premium-
free Medicare Part A, typically due to not having the required work
history for premium-free Part A. Individuals eligible to enroll under
1818A are disabled individuals who lose Medicare coverage solely
because of substantial gainful work. These individuals are exempt from
the Medicare Part B enrollment requirement that applies to most other
Postal Service annuitants and their PSHB-eligible family members.
For purposes of the FEHB Program, 5 U.S.C. 8901(5) defines a
``member of family'' of employees and annuitants to include spouses and
children under 22 years of age, subject to exception, including natural
children, adopted children, stepchildren, and foster children. The
enactment of the Affordable Care Act in 2010 required health insurers
to cover dependents until age 26. At that time OPM issued updates to
its regulations to reflect that change and codified 5 CFR 890.302(b)
and (c) which defines FEHB covered family members to include such
children until they reach the age of 26, subject to exception. The PSHB
Program will align with 5 CFR part 890 regarding the definition of
family members for all purposes, including the Medicare special
enrollment period (SEP) opportunity.
The PSRA adds new definitions to chapter 89. Section 8903c(a)(9)
defines a Postal Service employee as ``an employee of the Postal
Service enrolled in a health benefits plan under this chapter whose
Government contribution is paid by the Postal Service.'' Under section
8903c(a)(8), a Postal Service annuitant ``means an annuitant enrolled
in a health benefits plan under this chapter whose Government
contribution is required to be paid under section 8906(g)(2).''
Therefore, individuals not meeting the statutory definition of a Postal
Service annuitant or Postal Service employee are not eligible to enroll
in a PSHB plan. If such individuals are eligible for enrollment in an
FEHB plan, they may enroll or continue enrollment in such plan.
The PSRA does not establish a distinct category for Postal Service
compensationers, those employees who sustain workplace-related illness
or injury, receive workers' compensation payments through the
Department of Labor's Office of Workers' Compensation Programs (OWCP)
because of that illness or injury, and who are determined by the
Secretary of Labor to be unable to return to duty. Section 8901 of
title 5, U.S.C. includes ``an employee who receives monthly
compensation under subchapter I of chapter 81 of this title and who is
determined by the Secretary of Labor to be unable to return to duty''
in the definition of annuitant.\2\ However, the PSRA definition of
Postal Service annuitant is limited to those who are enrolled in a
health benefits plan under
[[Page 20385]]
5 U.S.C. chapter 89, whose Government contribution is required to be
paid under section 8906(g)(2).
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\2\ 5 U.S.C. 8901(3)(C).
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Section 8906(g)(2) authorizes Government contributions for health
benefits for individuals who become Postal Service annuitants ``by
reason of retirement'' and their survivors. These contributions are
paid first by the Postal Service Retiree Health Benefits Fund with any
remaining amount paid by the Postal Service. The description in
8906(g)(2) does not include Postal Service compensationers, as they
have not become annuitants by reason of retirement. Postal Service
compensationers are more closely aligned with the 8903c(a) definition
of Postal Service employee, whose Government contribution is paid by
the Postal Service.
The definition of Postal Service employee, rather than Postal
Service annuitant, will include Postal Service compensationers. Postal
Service compensationers will not be subject to the Medicare Part B
enrollment requirement, regardless of Medicare Part A entitlement.
Primary and Secondary Payers
The Centers for Medicare & Medicaid Services (CMS) generally
considers those receiving worker's compensation payments to be
employees. As described above, compensationers are considered to be
employees within the meaning of 42 CFR 411.40, 411.43, and 411.45.
Medicare is the secondary payer for all compensationers enrolled in an
FEHB plan or a PSHB plan. Even if a compensationer is entitled to or
eligible for Medicare benefits, enrolled in Medicare, and enrolled in
an FEHB plan, Medicare is still the secondary payer, notwithstanding
the statutory annuitant status for purposes of FEHB enrollment, with
respect to those compensationers determined unable to return to duty.
Should a Postal Service compensationer who is enrolled in a PSHB plan
and entitled to or eligible for Medicare benefits choose to enroll in
Medicare, that compensationers' Medicare coverage would be secondary to
the PSHB plan coverage. Postal Service annuitants enrolled in Medicare
and enrolled in a PSHB plan would have Medicare as primary coverage and
PSHB plan coverage as secondary.
Impact on Other Benefits
Eligibility for the PSHB Program does not affect eligibility for
other Federal benefits. Postal Service employees and Postal Service
annuitants may continue to enroll and cover their eligible family
members in the Federal Employees Dental and Vision Insurance Program
(FEDVIP), Federal Employees' Group Life Insurance (FEGLI), Federal Long
Term Care Insurance Program (FLTCIP), and, for Postal Service employees
and their family members, participate in the Federal Flexible Spending
Account Program (FSAFEDS).
Consultation With the Postal Service and Other Federal Agencies
The PSRA includes the following requirements for consultation
between OPM and several other Federal agencies:
<bullet> 5 U.S.C. 8903c(e)(3)(B) requires that OPM, in consultation
with the Secretary of Veterans Affairs, Secretary of Health and Human
Services, and the Postmaster General, promulgate regulations
implementing the Department of Veterans Affairs (VA) and Indian Health
Service (IHS) coverage exceptions to the Medicare enrollment
requirements for certain Postal Service Medicare covered annuitants and
family members enrolled in certain health care benefits provided by the
VA, or eligible for IHS health services, within a year of enactment.
OPM has engaged in this consultation since the PSRA was enacted.
<bullet> 5 U.S.C. 8903c(e)(4) requires OPM and the Postal Service,
in consultation with the Social Security Administration (SSA) and CMS,
to establish a process that will enable the Postal Service to timely
inform Postal Service employees, Postal Service annuitants and the
family members of Postal Service employees and annuitants of the
Medicare enrollment requirements. OPM has engaged in this consultation
since the PSRA was enacted.
<bullet> 5 U.S.C. 8903c(g)(2) requires OPM to consult with the
Department of Health and Human Services (HHS) Secretary, VA Secretary,
SSA Commissioner, and the Postmaster General in issuing regulations
carrying out section 101 of the PSRA to include (1) a process to timely
inform individuals of the enrollment requirements and how to request
additional enrollment information in writing; (2) how an individual
enrolled in PSHB can request a belated change of plan and be
prospectively enrolled in a plan of the Postal Service employee's or
Postal Service annuitant's choice; and (3) how individuals can cancel
PSHB coverage in writing to the Postal Service because the individuals
choose not to enroll in, or to disenroll from, Medicare Part B; and (4)
any provisions necessary to implement the section. OPM has engaged in
this consultation since the PSRA was enacted.
<bullet> 5 U.S.C. 8903c(l)(4)(B) requires the Postal Service to
coordinate with OPM, and in consultation with CMS and SSA, to obtain
and confirm accuracy of information as the Postal Service determines to
be necessary to conduct the Health Benefits Education Program. 5 U.S.C.
8903c(l)(5)(C) requires the Postal Service, in consultation as
necessary with OPM and CMS, to develop standards to ensure that
information made available by navigators is fair, accurate, and
impartial.
<bullet> 5 U.S.C. 8903c(l)(6) requires the Postal Service, as part
of the regulations for the Health Benefits Education Program, to
develop a process in consultation with OPM, SSA, and CMS for addressing
inquiries from Postal Service employees and Postal Service annuitants
about PSHB or Medicare enrollment.
<bullet> Section 101(c) of the PSRA requires OPM to establish a
process by regulation to provide information to SSA regarding Postal
Service annuitants and their family members who may be eligible to
enroll in Medicare Part B during the special enrollment period (SEP)
established by the PSRA under the Social Security Act. The section also
requires SSA to provide information to OPM and the Postal Service
regarding whether Postal Service annuitants and their family members
are entitled to benefits under Medicare Part A and enrolled under
Medicare Part B to assist OPM and the Postal Service in determining who
may be eligible to enroll in Medicare Part B during the SEP, or who may
be subject to the Part B enrollment requirements for PSHB eligibility.
This interim final rule includes a process for OPM to provide
information to SSA for these purposes.
<bullet> 5 U.S.C. 8909a(f) requires that OPM, after consultation
with the Postal Service, promulgate any regulations determined
necessary under section 102 of the PSRA with respect to the Postal
Service Retiree Health Benefits Fund. OPM has addressed this provision
in this regulation.
Provisions of Interim Final Rule
This interim final rule amends subparts A, C, and E of 5 CFR part
890 related to the FEHB Program and 48 CFR chapter 16, the Federal
Employees Health Benefits Program Acquisition Regulation (FEHBAR). This
interim final rule also adds a new subpart P to 5 CFR part 890
regulating the new PSHB Program within the FEHB Program.
This regulation establishes rules for the operation of the PSHB
Program within the parameters of the PSRA. To the greatest extent
possible, OPM is aligning these rules with the FEHB Program's treatment
of FEHB plans. Where there is no existing rule
[[Page 20386]]
applicable to FEHB plans, OPM is implementing the greatest flexibility
for Postal Service employees, Postal Service annuitants, and their
eligible family members.
5 CFR Part 890: Federal Employees Health Benefits Program
Subpart A: Administration and General Provisions
OPM is amending Sec. 890.101 to add definitions specific to the
PSHB Program, including Postal Service, Postal Service employee, Postal
Service annuitant, PSHB plan, and PSHB Program. OPM is also adding
definitions for FEHB plan and FEHB Program. These definitions explain
the relationship between the FEHB Program and the PSHB Program. In
short, the FEHB Program offers FEHB plans, and the PSHB Program within
the FEHB Program offers PSHB plans. As a result, the FEHB Program
offers both FEHB plans and PSHB plans.
Section 8903c(a) of the PSRA includes definitions for the new PSHB
Program. A Postal Service Medicare covered annuitant is defined as an
individual who is both a Postal Service annuitant and a covered
Medicare individual (i.e., an individual entitled to benefits under
Medicare Part A).\3\ Section 8903c(e) requires that Postal Service
Medicare covered annuitants and eligible family members who are covered
Medicare individuals enroll in Medicare Part B to enroll or maintain
enrollment in a PSHB plan unless an exception described in section
8903c(e)(3) applies. Section 8903c(a) excludes those who are eligible
to enroll in Medicare under section 1818 or 1818A of the Social
Security Act from the definition of covered Medicare individual.
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\3\ Section 8903(a)(1) defines the term `covered Medicare
individual' as ``an individual who is entitled to benefits under
Medicare part A but excluding an individual who is eligible to
enroll under such part under section 1818 or 1818A of the Social
Security Act.''
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OPM is adding a new Sec. 890.115 to apply provisions of part 890
to Postal Service employees, Postal Service annuitants, and eligible
family members unless the provision is inconsistent with PSRA law at 5
U.S.C. 8903c or the PSHB regulation in subpart P of part 890.
Subpart C: Enrollment
Postal Service employees and Postal Service annuitants will be
eligible for enrollment in PSHB plans, not FEHB plans, starting with
the initial PSHB contract year of 2025. Under 5 U.S.C. 8903c(d)(2),
Postal Service employees and Postal Service annuitants may not enroll
in FEHB plans for plan year 2025 or thereafter. OPM is adding a new
Sec. 890.301(p) to implement that prohibition, which will begin after
December 31, 2024. There are no statutory exceptions to this
prohibition on FEHB plan enrollment.
OPM is amending Sec. 890.302 to apply to the whole of part 890,
removing specific references to the FEHB Program to cover both FEHB
plans and PSHB plans.
OPM is adding a new paragraph (l) to Sec. 890.303 to indicate that
a Postal Service employee eligible to enroll in a PSHB plan who moves
to a Federal agency, without a break in service of more than three
days, cannot continue in PSHB plan enrollment but may be eligible for
FEHB plan enrollment if their position conveys eligibility. This is
similar to the current FEHB rules that allow an employee to continue
FEHB enrollment if they have a break in service of no more than three
days.
Likewise, an employee who moves from a Federal agency to a PSHB-
eligible Postal position, without a break in service of more than three
days, may change to PSHB plan enrollment in the new job but otherwise
may not maintain FEHB plan enrollment.
Enrollees in the PSHB Program will be subject to the FEHB Program
requirement of maintaining enrollment for 5 years of service before
retirement in order to carry that coverage into retirement. A Postal
Service annuitant who (at the time the individual becomes an annuitant)
was enrolled in a health benefits plan under chapter 89, including
under 8903c, can meet that 5-year requirement if they were so enrolled
as a Postal Service employee, as an employee defined at 5 U.S.C.
8901(1),\4\ or a mix of both in order to maintain health benefits after
retirement. That individual would maintain eligibility to continue
enrollment in the FEHB plan or PSHB plan in which they were enrolled
immediately before retirement. Subsequent changes in enrollment may be
made, as permitted under chapter 89, from one FEHB plan to another FEHB
plan, or from one PSHB plan to another PSHB plan under section 8903c,
as applicable to the service from which the individual retired.
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\4\ The definition at 5 U.S.C. 8901(1) includes Federal
employees and other categories of statutorily eligible individuals.
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OPM's existing regulation at 5 CFR 890.303(d)(2), regarding
employees who become survivor annuitants, continues to apply, as
amended. The rule is expanded and now applies to an employee who is a
survivor annuitant of a Postal Service employee or Postal Service
annuitant and to a Postal Service employee or Postal Service annuitant
who is a survivor annuitant of an employee. In either case, if an
employee enrolled in a FEHB plan or a Postal Service employee enrolled
in a PSHB plan separates with insufficient service to continue
enrollment into retirement, but the separated individual is a survivor
annuitant of an employee or annuitant, or of a Postal Service employee
or Postal Service annuitant, and the separated individual is entitled
to enroll as a survivor annuitant, the enrollment may be reinstated
under the FEHB Program or PSHB Program as applicable to the service
that gives rise to the survivor annuitant status.
In Sec. 890.308, OPM is adding a new paragraph (i) that may
require disenrollment from PSHB plans for Postal Service Medicare
covered annuitants or removal from coverage of Medicare covered members
of family who are not enrolled in Medicare Part B, unless an exception
applies. Generally, unless an individual qualifies for an exception
from the Medicare enrollment requirement, the individual will be
disenrolled or removed from coverage from a PSHB plan if they have not
enrolled in Medicare Part B (for example, during their seven-month
Medicare Initial Enrollment Period (IEP), or applicable Medicare SEP).
Pursuant to Sec. 890.1612 in the new subpart P, OPM will share
information regularly with SSA and CMS to confirm an individual's
entitlement to Medicare Part A as well as enrollment or non-enrollment
in Medicare Part B.
In a case where OPM, the PSHB Carrier, or the Postal Service
belatedly learns that a Postal Service Medicare covered annuitant or
eligible family member who is a covered Medicare individual who is
enrolled or covered in a PSHB plan is not enrolled in Medicare Part B
and does not qualify for an exception to the Medicare enrollment
requirement, that individual will be permitted to stay enrolled in or
covered by PSHB if they enroll in Medicare during their next enrollment
opportunity, which may be the next Medicare General Enrollment Period.
This opportunity to stay enrolled in PSHB despite lacking Medicare Part
B coverage is not intended to allow a covered Medicare individual to
maintain PSHB coverage without a good faith effort to remain
continuously enrolled in Medicare Part B. The individual must enroll in
Medicare Part B during that next available enrollment period (in this
example, the next General Enrollment Period) and pay for any applicable
late enrollment penalty assessed by CMS in order to remain in the PSHB
plan. Such late enrollment
[[Page 20387]]
penalty will increase the Medicare Part B premium as long as the
individual is enrolled in Medicare Part B. If the Postal Service
Medicare covered annuitant or eligible Medicare covered family member
does not enroll in Medicare Part B at the next opportunity such as a
Medicare General Enrollment Period, they will be disenrolled or removed
from a PSHB plan and, in the case of a Postal Service annuitant, will
have no further opportunity to re-enroll in a PSHB plan. Disenrollment
of a Postal Service annuitant will also result in the removal of
covered family members from PSHB coverage.
In any case where a Postal Service Medicare covered annuitant is
disenrolled from a PSHB plan for non-enrollment in Medicare Part B, OPM
will treat this removal as a termination. A termination, in contrast
with a cancellation, confers rights to a 31-day temporary extension of
coverage and rights to conversion for the enrollee and covered family
members. Per existing FEHB regulation at 5 CFR 890.401, an enrollee or
family member whose enrollment is terminated other than by a
cancellation or discontinuance of plan is entitled to a 31-day
temporary extension of coverage for self only, self plus one, or self
and family without contributions by the enrollee or the Government.
During that 31-day period, OPM requires carriers to either offer the
individual a guaranteed-issue conversion policy or provide assistance
enrolling in such a policy on or off the Health Care Marketplace or
Exchange. OPM requests public comment on this approach.
New Subpart P: Postal Service Health Benefits Program
This new subpart P implements section 101 of the PSRA establishing
the PSHB Program for Postal Service employees, Postal Service
annuitants, and their eligible family members. The PSHB Program set
forth at 5 U.S.C. 8903c will be the only health benefits program
available to these individuals through 5 U.S.C. chapter 89, and PSHB
plans will be offered in lieu of FEHB plans for these individuals
beginning with the first contract year in January 2025.
In Sec. 890.1602(c), OPM defines terms specific to the PSHB
Program. Statutorily defined terms have the same meaning as in the
PSRA. Several other terms are defined to account for the Medicare
enrollment requirements for Postal Service Medicare covered annuitants
and their Medicare covered members of family in the PSHB.
The term ``cancel'' carries the same meaning as in FEHB, applying
when an individual elects not to continue coverage, despite remaining
eligible. The PSRA uses the term ``cancel'' in section 8903c(g) to
describe when an individual loses PSHB coverage because of a decision
not to enroll in Medicare Part B, or to disenroll from Medicare Part B.
OPM is using its administrative authority to classify this circumstance
as a termination in order to provide the individual with a 31-day
temporary extension of coverage and rights to conversion. This
classification of certain cancellations as terminations is delineated
in Sec. 890.1608(b)(5).
In Sec. 890.1602(d), OPM deems references made to other subparts
of part 890 to mean definitions established in subpart P. References
incorporated in subpart P that do not apply to Postal Service employees
or Postal Service annuitants or their eligible family members are not
applicable and do not have meaning in subpart P.
Eligibility
As directed by the PSRA, Sec. 890.1603, ``Eligibility for the
Postal Service Health Benefits Program,'' allows that Postal Service
employees, Postal Service annuitants, and family members will be
eligible for coverage in the PSHB starting with the first contract year
beginning January 2025. Under the PSRA, certain individuals are
ineligible to enroll or be covered; they include:
<bullet> Postal Service Medicare covered annuitants without
Medicare Part B coverage who are not covered by an exception in Sec.
890.1604(c);
<bullet> Postal Service Medicare covered members of family who do
not enroll in Medicare Part B and who are not covered by an exception
in Sec. 890.1604(c); and
<bullet> Any individual covered by another health benefits plan
under chapter 89 of title 5, U.S.C. except as permitted under dual
enrollment rules at Sec. 890.302.
OPM is adding Sec. 890.1603(d) to allow former spouses of Postal
Service employees and Postal Service annuitants to enroll in an FEHB
plan as described in subpart H (``Benefits for Former Spouses''). A
former spouse of a Postal Service employee or Postal Service annuitant
who is enrolled in an FEHB plan on or before December 31, 2024, may
continue enrollment in an FEHB plan and is not required to change to a
PSHB plan. Former spouses are not included in the PSRA as eligible for
PSHB enrollment. Therefore, an individual who was covered under their
spouse's PSHB plan would not continue eligibility if they became a
former spouse. Those former spouses could enroll in an FEHB plan. Such
former spouses will not be subject to the Medicare Part B enrollment
requirement, regardless of Medicare eligibility or enrollment status.
OPM invites comment on this approach.
OPM is adding Sec. 890.1603(e) to allow survivor annuitants to be
enrolled in PSHB plans in the same way they would have been enrolled in
FEHB plans, with the addition of the Medicare enrollment requirement in
Sec. 890.1604.
Medicare Enrollment Requirement for Certain Annuitants
Section 890.1604(a) requires that certain Postal Service annuitants
who are entitled to Medicare Part A, and their eligible family members
who are entitled to Medicare Part A, enroll in Medicare Part B as a
condition of eligibility to enroll in or continue enrollment in the
PSHB Program. This implements section 8903c(e) of the PSRA and is a
unique requirement as a condition of participation in a health benefits
program under chapter 89 of title 5, U.S.C. This requirement applies
regardless of whether the Postal Service annuitant becomes entitled to
Medicare Part A due to age, disability status, or other eligibility
pathway.
As described above, all Postal Service compensationers will be
considered employees for the purposes of the PSHB Program and will not
be subject to the Medicare Part B coverage requirement. PSHB enrollees
and covered members of family who are entitled to Medicare Part A and
enrolled in Medicare Part B are able to receive their Medicare Part A
and B benefits through Original Medicare or by enrolling in an
available Medicare Advantage plan. Individuals entitled to Part A and
enrolled in Part B may be able to buy Medigap policies, subject to
certain requirements.
Disenrollment for Non-Enrollment in Medicare Part B
OPM is amending Sec. 890.308, ``Disenrollment and removal from
enrollment,'' to add a new paragraph (i) to insert cross reference to
new Sec. 890.1608(b), which describes the circumstances under which an
individual can be disenrolled from a PSHB plan for non-enrollment in
Medicare Part B.
Postal Service Medicare covered annuitants and their Medicare
covered members of family will be required to enroll in Medicare Part B
at their first opportunity, usually within the 7-month IEP around their
65th birthday or during an SEP if they are over the age of 65 and still
in active employment. An individual can be removed or disenrolled from
a PSHB plan if they do not enroll within those enrollment
[[Page 20388]]
periods unless they qualify for an exception detailed in Sec.
890.1604(c).
A Postal Service Medicare covered annuitant or Medicare covered
member of family could be determined ineligible for PSHB if not
enrolled in Medicare Part B. An individual can be disenrolled or
removed from a PSHB plan any time after OPM, the PSHB Carrier, or the
Postal Service determines that a Medicare covered annuitant or Medicare
covered member of family required to be enrolled in Medicare Part B is
not so enrolled. The process for disenrollment or removal from a PSHB
plan for non-enrollment in Medicare Part B is detailed in Sec.
890.1608(b).
Exceptions to Medicare Part B Enrollment Requirement
Section 890.1604(c) describes the statutory exceptions to the
Medicare Part B enrollment requirement for Postal Service Medicare
covered annuitants and their Medicare covered members of family. Those
exceptions are:
<bullet> Individuals who, as of January 1, 2025, are Postal Service
annuitants who are not both entitled to benefits under Medicare Part A
and enrolled in Medicare Part B;
<bullet> Individuals who, as of January 1, 2025, are Postal Service
employees who are aged 64 and over;
<bullet> Postal Service Medicare covered annuitants and family
members residing outside the United States and its territories who
demonstrate their residency in accordance with Postal Service
regulations;
<bullet> Postal Service Medicare covered annuitants and their
family members enrolled in certain VA health care benefits. This
exemption is derived from 5 U.S.C. 8903c(e)(3)(A)(iv)(II), which refers
to individuals ``enrolled in health care benefits provided by the
Department of Veterans Affairs under subchapter II of chapter 17 of
title 38, United States Code.'' Subchapter II of chapter 17 of title
38, U.S.C. governs who is eligible for various VA health care benefits,
including eligibility for VA hospital care and medical services. There
is a limited class of veterans who are not required to enroll in the
system of patient enrollment referred to in 38 U.S.C. 1705(a) in order
to receive VA benefits described in subchapter II of chapter 17 of
title 38, United States Code. As such, this regulation is drafted to
include all veterans described in 38 U.S.C. 1710, including those who
are not required to enroll in the VA's system of patient enrollment
referred to in 38 U.S.C. 1705(a);
<bullet> Postal Service Medicare covered annuitants and family
members eligible for health services provided by the Indian Health
Service; and
<bullet> A Medicare covered member of family of a Postal Service
Medicare covered annuitant who is not required to enroll in Medicare
Part B, based on a statutory exception, in order to be eligible for
PSHB coverage.
Section 890.1604(c) satisfies the requirement in 5 U.S.C.
8903c(e)(3)(B) that OPM promulgate regulations to implement the VA and
IHS coverage exceptions. OPM consulted with VA and IHS beginning in the
Spring of 2022 to draft these policies. IHS strongly recommends that
Medicare covered Postal Service annuitants and their family members be
permitted to use self-attestation as proof of eligibility for IHS
health services for purposes of an exception to the Medicare Part B
requirement. There are various acceptable documents or evidence that
IHS uses as proof of eligibility for IHS health services, and OPM
recommends accepting these as proof for the Medicare Part B exception.
OPM seeks comment on this approach. Section 890.1604(d) describes how
Medicare covered annuitants and Medicare covered members of family can
demonstrate that they qualify for an exception to the Medicare
enrollment requirement.
As required by the PSRA, Sec. 890.1604(e) allows a Medicare
covered annuitant or Medicare covered family member to notify the
Postal Service in writing that they choose not to enroll or to
disenroll from Medicare Part B. Per the PSRA statute, this would have
the effect of cancelling PSHB enrollment. OPM will treat this
circumstance as a termination, conferring rights to a 31-day temporary
extension of coverage and conversion. OPM invites comment on this
approach, which is intended to implement a member-centric approach to
the transition to the PSHB Program.
Suspending PSHB Enrollment for Other Forms of Coverage, Including
Medicare Advantage
Under 5 CFR 890.304(d)(2), an annuitant or survivor annuitant may
suspend FEHB enrollment if they choose to get certain alternative
coverage, including Medicare Advantage (MA), Medicaid or a similar
state-sponsored program of medical assistance for the needy, Peace
Corps, CHAMPVA, TRICARE (including coverage provided by the Uniformed
Services Family Health Plan), or TRICARE-for-Life. These rules will
apply to the PSHB Program. While PSHB enrollment is suspended, no PSHB
premiums would be required. These individuals can re-enroll in a PSHB
plan, subject to subpart P requirements, for instance, during the next
Open Season, when they involuntarily lose coverage, or move out of an
MA Plan's service area.
PSHB Enrollment When an Individual Is Under a Court or Administrative
Order To Provide Health Coverage
The Federal Employees Health Benefits Children's Equity Act of 2000
(Pub. L. 106-394) codified at 5 U.S.C. 8905(h) requires OPM to compel
appropriate FEHB enrollment of an eligible employee in the presence of
a court or administrative order for health insurance coverage of
children and to prohibit the discontinuation of such enrollment by an
annuitant who continued coverage into retirement. This law will be
applied with respect to PSHB enrollment for those Postal Service
employees who are under a court or administrative order to provide
health insurance coverage and with respect to those Postal Service
annuitants for whom a court order continues from when they were an
employee, to the extent the Postal Service annuitant remains enrolled
in a PSHB plan.
A Postal Service employee or Postal Service annuitant would be
subject to the rules concerning court and administrative orders in the
same way as employees and annuitants enrolled in an FEHB plan; however,
the provisions of 5 U.S.C. 8905(h) cannot be fully and properly applied
with respect to Postal Service annuitants for whom a court order
continues from when they were an employee. While OPM has authority to
compel enrollment in a PSHB plan and withhold the appropriate share of
contribution toward premiums, the PSRA includes no authority for OPM to
compel enrollment in Medicare Part B by Postal Service Medicare covered
annuitants on the grounds of a court order for coverage of children.
Further, a Postal Service annuitant who is subject to a court or
administrative order to provide health insurance coverage could be
disenrolled from PSHB coverage because of non-enrollment in Medicare
Part B. In such a circumstance, the child would be without PSHB
coverage despite the court or administrative order, and OPM would be
without authority to compel continued enrollment in PSHB by a Postal
Service annuitant who is required to be enrolled in Medicare Part B as
a condition of PSHB enrollment but is not so enrolled.
PSHB Plan Year
The PSHB plan year will run from January 1 to December 31 each year
[[Page 20389]]
starting in 2025. Any Open Season enrollment, change of enrollment, or
reenrollment will take effect on January 1 of each year starting in
2025. The PSHB plan year is in contrast to the effective date of new
FEHB enrollments by employees during the annual Federal Benefits Open
Season, which is the first day of the first pay period that begins in
the next year, and which follows a pay period during any part of which
the employee is in a pay status. See Sec. 890.301(f)(4)(i). For Open
Season changes in FEHB enrollment for Postal Service employees, the
effective date is the first day of the first pay period that begins in
January of the next year. See Sec. 890.301(f)(4)(ii). Under the
current regulations, the effective date for FEHB enrollments and
changes in enrollment may be different each year based on which day in
January is the first day of the pay period.
OPM is making this change because a calendar year start date is
easier for enrollees to track and follow their PSHB coverage. In
addition, setting the PSHB plan year start date to January 1 would be
consistent with the industry standard; the cutoff date for Postal
Service Medicare covered annuitants who are listed as exceptions to the
Medicare enrollment requirement; the effective date of benefit changes
under OPM's contracts with carriers; health savings accounts for high
deductible health plans; flexible spending accounts; coverage under the
FEDVIP; and payments to compensationers.
A standard January 1 start date to the plan year may present
certain challenges, which became apparent when OPM proposed such a
change for the FEHB Program in 1998.\5\ Such challenges include an
effective way to collect and pro-rate FEHB premiums when one switches
plans, given that January 1 is in the middle of a pay period for most
Federal and Postal Service employees. Because of these challenges, OPM
eventually withdrew the 1998 proposed rule in 2003.\6\
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\5\ <a href="https://www.federalregister.gov/d/98-23335">https://www.federalregister.gov/d/98-23335</a> (63 FR 46180,
August 31, 1998).
\6\ <a href="https://www.federalregister.gov/d/03-31768">https://www.federalregister.gov/d/03-31768</a> (68 FR 74513,
December 24, 2003).
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OPM believes the prior challenges are mitigated by the advancement
of technology, including the establishment of a centralized enrollment
system for the PSHB Program. OPM also believes that payroll offices and
other stakeholders will have the necessary lead time to make all
appropriate system changes to accommodate this effective date.
OPM invites comments on a January 1 plan year start date for the
PSHB Program. OPM invites comments on the operational feasibility of
implementing a standard January 1 effective date for Open Season PSHB
enrollment actions, including any challenges relating to premium
allocation and whether it makes a difference if the centralized
enrollment system calculates and requests the partial premium versus
the Federal payroll provider.
Enrollment
Section 890.1605 establishes enrollment in the initial contract
year, including a transitional Open Season that coincides with the
standard FEHB Program Open Season in 2024 for enrollment in health
benefits plans offering coverage in 2025. Definitions are included in
Sec. 890.1605(a), and the transitional Open Season is defined in Sec.
890.1605(b). Consistent with 5 U.S.C. 8903c(f), the PSHB transitional
Open Season will run at the same time as the standard FEHB Open Season
outlined at Sec. 890.301(f), starting the Monday of the second full
workweek in November, going through the Monday of the second full
workweek in December. This is the time period for Postal Service
employees and Postal Service annuitants to select and enroll or
continue enrollment, or choose not to enroll or continue enrollment, in
a PSHB plan. Starting with the 2024 Open Season, Postal Service
employees and Postal Service annuitants are ineligible to enroll or
continue enrollment in FEHB plans for the 2025 plan year and
thereafter.
Automatic enrollment into a PSHB plan for the initial contract year
is described in Sec. 890.1605(c). The PSRA requires that FEHB-enrolled
Postal Service employees and Postal Service annuitants that do not make
an election to enroll in a PSHB plan during the transitional Open
Season will be automatically enrolled in a PSHB plan offered by their
current FEHB Carrier to begin January 2025. If the carrier offers
multiple PSHB plans or options, the individual will be automatically
enrolled in the carrier's plan and option with equivalent or most
similar benefits and cost-sharing to the individual's current FEHB
plan. In a case where the carrier is not offering PSHB plans, those
individuals will be automatically enrolled in the lowest-cost
nationwide PSHB plan option that is not a high deductible health plan
and does not charge an association or membership fee. All automatic
enrollments will be into a PSHB plan of the same enrollment type (self
only, self and family, or self plus one) as the 2024 FEHB plan.
In the FEHB Program, employees in a nonpay status, such as leave
without pay, are not generally able to enroll in an FEHB plan during
Open Season. OPM is changing this policy for the PSHB Program for the
transitional Open Season in 2024 only. FEHB enrollments and FEHB plan
eligibility will terminate at the end of 2024 for all Postal Service
employees. Since these individuals can't continue their FEHB plan
enrollment into 2025, OPM will permit Open Season elections for
eligible Postal Service employees, regardless of pay status with the
exception of Sec. 890.303(e) individuals whose enrollment is
terminated due to 365 days of nonpay status, for the 2024 Open Season
only. OPM invites comment on this approach, which is intended to
implement a member-centric approach to the transition to PSHB coverage.
Continuity of Enrollment
Continuity of enrollment for PSHB is detailed in Sec. 890.303
(``Continuation of enrollment''). As described above, OPM is updating
the list of exclusions from the continuation of enrollment
requirements.
Retroactive Enrollment and Termination
Section 890.103 allows for OPM to correct administrative FEHB plan
enrollment errors, including retroactive actions such as enrollments
and correction of enrollment code errors. Such corrective actions are
subject to appropriate withholding and contributions of premiums, which
requires payment from the employee or annuitant for each pay period
they are enrolled in a health benefits plan.
These correction of errors provisions will apply in the PSHB
Program, as laid out in Sec. 890.1614. This new section adds a clause
to state ``except that retroactive corrections to an enrollment under
this subpart may not go further back than the initial contract year.''
This is to establish that there cannot be a retroactive correction to a
PSHB enrollment before the initial contract year of the PSHB Program.
Terminations are addressed in the FEHB Program according to rules
in Sec. 890.304. Section 890.304(b)(2) allows an annuitant whose
coverage was terminated due to insufficient annuity to pay withholdings
for the health benefits plan in which the annuitant was enrolled, to
request reinstatement of coverage from the retirement systems when they
failed, due to circumstances beyond their control, to directly pay
premiums or to make an election to change enrollment to a health
benefits plan so that their annuity was sufficient for the new
withholdings. In this
[[Page 20390]]
circumstance, the retirement system may reinstate coverage
retroactively to the termination date.
Although 5 U.S.C. 8903c(d)(2) prohibits Postal Service employees
and Postal Service annuitants who are covered in PSHB plans from
enrolling or continuing enrollment in FEHB plans after 2024, the
statute does not prohibit retroactive enrollment into a FEHB plan for
an effective date beginning on or before December 31, 2024, before the
start of the PSHB Program. Such retroactive enrollments may occur, for
instance, due to an enrollment processing error that pre-dated the
first contract year of the PSHB Program.
Plan Contracting
Section 890.1610 outlines the minimum standards for PSHB Carriers
and plans, including a requirement to provide Medicare prescription
drug benefits to Medicare Part D-eligible annuitants and family members
pursuant to 5 U.S.C. 8903c(h). Section 8903c(c)(1)(B) of title 5,
U.S.C. requires that PSHB plan contracts under the PSHB Program are
consistent with the requirements of chapter 89 for FEHB plan contracts
under section 8902. The minimum standards for PSHB Carriers will be the
same as for FEHB Carriers as described at 48 CFR 1609.70, with the
addition of the new Sec. 1609.7002 outlining the minimum standards for
PSHB Carriers. A PSHB plan must meet the minimum standards at 5 CFR
890.201. All PSHB plans must have coverage effective on January 1 of
each contract year.
As required by 8903c(c)(1)(C), the FEHB Program will offer, to the
greatest extent practicable, a PSHB plan from each FEHB Carrier that
has a plan with 1,500 or more Postal Service employees or Postal
Service annuitants enrolled in the 2023 contract year. In the initial
contract year, PSHB Carriers must offer PSHB plans that have coverage
with equivalent benefits and cost-sharing to the FEHB plans offered by
that carrier, except to the extent needed to integrate Medicare Part D
prescription drug benefits. If the FEHB plans offered by a carrier do
not meet the requirements under Medicare Part D, then the carrier will
need to adjust its corresponding PSHB plan accordingly. A carrier's
prescription drug coverage may be different in its PSHB plan than in
its FEHB plan.
OPM has the authority to exempt comprehensive medical plans, as
described in 5 U.S.C. 8903(4), from the requirement that the PSHB
Program include, to the greatest extent practicable, a plan offered by
any FEHB Carrier that has a plan with 1,500 or more Postal Service
enrollees. Comprehensive medical plans are defined in FEHB statute as
one of four health plan categories that OPM is authorized to contract
for. The term ``comprehensive medical plans'' refers to health
maintenance organizations (HMOs). Many of these HMOs are regional
rather than nationally available plans.
PSHB plans will offer the same enrollment types as FEHB plans,
including self only, self plus one, and self and family coverage. Only
Postal Service employees and Postal Service annuitants, including
survivor annuitants, and those eligible for temporary continuation of
coverage (TCC), may enroll in PSHB plans established under new subpart
P of part 890. Those eligible to enroll may add eligible family members
to their enrollment.
Medicare Part D Prescription Drug Coordination
The PSRA requires plans in the PSHB Program to provide prescription
drug benefits through Medicare Part D for Part D-eligible Postal
Service annuitants and their Part D-eligible family members. Under 5
U.S.C. 8903c(h), PSHB plans are required to provide prescription drug
benefits to these individuals through ``employment-based retiree health
coverage'' either through a ``prescription drug plan (PDP)'' or a
contract with a ``PDP sponsor'' of a prescription drug plan, as terms
are defined in section 1860D-22(b), 1860D-41(a)(14), and 1860D-
41(a)(13) of the Social Security Act, respectively.
A carrier offering employment-based retiree health coverage,
defined in section 1860D-22(c)(1) of the Social Security Act and
referred to in section 5 U.S.C. 8903c(h)(2) and a conforming amendment
to 1860D-22(b), may provide prescription drug coverage through an
employer group waiver plan or EGWP (for a discussion of EGWPs, see
Prescription Drug Benefit Manual, Chapter 12,\7\ Application of CMS
Employer Group Waiver Authority).
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\7\ CMS, Medicare Prescription Drug Benefit Manual, Chapter 12,
``Employer/Union Sponsored Group Health Plans,'' Rev. November 7,
2008, at <a href="https://www.cms.gov/regulations-and-guidance/guidance/transmittals/downloads/dwnlds/r6pdbpdf">https://www.cms.gov/regulations-and-guidance/guidance/transmittals/downloads/dwnlds/r6pdbpdf</a>.
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To ensure compliance with 5 U.S.C. 8903c(h)(2) of the PSRA, a
carrier seeking to offer a Medicare Advantage Prescription Drug (MA-PD)
plan to PSHB members must offer prescription drug coverage for Part D-
eligible Postal Service annuitants and their Part D-eligible family
members through a PDP or through a contract with a PDP Sponsor and may,
subject to OPM's approval, offer MA-PD coverage as an alternative for
these individuals to elect, should they so choose. Consistent with FEHB
Program policy and current FEHB contract provisions, OPM will consider
carrier applications for PSHB plans that coordinate with EGWP MA-PDs,
subject to the requirements in 8903c(h)(2) and negotiation with OPM.
OPM Right To Withdraw or Non-Renew
Section 890.1611 describes OPM's right to withdraw approval of any
PSHB plan or carrier, and to give notice of non-renewal of any health
benefits plan contract for failure to meet applicable standards.
Separate PSHB Reserves
Section 890.1610(a)(4) implements the requirement at 5 U.S.C.
8903c(j) that OPM maintain separate reserves, including contingency
reserves, for each PSHB plan. These reserves will include an account in
OPM's administrative reserve and a contingency reserve for each plan,
established under and governed by 5 CFR 890.503, 48 CFR chapter 16, and
carrier contract.
Information Sharing
Section 890.1612 requires OPM to enter into agreements with other
agencies for information exchange necessary to implement the PSHB
Program. As required by section 101(c)(2) of the PSRA, OPM will
exchange information to SSA as necessary regarding Postal Service
annuitants and their family members who may be subject to the Medicare
enrollment requirements described in Sec. 890.1604 or who may be
eligible to enroll in Medicare Part B during the new Part B six-month
SEP (beginning April 1, 2024) which was created by the PSRA as
available to certain Postal Service annuitants and family members who
are entitled to Medicare Part A and is described in section 1837(o) of
the Social Security Act. In addition, OPM will establish periodic
agreements with HHS, the Postal Service, VA, and other Federal agencies
as needed to share data and information as is necessary to implement
the PSHB Program.
These periodic agreements will specify the data elements that will
be shared, the process for information sharing, the frequency of
information sharing, and how that data can be used and disclosed. The
purpose of these agreements is to determine (1) which Postal Service
employees, Postal Service annuitants, and family members may be
eligible to enroll in or be covered by in PSHB plans, (2) which Postal
Service
[[Page 20391]]
Medicare covered annuitants and Medicare covered members of family may
be subject to the enrollment requirements described in Sec. 890.1604,
(3) whether Postal Service Medicare covered annuitants and Medicare
covered members of family satisfy the Medicare enrollment requirements
at Sec. 890.1604, (4) which Postal Service annuitants and family
members may be eligible to enroll in Medicare Part B during the six-
month SEP beginning April 1, 2024 under a new section 1837(o) of the
Social Security Act, and (5) a system for data sharing as needed for
carrying out section 8903c of title 5, United States Code, and this
subpart.
Premium Payment
The calculations for contributions and withholdings for PSHB will
be made in the same manner as 5 U.S.C. 8906 and subpart E of 5 CFR part
890. The Postal Service Government contribution will be determined
using the calculation at section 8903c(i) of title 5, United States
Code. Section 8903c(i)(3) states that OPM, when computing the weighted
average of the rates offered by carriers for the initial PSHB contract
year, shall take into account the enrollment of Postal Service
employees and Postal Service annuitants in those carriers' plans as of
March 31, 2023. Nonetheless, because OPM expects to have significantly
more current Postal Service enrollment data available, OPM intends to
use all available 2024 Postal Service enrollment information when
determining the 2025 weighted average of the rates for the initial
contract year, taking into account 2023 data as a comparison point and
for validation purposes, or in the event 2024 data is not available.
For all subsequent years, the PSHB plans and FEHB plans will each have
the Government contributions calculated in accordance with Sec.
890.501.
Some Postal Service Medicare covered annuitants and/or their
Medicare covered members of family who enroll in Medicare during the
SEP beginning April 1, 2024, may be subject to a Medicare Part B late
enrollment penalty. This penalty is added to the monthly Medicare Part
B premium and is usually charged for as long as the individual is
enrolled in Medicare. The amount of the Part B late enrollment penalty
depends on how long the individual waited to enroll after their initial
period of Medicare eligibility. The PSRA requires that the Secretary of
HHS enter into an agreement with the Postal Service under which the
Postal Service agrees to pay on a quarterly or other periodic basis to
the Secretary the amount of the Part B late enrollment premium
increases for eligible individuals who enrolled during the SEP. In
addition, the PSRA states that the Postal Service may direct OPM to pay
such Part B late enrollment penalties for Postal Service Medicare
covered annuitants or Medicare covered members of family who enroll in
Part B during the 2024 SEP subject to the agreement between the Postal
Service and HHS from the PSRHBF established under 5 U.S.C. 8909a until
those funds are depleted. Thereafter, those payments will be paid from
the Postal Service Fund established under 39 U.S.C. 2003.
USPS Fairness Act
Section 102 of the PSRA (``USPS Fairness Act'') directs OPM to
annually calculate a payment to be made by the Postal Service into the
PSRHBF beginning in June of 2026. This payment replaces the previously
required actuarially determined pre-funding payments (normal cost and
amortization) calculated annually by OPM from 2017 through 2021.
The payment into the PSRHBF required under the PSRA is not an
actuarially determined pre-funding payment, though OPM's actuaries are
responsible for calculating the new formula driven payment into the
fund starting in 2026. The PSRA provides the formula by which OPM is to
calculate the payment, which is defined as the difference between the
Postal Service share of Postal Service annuitant premiums less
estimated net claims costs. The PSRA defines estimated net claims costs
as the difference between the sum of the costs incurred by the carrier
for health services provided to Postal Service annuitants and
reasonable administrative expenses less the Postal Service annuitants'
share of premium.
Section 102 states that ``[a]fter consultation with the United
States Postal Service, [OPM] shall promulgate any regulations the
Office determines necessary under this subsection.'' OPM has determined
that the formula is sufficiently defined in the law and defining it
further in regulation is unnecessary. OPM invites comment on this
approach.
The PSRA revises the language under 5 U.S.C. 8909a to provide that
any calculation required under 39 U.S.C. 3654(b) should be based on
current Postal Service annuitants and current Postal Service employees
who would be eligible to retire under 5 U.S.C. 8901(3)(A)(i) or (ii)
and who have the required years of health coverage to continue health
benefits in retirement. Pursuant to 39 U.S.C. 3654(b), OPM is required
to calculate and provide certain information for the Postal Service
financial reporting on both health benefits and pension obligations as
provided under chapters 83 and 84 of title 5. However, the requirements
in the PSRA involving 39 U.S.C. 3654(b) apply only to health benefits
and the CSRS and FERS statutes do not provide any similar requirement
pertaining to section 3654(b). It would not be appropriate to calculate
any pension obligations in the manner now required under 5 U.S.C. 8909a
for post-retirement health benefits. As a result, OPM is interpreting
the new PSRA provision in section 8909a as applying only to the ``post-
retirement health requirements'' in 39 U.S.C. 3654(b). OPM invites
comment on this approach.
The term `future net claims costs' as used in PSRA section
102(e)(1) does not have a definition in regulation or statute. Section
890.1613(e) clarifies that OPM interprets ``future net claims costs''
in section 102(e)(1) to be the same as ``estimated net claims costs''
as defined in section 102(g). OPM invites comment on this approach.
Centralized Enrollment
Since the inception of the FEHB Program in 1960, OPM has prescribed
regulations over time that place responsibility for health benefits
actions on to an ``employing office,'' as defined at 5 CFR 890.101, an
``employing agency,'' or an ``agency.'' Consequently, the FEHB
Program's enrollment functions are not handled by OPM but are dependent
on decentralized processes that utilize independent systems at
different Federal agencies. Therefore, the Postal Service or other
employing office \8\ is responsible for processing appropriate requests
for FEHB enrollment or changes in enrollment. See, e.g., 5 CFR
890.301(b). An employing office is also responsible for verifying the
eligibility of family members. See 5 CFR 890.302.
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\8\ The Postal Service is the employing office for Postal
Service employees. OPM Retirement Services is the employing office
for Postal Service annuitants. The Department of Labor's Office of
Workers' Compensation Programs is the employing office for
compensationers. The Department of Agriculture's National Finance
Center is currently the employing office for individuals enrolled
under Temporary Continuation of Coverage, Spouse Equity, and for
annuitants whose annuity is insufficient to withhold the cost of
health benefits premiums.
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For purposes of the PSHB Program, OPM will shift certain
responsibilities from the employing office to a centralized enrollment
system which will be administered by OPM or its contractor. As
envisioned, the centralized enrollment system will be an electronic
enrollment solution for all PSHB stakeholder groups including
[[Page 20392]]
enrollees, the Postal Service and other employing offices, and PSHB
Carriers. The centralized enrollment system will include an online
portal to enter and process enrollment transactions, robust decision
support tools, and a customer support center to assist enrollees via
phone, email, or online chat. Persons who are unable to access the
online portal will be able to enroll through other means such as phone,
fax, or mail.
To support the establishment of centralized enrollment for the PSHB
Program, OPM is adding several regulatory provisions. OPM may also
issue guidance to further delineate responsibilities regarding PSHB
enrollment.
Specific Regulatory Provisions
In addition to any future guidance, in Sec. Sec. 890.1605,
890.1606, 890.1608, and 890.1614, OPM is specifying that OPM will
assume responsibility for the following health benefits actions for the
PSHB Program: enrollment, changes of enrollment, correction of errors,
election not to enroll, and disenrollment of enrollees and removal of
family members. OPM will work with the Postal Service and other
employing offices to determine additional details about these health
benefit actions.
Reconsideration of Initial Decisions
An individual who has received an initial decision affecting their
enrollment in the PSHB Program may request a reconsideration of that
initial decision. Individuals will be made aware of their right to an
independent review and the time, manner, and entity to which the
reconsideration request must be made.
Administrative Provisions
As described above and included in Sec. 890.1614(a), correction of
errors for PSHB enrollments will follow the rules for FEHB correction
of errors, except that a PSHB enrollment cannot be corrected to be
effective before the first PSHB contract year.
Section 890.1614(b) requires that carrier entitlement to pursue
subrogation and reimbursement recoveries must follow the requirements
of Sec. 890.106.
Section 890.1614(c) requires reconciliation of PSHB enrollment
between OPM and each PSHB Carrier in a form and manner to be determined
by OPM. If a Medicare covered annuitant or member of family is found
not to be enrolled in Medicare Part B in violation of the requirements
of Sec. 890.1604, that individual may be disenrolled or removed from
PSHB enrollment or coverage.
C. Structure of the Interim Final Rule
The regulations outlined in this interim final rule are codified in
subparts A, C, E, and the new subpart P of 5 CFR part 890 and 48 CFR
chapter 16.
Interim Final Rule With Request for Comments
OPM commonly publishes notices of proposed rulemaking in the
Federal Register and invites public comment on rules before the
provisions of the rules are finalized, either as proposed or as amended
in response to public comments, and take effect, in accordance with the
Administrative Procedure Act (APA) at 5 U.S.C. 551 et seq. and, where
applicable, the Civil Service Reform Act of 1978 (CSRA) at 5 U.S.C.
1103(b).
Specifically, 5 U.S.C. 553 and 1103(b) require the agency to
publish a notice of certain proposed rules in the Federal Register that
includes a reference to the legal authority under which the rule is
proposed, and the terms and substance of the proposed rule or a
description of the subjects and issues involved. Further, the APA at 5
U.S.C. 553(c) requires agencies to give interested parties the
opportunity to participate in the rulemaking through public comment
before the provisions of a rule take effect.
However, the APA also provides that traditional notice and comment
procedures are not required when, as relevant here, the agency for good
cause finds that following those procedures would be impracticable, 5
U.S.C. 553(b)(B), and the CSRA includes a ``parallel exception,''
National Federation of Federal Employees v. Devine, 671 F.2d 607, 610
(D.C. Cir. 1982); see 5 U.S.C. 1103(b)(3). ``[A] situation is
impracticable when an agency finds that due and timely execution of its
functions would be impeded by the notice otherwise required . . . as
when a safety investigation shows that a new safety rule must be put in
place immediately.'' Util. Solid Waste Activities Group v. E.P.A, 236
F.3d 749, 754 (D.C. Cir. 2001) (quotation marks and alterations
omitted); see Mack Trucks, Inc. v. E.P.A., 682 F.3d 87, 93 (D.C. Cir.
2012). OPM finds that following typical notice and comment procedures
would be impracticable here because doing so would not allow sufficient
time for the PSHB to be in effect by January 2025, as required by the
PSRA. As explained further below, failure to meet this deadline would
not only violate the PSRA but would also result in a potential gap in
health insurance coverage for Postal Service employees, Postal Service
annuitants, and their families. OPM is therefore issuing this interim
final rule with request for comment--a temporary measure before OPM
issues a final rule in response to comments received.
The deadlines that Congress has specified in the PSRA require this
rule to become effective expeditiously. The PSRA provides in part that
the Director of OPM shall issue regulations to carry out the PSHB
provisions no later than April 6, 2023--just one year after statutory
enactment--in consultation with the Secretary of Health and Human
Services, the Secretary of Veterans Affairs, the Commissioner of Social
Security, and the Postmaster General. See Devine, 671 F.2d at 611
(``This is not a case in which the agency received substantial prior
notice of a statutory deadline[.]''). The law also requires that health
coverage through a PSHB plan must begin in January 2025 and that Postal
Service employees and Postal Service annuitants enroll for coverage
during an annual Open Season period beginning in 2024.
To meet these statutory deadlines, this rule must go into effect
immediately. That is so because until this rule is in place, OPM and
the health insurance industry cannot engage in the complex process
necessary to develop health insurance plans, make those plans available
for enrollment during the 2024 Open Season, and effectuate coverage on
January 1, 2025. And that complex process must begin now; specifically:
<bullet> For OPM to develop its enrollment plan strategy, and to
determine the number, type, and location of FEHB plans committed to
participating in the PSHB, OPM needs health insurance carriers seeking
to participate in the PSHB Program to submit applications to OPM in
August 2023--just four months from issuance of this interim final rule.
To prepare those applications, health insurance carriers will need to
understand the requirements of the PSHB Program, including how they may
differ from FEHB plans in a number of key areas. These areas include
the Medicare Part D coverage integration requirements for PSHB plans,
Medicare benefit coordination, and data exchange capabilities for PSHB
enrollment eligibility which include data regarding an individual's
entitlement for Medicare Part A and enrollment in Part B, their VA
benefit enrollment status, and/or IHS eligibility. Carriers will need
to know the implications of the requirements and capabilities outlined
in this rule--and will need them to have effect--in order to (1) make a
business
[[Page 20393]]
decision about whether to participate in the Program and (2) put
together a proposed plan that aligns with the requirements of this
rule.
<bullet> OPM will then need to review such applications to ensure
that the plans will satisfy requirements set forth in this rule by the
Program start date. Review and vetting of carrier applications--
including the financial fitness of the proposed PSHB plan, Postal-
specific information system capabilities, and adherence to Medicare
Part D coordination requirements such as plans arranging for
prescription drug plan coverage--must occur during the Fall of 2023.
<bullet> In October 2023, the Postal Service is required by the
PSRA to launch a Health Benefits Education Program to raise employee
and annuitant awareness of the PSHB Program and its requirements
through the distribution of information and facilitation of enrollment
in available plans. While specific information such as rates and
benefits will not be available until later in 2024, the Postal Service
will structure this Education Program based on the requirements for the
PSHB Program as set forth in this rule. Knowledge of the Program's
requirements and the health insurance carriers that have applied to
participate in the Program starting in 2023 will assist enrollees in
understanding the decisions they will need to make.
<bullet> Throughout 2023 and 2024, OPM will, among other things,
develop, test, and implement a Postal Service centralized enrollment
system, which will be used by PSHB enrollees to select health plans for
the 2025 plan year. OPM must integrate Medicare Part A entitlement and
Medicare Part B enrollment data in accordance with existing FEHB
regulations and the new PSHB requirements, as set forth in this rule
that implements the PSRA. Enrollment data processed by the centralized
enrollment system will be transmitted to PSHB Carriers, who will begin
serving these enrollees starting January 1, 2025.
<bullet> In April of 2024, CMS will launch the six-month SEP,
during which time Postal Service annuitants and their family members
will have the opportunity to enroll in Medicare Part B, without a late
enrollment penalty for the Part B enrollee. If Postal Service
annuitants and their family members eligible for the SEP are not timely
informed that they have this opportunity to enroll in Medicare Part B
without having to pay a late enrollment penalty and how to do so, they
may incur the standard late enrollment penalty if they subsequently
wish to enroll in Part B, should they choose to do so, and such late
enrollment penalty could remain in place for as long as they remain
enrolled in Part B.
<bullet> By May 31, 2024, PSHB Program carriers will need to submit
rates and benefits proposals to offer health plans for the 2025 plan
year.
<bullet> In September 2024, OPM will publish the negotiated PSHB
plan rates and benefits for the 2025 plan year.
<bullet> Open Season for enrollee selection of PSHB plans will
occur from November 11 through December 9, 2024.
As this timeline makes clear, there are numerous operational
interdependencies--beginning with carriers submitting applications to
participate in the PSHB Program by August 2023--that necessitate the
immediate effectiveness of this regulation. The immediate effectiveness
of this rule is necessary not only for OPM to meet the statutorily
required January 1, 2025 deadline for providing benefits to enrollees,
but also because a failure to do so could result in a loss of
healthcare coverage for Postal Service employees, annuitants, and their
families. After December 31, 2024, Postal Service employees or Postal
Service annuitants will no longer be eligible to enroll in an FEHB plan
based on status as a Postal Service employee or Postal Service
annuitant, and their family members will no longer be covered by such
plan. Accordingly, Sec. 890.1605 establishes that PSHB plans must be
available to enroll individuals during the 2024 Open Season, starting
on November 11, 2024. If PSHB plans are not available, those
individuals may experience a gap in health insurance coverage, and
people without insurance coverage have worse access to care and
experience worse health outcomes than people who are insured. See
Office of Disease Prevention and Health Promotion. (n.d.). Access to
Health Services. Healthy People 2030. U.S. Department of Health and
Human Services. <a href="https://health.gov/healthypeople/priority-areas/social-determinants-health/literature-summaries/access-health-services">https://health.gov/healthypeople/priority-areas/social-determinants-health/literature-summaries/access-health-services</a>; see
also 42 U.S.C. 18091(2)(E) (observing the ``poorer health and shorter
lifespan of the uninsured''). Among the catalysts of poorer health is
the decreased use of preventive services by individuals experiencing
gaps in health insurance coverage, even if only for a relatively short
period of time, and especially for individuals at or near retirement
age. See Sudano, J.J. Jr., Baker, D.W. (2003). Intermittent Lack of
Health Insurance Coverage and Use of Preventive Services. Am. J. Public
Health, 93:130-37, available at: <a href="https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1447707">https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1447707</a>. These services include mammography, Pap tests,
cholesterol checks, flu vaccination, and prostate and breast cancer
screenings. Id.
Additionally, OPM is obligated to provide Postal Service employees
and Postal Service annuitants an opportunity to enroll in health
insurance plans for which they are eligible under current statutory
provisions, including provisions granting Postal Service employees and
Postal Service annuitants eligibility under chapter 89. See 39 U.S.C.
1005(f). The FEHB regulations currently in effect permit health
insurance enrollment actions and changes to be made during Open Season
periods, which are required to be held annually from mid-November
through the mid-December. 5 CFR 890.301(d). Failure to hold a PSHB Open
Season period prior to December 31, 2024, when Postal Service employees
and Postal Service annuitants lose eligibility for FEHB plan
enrollment, may conflict with OPM regulations
In short, given the complexities of establishing this Program, as
discussed above, expeditious issuance of these rules is required
because otherwise PSHB plans will not be established by January 2025,
potentially resulting in the loss of health insurance coverage for
millions of Postal Service employees, Postal Service annuitants, and
their family members. An interim final rule is therefore necessary so
as to avoid the ``possible imminent hazard'' that individuals would
face from a gap in coverage, Mack Trucks, Inc., 682 F.3d at 93.
For these reasons, OPM finds good cause to issue this interim rule.
But, again, this rule is temporary: OPM invites public comments and
will promulgate a final rule as soon as practical after receiving and
considering them.
Regulatory Impact Analysis
Need for Regulatory Action
This interim final rule implements sections 101 and 102 of the PSRA
which direct OPM to establish the PSHB Program for Postal Service
employees, annuitants, and their eligible family members. These
sections of the PSRA amend chapter 89 of title 5, United States Code,
which identifies the individuals who, starting in 2025, will be
eligible to enroll in a PSHB plan and may not remain in an FEHB plan
under their Postal Service employment or retirement; those who must
enroll in Medicare Part B to maintain enrollment
[[Page 20394]]
in PSHB; the health benefits plans that should be offered to the
greatest extent practicable; some plan requirements; the need for
automatic enrollment in certain circumstances; contributions by the
Postal Service; how reserves for PSHB plans are to be structured;
requirements for information sharing; and other requirements necessary
for PSHB Program implementation.
The PSHB Program is contained within chapter 89, which governs the
FEHB Program generally. The PSRA confirms that PSHB plans are subject
to the same provisions as FEHB plans unless they are inconsistent with
the statute. OPM is given the discretion to make such determinations.
Section 101 of the PSRA codified at 5 U.S.C. 8903c directs OPM to
issue regulations establishing the PSHB Program and is given the
discretion to include ``any provisions necessary to implement this
section.'' Section 8903c(g) addresses the topics for which Congress
specifically instructed OPM to promulgate rules, clarifies how existing
rules for the FEHB Program will apply to the PSHB Program, as well as
new requirements regarding eligibility and enrollment, information
sharing with other agencies, PSHB Carrier requirements, and other rules
that will govern the PSHB Program. OPM's interim final rule is
necessary to provide transparency into how it is implementing the PSRA,
memorialize processes and procedures that will apply, allow carriers to
begin preparations to enter the PSHB Program, and give individuals who
will be impacted as much information about the PSHB Program as early as
possible.
These regulatory provisions implement the statutory requirements,
and without these provisions, it will be impossible for OPM to comply
with its own obligations under the PSRA, and PSHB Carriers, other
agencies, and Postal Service employees and annuitants will be uncertain
about how the PSHB Program will operate.
Executive Orders 12866 and 13563
Executive Order 12866 at section 3(f) defines a ``significant
regulatory action'' as an action that is likely to result in a rule:
(1) having an annual effect on the economy of $100 million or more, or
adversely and materially affecting a sector of the economy,
productivity, competition, jobs, the environment, public health or
safety, or state, local or tribal governments or communities (also
referred to as ``economically significant''); (2) creating a serious
inconsistency or otherwise interfering with an action taken or planned
by another agency; (3) materially altering the budgetary impacts of
entitlement grants, user fees, or loan programs or the rights and
obligations of recipients thereof; or (4) raising novel legal or policy
issues arising out of legal mandates, the President's priorities, or
the principles set forth in the Executive Order.
A regulatory impact analysis must be prepared for major rules with
economically significant effects (annual effect of $100 million or
more), and a ``significant'' regulatory action is subject to review by
the Office of Management and Budget (OMB). OPM anticipates that this
rule is likely to have economic impacts of $100 million or more in at
least 1 year, meeting the definition of a ``significant rule'' under
Executive Order 12866.
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributional impacts, and equity). This
rule is a significant regulatory action under E.O. 12866. Therefore,
OPM has provided an assessment of the potential costs, benefits, and
transfers associated with this rule.
Summary of Impacts
Overall, the PSRA and the PSHB Program, through this regulation,
will help to promote the financial stability and long-term viability of
the Postal Service, which provides a crucial role for society with
respect to communication, commerce, and political participation. The
Postal Service was established with the intent to benefit the public
and provide reliable, affordable nationwide mail, package delivery, and
other services. With the Postal Service's wide reach in providing
essential services to nearly everyone in the U.S. in some form, its
long-term stability is crucial. The PSRA improves the Postal Service's
financial position, and a financially sustainable Postal Service
ensures that the Postal Service can continue to fulfill its universal
service mission, and make the investments needed to support service
excellence, network efficiency, and introduce enhanced products and
services for its customers.
This societal benefit will result primarily from the removal of the
prefunding obligation related to future retiree health benefits and the
shifting of insurance coverage costs away from the Postal Service to
Medicare, and ultimately to taxpayers, who together with beneficiaries,
fund Medicare. The Postal Service is required by law to be self-
sufficient, and the Postal Service, along with its employees, pay taxes
to fund Medicare each year, but many of its employees do not enroll in
Medicare after they retire. Therefore, and unlike other employers who
offer retiree health benefits and pay Medicare taxes, the Postal
Service has not been able to ensure that its retiree health care
program fully utilizes Medicare. Enabling the Postal Service to
generally require its Medicare-eligible annuitants to enroll in
Medicare when eligible ensures that the Postal Service can utilize
Medicare in a similar manner as other employers, which strengthens its
financial position and therefore its ability to continue its critical
public service mission.
From a societal perspective, the primary costs associated with the
implementation of the PSHB Program will be administrative and
operational costs necessary to initiate and maintain the program,
including development of information technology (IT) systems, education
and outreach, and additional administrative staffing for the design,
maintenance, and oversight of the increased quantity of health plans.
These costs will be largest in the initial start-up phase and will be
borne by Federal agencies, as well as carriers offering both FEHB plans
and PSHB plans. The PSRA appropriated $94 million in implementation
funding for OPM and other Federal agencies for these administrative and
operational costs. Pursuant to section 101(d)(4) of the PSRA, the
Postal Service deposited the appropriated funds into the Treasury as a
miscellaneous receipt from the Postal Service Fund in fiscal year 2022.
Most of the impact from the PSRA and this regulation will occur via
distributional effects. The principal transfer will be the shifting of
premium costs from the Postal Service and PSHB members to Medicare as a
result of the Medicare Part B enrollment requirements and the
integration of Medicare Part D coverage into PSHB plans. This Part D
integration could also result in a portion of costs being transferred
to the pharmaceutical industry via the statutory manufacturer discounts
provided to Part D, in conjunction with discounts negotiated with
individual FEHB plans. Further, integrating Part D coverage into PSHB
plans may result in a transfer of costs to carriers, particularly those
with little Medicare experience, who may need to contract with third-
party vendors to assist with integration, increasing administrative
costs. The segmentation
[[Page 20395]]
of the current FEHB risk pool will result in premiums reflective of
each separate risk pool's health care utilization and costs, which are
estimated to be higher for Postal Service enrollees compared with non-
postal.\9\ This may result in a slight reduction in FEHB premiums
following implementation.
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\9\ H.R. 3076, Postal Service Reform Act of 2021--Cost Estimate,
Congressional Budget Office (CBO) (2021). <a href="https://www.cbo.gov/system/files/2021-07/hr3076.pdf">https://www.cbo.gov/system/files/2021-07/hr3076.pdf</a>.
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Ultimately, the total costs and benefits associated with the PSRA,
and this interim final rule are highly uncertain because enrollee and
carrier reactions to the effects on Medicare, the FEHB Program, and the
new PSHB Program are unknown. In accordance with OMB Circular A-4, the
following sections outline the benefits, costs, and transfers
associated with section 101 of the PSRA and this regulatory action in
more detail. Where specific costs were quantifiable, they are included
in Table 1.
Regulatory Baseline
The regulatory baseline for this rule is the FEHB Program as it is
currently administered, as the eligible population under both programs
will largely remain the same. Postal Service employees, Postal Service
annuitants, and their eligible family members are currently eligible
for FEHB coverage. In 2021, this population totaled approximately
915,000 enrollees and 1.7 million total covered lives. There are nearly
700,000 Postal Service annuitants, including about 123,000 survivor
annuitants. Of the Postal Service annuitants, about 500,000 are
currently enrolled in the FEHB Program. A majority of these are Self-
Only enrollments while 200,000 are Self Plus One or Self and Family
enrollments.
Beginning in the 2025 plan year, the PSHB Program will be the only
health benefits program available through the Postal Service to Postal
Service employees, Postal Service annuitants, and their eligible family
members. Unless they meet a specified exception, as previously
outlined, Postal Service Medicare covered annuitants and their Medicare
covered members of family will be required to enroll in Part B or will
lose their eligibility to continue enrollment in the PSHB Program. Once
this eligibility is lost, it cannot be reinstated. As with the
regulatory baseline, those covered by a PSHB plan will also be
responsible for Medicare premiums.
Currently, Postal Service annuitants and their family members that
are participating in FEHB are not required to enroll in Medicare Part
B, regardless of Medicare status. Based on 2021 data, OPM estimates
that 75% of Postal Service annuitants aged 65 and over have enrolled in
Medicare Part B. There will be approximately 100,000 Postal Service
annuitants and their eligible family members who will be eligible to
enroll in Part B during the six-month SEP beginning April 1, 2024.
Prior to the PSRA, the Postal Service paid the Government
contribution for all Postal Service employees and annuitants enrolled
in FEHB. The Government contribution was paid directly by the Postal
Service for employees and from the PSRHBF for annuitants. In addition,
the Postal Service was required under the Postal Accountability and
Enhancement Act of 2006 to fully prefund retiree health benefits.
Section 102 of the PSRA (``The USPS Fairness Act'') amended 5 U.S.C.
8909a to remove this prefunding requirement and replace it with a new
calculation for annual payments into the PSRHBF. The law maintains the
requirement that the Postal Service continue to pay the Government
contribution; directly for employees or through the PSRHBF for
annuitants. The Postal Service is also required to pay the Medicare
Part B late enrollment penalty for any Medicare covered annuitants and
members of family who enroll in Part B during the 2024 SEP. As with the
regulatory baseline, there is no Government contribution towards Part B
premiums.
Carriers that participate in the PSHB Program will generally be
subject to the same minimum requirements for plan design that exist for
FEHB plans under the FEHB Program, but PSHB plans will be required to
integrate Part D prescription drug benefits for Medicare covered
annuitants and Medicare covered members of family. In addition,
carriers that are offering both PSHB plans and FEHB plans will need to
offer equivalent benefits and cost sharing in the initial year, other
than as needed to integrate Part D coverage.
Benefits of Regulatory Action and Implementation
This rule serves to implement the requirements of the PSRA. The
regulatory action builds on the statute by offering clarity and
efficient implementation. OPM anticipates that the timely promulgation
of this rule will allow other Federal agencies, PSHB Carriers, and
enrollees to begin necessary education and deliberation.
The Postal Service will benefit from increased financial stability
because of the removal of the past-due pre-funding payments and future
pre-funding obligations related to the retiree health benefits costs
and from having a retiree health benefits program in which more
annuitants are enrolled in Medicare. With fewer costs for retiree
health benefits, the Postal Service will have more financial stability.
Better, more stable Postal Service operations would benefit the country
overall. The Postal Service plays a critical role in the nation's
communications, commerce, and voting infrastructure. In rural and
remote communities especially, many of which lack adequate broadband
access and rely heavily on mail service, the Postal Service's universal
service mandate ensures crucial access to essentials including medicine
and food.\10\
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\10\ The USPS and Rural America, Institute for Policy Studies
(2020), <a href="https://inequality.org/wp-content/uploads/2020/04/IPS-policy-brief-USPS-Rural-America2.pdf">https://inequality.org/wp-content/uploads/2020/04/IPS-policy-brief-USPS-Rural-America2.pdf</a>.
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Within these communities, the Postal Service is often the only
delivery service carrier with a door-to-door network and is heavily
relied on by other delivery service carriers to provide ``last mile''
deliveries. According to the Postal Service Office of Inspector
General, the Postal Service provided vital services during the COVID-19
pandemic, including the delivery of critical items such as medications,
stimulus payments, election ballots, and record levels of home package
deliveries.\11\ A Government Accountability Office Report found that
the Postal Service experienced a 9 percent decline in total mail volume
in 2020 when compared to 2019, but package volume rose by 32 percent
over the same period.\12\ This underscores the importance of a stable
Postal Service to the Nation.
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\11\ Audit Report Mail Service During the Early Stages of the
COVID-19 Pandemic, USPS Office of Inspector General (Jan. 2021),
<a href="https://www.uspsoig.gov/document/mail-service-during-early-stages-covid-19-pandemic">https://www.uspsoig.gov/document/mail-service-during-early-stages-covid-19-pandemic</a>.
\12\ U.S. Postal Service: Volume, Performance, and Financial
Changes since the Onset of the COVID-19 Pandemic, Government
Accountability Office Publication 21-261 (2021), <a href="https://www.gao.gov/products/gao-21-261">https://www.gao.gov/products/gao-21-261</a>.
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With greater financial stability for the Postal Service, current
Postal Service employees, Postal Service annuitants, and their family
members will also see greater stability in their future health
insurance coverage and other benefits.
Medicare covered annuitants may be eligible, depending on whether
they meet statutory income and resource thresholds, for the low-income
cost-sharing subsidies and premium subsidies that are part of the
Medicare part D program, under section 1860D-14 of the Social Security
Act.
[[Page 20396]]
Costs of Regulatory Action and Implementation
Implementation of the PSRA and this regulatory action necessitates
the administration and oversight of new health benefits plans,
including substantial member education and outreach efforts, additional
interagency coordination and the creation of new IT processes to
satisfy new statutory eligibility and enrollment requirements, creating
startup and ongoing costs to agencies, enrollees, and carriers. Table 1
depicts an accounting statement summarizing the assessment of the
administrative costs associated with this regulatory action. Table 2
depicts the expected allocation of total spending over the course of 10
years, beginning in fiscal year (FY) 2023.
Table 1--Estimated Administrative and Implementation Costs Associated With Regulatory Action
----------------------------------------------------------------------------------------------------------------
Ongoing costs
Agency/category Startup costs \1\
----------------------------------------------------------------------------------------------------------------
OPM.......................................................................... $81,680,944 $49,315,703
Personnel................................................................ -- 24,434,476
IT and IT Contracts...................................................... 68,307,195 20,961,759
Non-IT Contracts......................................................... 3,600,000 1,735,695
General (Supplies, Equipment, Communications, Training).................. 9,773,749 2,183,773
Postal Service............................................................... 11,500,000 1,425,000
Implementation costs (updating systems, developing training materials, 11,500,000 --
etc.)...................................................................
Personnel (4 Program and 2 IT full-time employees (FTEs))................ -- 925,000
Communications........................................................... -- 500,000
Department of Labor.......................................................... 72,500 2,000
Training and Communication............................................... 72,500 --
Additional support and communication for separate Open Season............ -- 2,000
Department of Veterans Affairs............................................... 395,000 --
IT Contracts............................................................. 395,000 --
Social Security Administration............................................... 7,327,764 407,881
Staffing and Overhead.................................................... 5,161,138 407,881
System Updates........................................................... 2,166,626 --
Ongoing Data Exchange.................................................... -- TBD
Indian Health Service........................................................ -- --
Carriers..................................................................... Unknown Unknown
----------------------------------
Total Administrative Costs............................................... 100,976,208 51,150,584
----------------------------------------------------------------------------------------------------------------
\1\ Recurring costs represented as fully loaded annual costs beginning in FY2025 and remaining consistent
through at least FY2032. Given that development and onboarding will occur during run-up period to PSHB
implementation, recurring costs will likely cross multiple fiscal periods and gradually ramp up between FY22
and FY25, although all costs are expected to become fully realized beginning in FY25. For details on the
expected allocation of total costs by year, see Table
2. All costs are represented based on 2022 dollars and pay scales and are subject to change based on PSHB
enrollment and carrier participation following implementation.
Table 2--Expected Total Administration and Implementation Costs by Year
[$ Millions]
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY2023 FY2024 FY2025 FY2026 FY2027 FY2028 FY2029 FY2030 FY2031 FY2032
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total costs (all agencies) \1\............ $66.47 $75.14 $52.53 $51.15 $51.15 $51.15 $51.15 $51.15 $51.15 $51.15
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Annual cost projections are in terms of 2022 dollars and payscales and do not reflect any discounting, inflation, or other adjustments for Federal
payroll increases, staff promotions, etc. This table is intended only to summarize the expected timing of the costs outlined in Table 1 and is not
meant to reflect budgetary expectations.
Detailed Startup and Ongoing Cost Related to the PSRA
The following sections contain underlying details for the cost
estimates presented in Table 1, including, where appropriate, the
assumptions and methodology used by individual agencies in preparing
them. For the purposes of this regulatory impact assessment (RIA),
Startup Costs were defined as upfront, non-recurring costs associated
with the PSRA implementation and are represented as aggregate total
expenditures for the years leading up to and immediately following the
PSHB implementation. Ongoing Costs were defined as recurring costs
(e.g., salary costs) beginning in the years preceding or immediately
following the PSRA implementation and expected to persist through at
least FY2032. All ongoing costs are presented as fully loaded, annual
totals. These estimates for ongoing costs are preliminary, and funding
for ongoing costs would be subject to the annual budget process.
OPM
Startup Costs: OPM estimates a total of $81.6 million in start-up
costs for the development and administration of the PSHB Program. This
estimate includes $68.3 million of IT and IT contract costs for system
development and updates, including the creation of the centralized
enrollment system. The centralized enrollment system will consolidate
data from multiple agencies, including USPS, SSA, CMS, IHS, and VA, to
create a centralized platform for verifying eligibility and processing
enrollments. While a centralized enrollment system was not mandated by
the PSRA, it will create efficiencies through the elimination of
decentralized duplicative and manual processes and improve interagency
communication. It is expected to yield long term cost-savings that will
help offset significant upfront costs of development. Additional IT and
IT contract costs are anticipated for updating existing systems,
including Benefits Plus and the audit resolution tracking system, and
developing new resources to improve customer experience, including the
[[Page 20397]]
creation of an enrollment Decision Support Tool.
The remaining $13.4 million in estimated startup costs include $3.6
million for non-IT contractor support throughout implementation and
$9.8 million for additional supplies, equipment, training, and
communication related to the PSRA. All costs were estimated based on
2022 dollars and contract rates.
Ongoing Costs: As this is a new program, additional staffing and
resources will be essential to establish and administer the PSHB. OPM
estimates a total of $49.3 million in annual, ongoing costs related to
the PSRA. This estimate consists of $24.4 million in annual salary
costs for 153.5 additional full-time employees (FTEs) necessary for
contract oversight, program operations, systems maintenance, customer
service, policy support, and general support. Additionally, OPM
anticipates $21 million in annual IT and IT contract costs for ongoing
system development and maintenance support, and an additional $1.7
million in annual, non-IT contract costs related to oversight and
management of the increased number of health benefits plans within the
PSHB and FEHB populations. Finally, OPM estimates an additional $2.2
million in annual costs for training, communications and overhead
related to the PSHB program and the annual Open Season period.
The above costs are represented as fully loaded annual projections
based on 2022 dollars. Salaries and burden were based on 2022 pay
tables and Washington, DC metro area locality adjustment, a burden
percentage of 34%, and award and transit subsidies. This adjustment
factor was used in lieu of a standard wage rate to more accurately
reflect the historical trends in benefit costs for OPM employees, based
on the anticipated locations and experience-levels of the
aforementioned positions. Additionally, the wage rate is meant to
capture overhead costs which were already represented in separate
categories. All recurring costs are projected to be fully loaded
beginning in FY2025 and to persist through at least FY2032. Given that
development and onboarding will occur in the run-up to the PSHB
implementation, OPM anticipates that annual costs related to the PSRA
will increase steadily between FY2022 and FY2024.
Postal Service
Startup Costs: The Postal Service estimates $11.5 million in start-
up costs for updating systems, development of training materials, and
the development and maintenance of the Health Benefits Education
Program. These estimates were calculated based on anticipated system
configuration and assumed effort level and are subject to change based
on additional requirements that may be required of the Postal Service.
Ongoing Costs: In preparation for and following implementation of
the PSHB, the Postal Service estimates an additional $1.4 million in
annual costs for increased staffing and communication needs.
Specifically, the Postal Service estimates $0.9 million in salary costs
for 6 additional FTEs, including 4 Program and 2 IT FTEs, and an
additional $0.5 million towards increased outreach, education, and
communication. Given the general retirement eligibility ages in
comparison to the Medicare eligibility age, there will be a 3- to-5-
year gap between the time of retirement until Medicare enrollment. It
will be critical during the initial implementation of the Program and
for the subsequent 5-10 years to send constant communications regarding
plan options and healthcare costs, along with information about
Medicare Part B eligibility periods and how and when to enroll.
Additional resources will also be needed to monitor enrollee compliance
for the Medicare Part B enrollment exceptions requirements on an
ongoing basis. Although recruitment, onboarding, and development costs
will gradually ramp up preceding implementation, the ongoing costs are
expected to become fully realized beginning in FY25 and will likely
persist for a period of 5-10 years following implementation, at which
point the Postal Service will reevaluate resourcing needs. All costs
were estimated in terms of 2022 dollars and pay scales.
Department of Labor--Office of Workers' Compensation Programs (OWCP)
Startup Costs: OWCP estimates a total of $72,500 in startup costs
related to the PSRA. These include an estimated $50,000 in staff time
for training on the PSRA changes and implementation, and $22,500 for
pre- and post-implementation mailings to approximately 12,500 claimants
and beneficiaries regarding changes to health benefit coverage. All
costs were estimated based on 2022 dollars and pay scales.
Ongoing Costs: Beginning in 2025, OWCP estimates an additional
$2,000 of annual, recurring costs for the creation and distribution of
mailing announcements and customer service response letters related to
the PSHB Open Season.
Department of Veterans Affairs (VA)
Startup Costs: The VA anticipates startup costs for system updates
and development to meet the information sharing requirements outlined
in Sec. 890.1612 of the regulation. In total, the VA estimates
$395,000 worth of IT contractor development work will be needed to
integrate the existing Veteran Verification process with the
centralized Enrollment and Eligibility System. The estimated costs are
based on the anticipated number of scrum teams and sprints required to
build this functionality and the projected firm-fixed-price contract
rates. All costs were estimated in 2022 dollars.
Social Security Administration (SSA)
Startup Costs: SSA estimates $7.3 million in startup costs for
staffing support and system updates related to the PSHB implementation.
These include an estimated $5.16 million in staffing costs for project
management, policy and business process development, and additional
technician support for the initial SEP. Additionally, SSA anticipates
$2.17 million in up-front costs for system enhancements that will be
necessary to support data exchanges and the initial SEP.
Ongoing Costs: SSA anticipates approximately 3 FTEs will be needed
to support the PSHB following implementation, with estimated salary and
overhead costs totaling $408,000 annually. These costs are based on the
anticipated workload for processing annual enrollments and exceptions
related to the Medicare coverage requirements for postal annuitants and
family members. Additionally, SSA anticipates a small cost for the
ongoing data exchange with OPM, although this cost cannot be determined
until the data exchange is completed and will ultimately be reimbursed
by OPM.
Indian Health Service
Indian Health Service (IHS) estimates de minimis costs for PSHB
implementation. This is based upon the assumption that self-attestation
will be utilized for Postal Service annuitants and family members to
provide proof of eligibility for IHS health services for purposes of an
exception to the Medicare Part B requirement.
Carriers (Not Quantified)
Carriers will also have startup costs to participate in the PSHB
Program, although the magnitude of these costs is unknown and will
likely vary by carrier. Based on the 2021 FEHB headcount, OPM estimates
that 41 FEHB Carriers provide coverage to Postal Service
[[Page 20398]]
enrollees and they will therefore be impacted by implementation of the
PSHB Program. Although OPM anticipates that not all carriers will elect
to participate in the Program, at a minimum, assuming only plans with
1,500 or more Postal Service enrollees choose to participate, 28
carriers would be expected to incur additional costs associated with
the creation and administration of separate PSHB plans. These costs
will likely be incurred for internal training, updating enrollment
processes and information systems, updating financial systems, and
development of proposals specific to the PSHB Program. In developing
plan options for the PSHB, carriers will not simply be able to
duplicate FEHB plan designs as the requirement to integrate Part D
coverage is substantively different. While large carriers may be able
to leverage existing experience integrating Medicare Part D coverage in
their other books of business, the need to apply and submit a different
PSHB proposal will be a cost to carriers. PSHB Carriers will continue
to incur annual costs to offer plans as there will need to be two sets
of proposals, contract negotiations, and enrollment processing for
carriers offering both PSHB and FEHB plans. This will likely create
additional staffing costs on an ongoing basis.
Postal Service Annuitants (Not Quantified)
Existing and future Postal Service annuitants may incur additional
costs in navigating both Medicare and PSHB enrollment decisions,
particularly in the initial years following implementation. Prior to
the PSHB Program Open Season, a six-month SEP will be offered to
provide existing Medicare-eligible Postal Service annuitants and their
Medicare-eligible family members with the opportunity to enroll in Part
B. This enrollment window will take place before PSHB benefits and
premiums are set, meaning participants will not know the details of the
PSHB premiums when making their Medicare election during the SEP. This
could create additional burden and confusion for participants and may
result in suboptimal enrollment decisions.
As with the training and communications costs for the first year,
Postal Service employees may continue to need training as they approach
retirement. They may generally experience new costs associated with
interacting with a new set of options, especially if they have already
planned to take certain actions upon retirement which are now
infeasible under the PSRA. Additionally, as is true currently under
FEHB, retirement will not be a PSHB qualifying life event. Postal
Service annuitants will need to understand how their PSHB plan election
will work with the Part B requirement upon retirement or wait for Open
Season alignment in both Medicare and the PSHB to make a suitable
choice for their health care insurance needs.
Transfers
The main impact of section 101 of the PSRA and these rules will be
a transfer of costs from the Postal Service to the Medicare Program,
which is funded by taxpayers, including the Postal Service and
beneficiaries. Additionally, a portion of these premium costs will
likely be transferred to the pharmaceutical manufacturers due to
reduced payments received from Medicare Part D enrollees. Table 3
summarizes the projected changes in annual premium expenditures for
each of the primary stakeholders. These projections were obtained from
separate, independent analyses performed by CMS, the Postal Service,
and OPM, which were produced at different points in time and with
different underlying methods and assumptions and are therefore intended
to summarize the directional transfer of costs among the different
stakeholders, not the overall budgetary impacts of the PSRA.
Additionally, all estimates were based on FEHB and Medicare coverage as
of 2023, and do not incorporate any changes expected from the Inflation
Reduction Act or Carrier Letter 2023-02.\13\ Details on the methods and
assumptions utilized by each agency are provided in the Table 3
footnotes.
---------------------------------------------------------------------------
\13\ FEHB Program Carrier Letter Number 2023-02, FEHB and
Medicare Part D Prescription Drug Coordination (published January
25, 2023).
Table 3--Net Transfer Effects
--------------------------------------------------------------------------------------------------------------------------------------------------------
Projected change in annual coverage costs due to PSRA ($ billions)
---------------------------------------------------------------------------------------------------------------------------------------------------------
Agency/outlay FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31 FY32 FY23-27 FY23-32
--------------------------------------------------------------------------------------------------------------------------------------------------------
CMS \1\........................... 0.00 0.00 0.00 0.50 0.76 0.92 1.11 1.16 1.35 1.53 1.73 2.18 9.06
Part B, net of premium \a\.... 0.00 0.00 0.00 0.09 0.18 0.24 0.31 0.39 0.47 0.57 0.68 0.51 2.93
Part D, net of premium and 0.00 0.00 0.00 0.41 0.58 0.68 0.80 0.77 0.88 0.96 1.05 1.67 6.13
clawback \b\.................
USPS \2\.......................... 0.00 0.00 0.00 -0.30 -0.30 -0.30 -0.30 -0.40 -0.40 -0.40 -0.40 -0.90 -2.80
USPS share of employee 0.00 0.00 0.00 -0.30 -0.30 -0.30 -0.30 -0.40 -0.40 -0.40 -0.40 -0.90 -2.80
premiums.....................
PSRHBF Annuitant Premiums \3\..... 0.00 0.00 0.00 -0.17 -0.23 -0.29 -0.36 -0.45 -0.49 -0.53 -0.58 -0.69 -3.10
PSRHBF Share of Annuitant 0.00 0.00 0.00 -0.17 -0.23 -0.29 -0.36 -0.45 -0.49 -0.53 -0.58 -0.69 -3.10
Premiums.....................
FEHB and Federal Share USPS 0.00 0.00 0.00 -0.09 -0.09 -0.10 -0.10 -0.10 -0.11 -0.11 -0.12 -0.28 -0.83
Premiums \3\.....................
Payments for NP annuitant 0.00 0.00 0.00 -0.06 -0.07 -0.07 -0.07 -0.08 -0.08 -0.09 -0.09 -0.20 -0.61
premiums.....................
Federal Share of USPS 0.00 0.00 0.00 -0.03 -0.03 -0.03 -0.03 -0.03 -0.03 -0.03 -0.03 -0.08 -0.21
Annuitant Premiums...........
Employee and Annuitant Share of 0.00 0.00 0.00 -0.26 -0.26 -0.25 -0.25 -0.25 -0.25 -0.24 -0.23 -0.76 -1.98
Premiums.........................
Postal employee share PSHB 0.00 0.00 0.00 -0.10 -0.11 -0.12 -0.13 -0.14 -0.15 -0.16 -0.17 -0.34 -1.09
premiums \2\.................
Postal annuitants share PSHB 0.00 0.00 0.00 -0.11 -0.12 -0.14 -0.15 -0.16 -0.17 -0.18 -0.19 -0.37 -1.22
premiums \2\.................
Non-Postal employee share FEHB 0.00 0.00 0.00 -0.04 -0.04 -0.04 -0.04 -0.05 -0.05 -0.05 -0.05 -0.12 -0.36
premiums \3\.................
[[Page 20399]]
Non-Postal annuitant share 0.00 0.00 0.00 -0.03 -0.03 -0.03 -0.03 -0.04 -0.04 -0.04 -0.04 -0.09 -0.28
FEHB premiums \3\............
Postal annuitant premiums for 0.00 0.00 0.00 0.03 0.05 0.08 0.11 0.13 0.16 0.19 0.23 0.16 0.98
Medicare B \1a\..............
Total [ne]................ 0.00 0.00 0.00 -0.32 -0.12 -0.01 0.11 -0.05 0.10 0.24 0.41 -0.45 0.35
--------------------------------------------------------------------------------------------------------------------------------------------------------
[ne] The estimated costs in this table were aggregated from multiple, independent analyses conducted by separate agencies, and are intended only to
represent the directional flow of costs between various stakeholders. Due to the differences in assumptions and methodology employed by each agency
(as detailed below), the cumulative impacts represented in this table do not directly align with the general expectation, as detailed in the narrative
below, that aggregate premium payments will be lower post-PSRA due to the transfer of costs to drug manufacturers via mandatory Part D discounts. All
estimates are based on coverage provisions as of 2023 and do not reflect expected changes to pharmaceutical coverage from the Inflation Reduction Act
or Carrier Letter Number 2023-04, the 2023 FEHB Call Letter.
Sources and methodology:
1. Projected Medicare costs for additional Part B and Part D enrollment were provided by CMS.
a. Part B projections were based on an assumption that about 7,000 new retirees plus spouses would enroll in Part B in 2025, and growth would be
consistent with aged enrollment. Additionally, CMS assumed that roughly 14,000 existing retirees would enroll in 2025, which would degrade over time
due to deaths. Expected costs and premiums for additional enrollees were assumed to be consistent with current average Part B beneficiaries.
b. CMS estimated additional Part D costs based on projected annual headcounts of Postal Service annuitants. Annual headcounts were estimated using the
2021 Postal Service annuitant enrollment total (approximately 515,000) and applying an annual growth rate based on the number of new postal retirees
in 2021. Growth estimates were trended by the projected annual growth in overall Part A and/or Part B enrollment and were decremented yearly by the
annual mortality rates from SSA for ages 70-75. Using this methodology, CMS estimated that approximately 603,000 postal retirees would join Part D in
2025 and that this population would grow to 797,000 by 2032. To project annual Part D spending on Postal retirees, CMS assumed a 90/10 split between
PDP-EGWP and MAPD-EGWP, and annual costs consistent with current beneficiaries in each of these enrollment categories.
2. Based on estimates provided by USPS actuaries and budget analysts. Projected savings on PSHB premiums are based on the expected reduction in the
portion of retirees' medical costs that will be paid by PSHB plans, which is expected to lower overall costs in the combined pool of annuitants and
employees and reduce premiums. USPS assumed that 30% of grandfathered annuitants would enroll in Part B during the SEP, resulting in 30,000 new
enrollments in 2025. Annual projections for current and annuitant Postal enrollee populations were based on mortality and retirement projections for
the postal population, which were developed by OPM.
3. Estimates from OPM Office of Administration (OA) Budget Summary as of January 2023. Assumed 30% of grandfathered annuitants and family members would
join during SEP and stable population of total annuitants from 2025-2032 (annual new retirees + family members [ap] deaths in Postal annuitant
population). Differential costs of FEHB and PSHB population was estimated using age distribution in the two populations, which skews slightly higher
for Postal, and historical average costs by age band for the joint FEHB population. OA estimates a 5.8% reduction in average PSHB premiums beginning
in 2025, which is attributed to the Part B and Part D requirements, and a 0.4% reduction in average FEHB premiums. Annual projections were discounted
at a rate of 4% annually and assumed a 4.8% medical inflation rate.
Beginning in 2025, mandatory Medicare Part B enrollment for all
future Postal Service Medicare covered annuitants enrolled in PSHB, as
well as optional enrollment for all current Medicare-eligible
annuitants, will transfer a portion of the costs for these individuals
from the Postal Service to Medicare. Additionally, the requirement for
all PSHB plans to offer Medicare Part D prescription drug benefits will
result in a significant transfer of prescription drug costs for all
current and future Medicare-eligible annuitants and family members from
the Postal Service to Medicare, with a portion of these costs
transferred to the pharmacy supply chain in the form of reduced
payments. This is due to the Medicare Coverage Gap Discount Program at
section 1860D-14A of the Social Security Act, which requires
manufacturers to provide a substantial discount on brand name drugs
dispensed to applicable beneficiaries in the coverage gap. These
industry discounts are in addition to the discounts negotiated with
individual FEHB plans, resulting in lower per-member payments for the
subset of current and future Postal Service annuitants who would have
otherwise elected not to enroll in Part D. It is important to note,
however, that all estimates related to Part D savings were conducted
prior to the enactment of the Inflation Reduction Act (Pub. L. 117-
169), which contained significant prescription drug provisions
including, for example, a provision that sunsets the Coverage Gap
Discount Program at the end of 2024, and establishes a new Manufacturer
Discount Program, beginning Jan. 1, 2025, at section 1860D-14C of the
Social Security Act.
The increase in Part B and Part D enrollment and the transfer of
costs to Medicare will lower the aggregate costs among the PSHB
population, as Medicare will cover a larger portion of the costs for
Postal Service annuitants and family members that would have previously
been covered by the PSHB plan. Given that premiums are based on average
per member costs of the combined pool of annuitants and employees, this
will likely result in lower premiums for PSHB plans compared with
current FEHB premium amounts. While this will reduce costs for the
Postal Service and current Postal Service employees, a portion of these
costs will likely be transferred to the estimated 25% of current and
future Medicare-eligible Postal Service annuitants and Medicare-
eligible family members who elect or are required to enroll in Part B
and otherwise would not have. These individuals will ultimately be
subject to premiums for both Medicare and PSHB plans which, on net, may
be higher than the current FEHB premiums. At the same time, being
covered by Medicare in conjunction with a PSHB plan may also reduce
out-of-pocket expenses (e.g., co-payments and co-insurance) for
annuitants than would otherwise have been incurred. Furthermore, we
anticipate that some plans will reimburse all or part of Part B
premiums, as is currently the case with some FEHB plans.
It is estimated that the cost of coverage for Postal employees and
their eligible family members is slightly higher than for the other
Federal employees. The creation of a separate risk pool for Postal
Service employees and annuitants will result in premiums that are more
reflective of the resulting Postal and non-Postal populations. Removal
of these individuals from the FEHB plan population will therefore
result in slight reduction in average per member costs which will be
directionally reflected in FEHB plan premiums following PSHB
implementation. The expected decrease in FEHB plan premiums would be
mirrored by a slight increase in PSHB premiums, although this increase
would be minimal compared to the expected decrease in premium due to
Medicare enrollments, meaning that the likely result will be lower
premiums for PSHB plans compared with current FEHB plan premium
amounts.
As required in the PSRA, the Postal Service will need to pay to CMS
the monthly late enrollment penalties for any Part B enrollments that
occurred during the 2024 SEP. These late enrollment penalties are
typically assessed to enrollees as a monthly
[[Page 20400]]
increase in premiums and are intended to transfer a portion of the
increased age-related risk that a late enrollee represents, compared
with an individual that was enrolled at age 65. We estimate that
approximately 100,000 Postal Service annuitant subscribers aged 65+
currently enrolled in the FEHB Program are not enrolled in Medicare
Part B and, thus, would be eligible for the SEP. Given that these
individuals have previously elected not to enroll in Part B, it is
estimated that around 30% of current Postal Service annuitants will
choose to enroll during the SEP. For these individuals, the additional
late enrollment penalties will be transferred to the Postal Service.
Additional transfers will likely occur among individual carriers
and with third party vendors or contractors as part of the PSHB
implementation. In particular, the requirements for integration of Part
D coverage into PSHB plans will likely benefit larger carriers with
more Medicare experience, who will be better positioned to seamlessly
adjust plans to incorporate Part D coverage. Smaller carriers, in
particular, are likely to lean on third-party vendors or contractors to
assist with the PSHB implementation and/or Part D coverage integration,
which will transfer a portion of carrier revenue into these markets.
Uncertainty and Directional Effects Related to Enrollment, Utilization,
and Carrier Participation
All benefits, costs, and transfers summarized above are based on
baseline assumptions that plan enrollment, carrier participation, and
healthcare utilization will remain consistent following implementation
of the PSHB Program. It is likely that implementation of the PSHB
Program and the additional Medicare enrollment requirements will impact
some or all of these baseline assumptions, which will have downstream
effects for cost and utilization within both the PSHB and FEHB
populations. The magnitude and directionality of these effects will
depend on several factors that are presently uncertain.
Individual carriers will likely weigh the costs and benefits of
offering FEHB plans and PSHB plans. Shifting enrollment numbers and
additional implementation costs may lead some carriers to scale back or
discontinue participation in one or both kinds of plans. This would
impact the number of available plan options for both PSHB and FEHB
enrollees, as well as the likelihood that they would be able to keep
their current plans. However, as noted below, it is likely that the
PSRA will increase the total number of plans covering both the Postal
Service and greater FEHB population.
Similarly, PSHB enrollees required to enroll in Medicare Part B
would be subject to additional premiums, which may impact the
likelihood of their enrollment in PSHB plans. It is estimated that
around 25% of Postal Service annuitants who are otherwise eligible for
Part B are not currently enrolled. It is possible they actively
declined Part B coverage because they were satisfied with their
existing coverage or felt that the additional Medicare premium costs
were too high, although it is also possible that they were not fully
aware of the benefits of Medicare enrollment on their overall health
care expenses over the course of their lifetimes. Assuming that a
similar percentage of future Postal Service annuitants would have made
a similar determination, these individuals will now be required to
enroll as a condition of PSHB eligibility. This may result in some
Postal Service annuitants dropping PSHB coverage altogether if they
determine that PSHB and Part B coverage together is unaffordable or
duplicative for their health care circumstances, though this number may
be limited since it would require those annuitants to forgo PSHB
coverage for the rest of their lifetimes unless individuals opt to
participate in a Medicare Advantage plan. This could potentially result
in adverse selection within the PSHB plans, referring to the tendency
for individuals with higher health risks to disproportionately elect
more generous coverage. Ultimately, this would increase the average
risk and costs within the PSHB enrolled population, creating upward
pressure on premiums. Additionally, some carriers may elect not to
offer or discontinue PSHB plans if they anticipate or experience lower
than expected enrollment.
The additional Medicare Part B and Part D coverage may also induce
a moral hazard effect due to the more robust coverage and lower cost-
sharing. Moral hazard refers to the tendency of individuals to increase
health care utilization and spending in response to greater coverage or
lower out-of-pocket costs. If an individual is required to enroll in
Medicare, they may feel more compelled to utilize the benefits,
increasing overall health care consumption. This effect has been
demonstrated in numerous studies, most notably the RAND and Oregon
Health Insurance Experiments, which found that utilization of both
necessary and unnecessary health services increased with increased
coverage and lower cost sharing.<SUP>14 15 </SUP> Increased utilization
among these individuals would increase the overall per member costs
within the PSHB plans which may result in higher premiums and
potentially impact health outcomes.
---------------------------------------------------------------------------
\14\ Brook, Robert H., Emmett B. Keeler, Kathleen N. Lohr,
Joseph P. Newhouse, John E. Ware, William H. Rogers, Allyson Ross
Davies, Cathy D. Sherbourne, George A. Goldberg, Patricia Camp,
Caren Kamberg, Arleen Leibowitz, Joan Keesey, and David Reboussin,
The Health Insurance Experiment: A Classic RAND Study Speaks to the
Current Health Care Reform Debate (2006), <a href="https://www.rand.org/pubs/research_briefs/RB9174.html">https://www.rand.org/pubs/research_briefs/RB9174.html</a>.
\15\ See Heidi Allen & Katherine Baicker, The Effect of Medicaid
on Care and Outcomes for Chronic Conditions: Evidence from the
Oregon Health Insurance Experiment, NBER Working Paper No. 29373
(October 2021), <a href="https://www.nber.org/papers/w29373">https://www.nber.org/papers/w29373</a>.
---------------------------------------------------------------------------
Any increases to premiums as a result of adverse selection or moral
hazard would have future implications on PSHB enrollment and plan
selection. If premiums increased, a greater percentage of enrollees may
shift into alternative plans with less comprehensive benefits such as
plans with reduced formularies and narrower provider networks, lower
premiums and higher cost-sharing (e.g., standard option as opposed to
high option health plans). This could potentially help to counter moral
hazard effects and lower costs, although it could intensify adverse
selection into the more robust plans, as high-cost individuals would be
less likely to change plans.
Despite the assumption that not all carriers will offer both FEHB
plans and PSHB plans, it is likely that the PSRA will increase the
total number of plans covering both the Postal and greater FEHB
population. This will result in smaller risk pools within each plan,
which could lead to greater uncertainty with respect to costs. With
smaller risk pools, each enrollee's health status has a larger impact
on total costs. This can create greater variability in annual premiums.
Smaller risk pools increase individual plans' exposure to high-cost
outlier events, as there are fewer low or average-cost enrollees to
offset these costs. Administrative costs would also be spread across
smaller risk pools. To ensure financial solvency in such scenarios,
plans may seek to price this additional risk exposure into premiums,
resulting in an increase in the aggregate costs for all PSHB plan and
FEHB plan enrollees compared to the baseline.
At present, there remains a great deal of uncertainty with respect
to the longer-term impacts on plan enrollment, carrier participation,
plan design, and plan premiums. It is possible that a number of current
FEHB Carriers will elect not to participate in the PSHB
[[Page 20401]]
Program or to drop their current FEHB plan offerings. Consolidation
within the FEHB and PSHB markets would likely benefit larger carriers
and may yield some efficiencies through greater economies of scale,
although on aggregate, it is expected that PSHB implementation will
result in a greater number of total plans and increased administrative
costs and premiums. Fewer options may also simplify plan choice for
employees and annuitants, saving time on plan comparisons.
Enrollment in the PSHB Program, particularly among individuals who
are required to enroll in Medicare Part B, is also uncertain. For
future Postal Service annuitants, the requirement to enroll in Part B
after retirement represents an additional cost. This will likely factor
into individual retirement planning decisions and could potentially
lead to employees remaining in the workforce longer to delay these
additional costs. Likewise, lower-risk individuals may determine that
their Medicare coverage, including Part B coverage is sufficient for
their health care needs and opt out of PSHB enrollment. These aspects
could impact PSHB Program risk pools and influence carriers' decisions
on whether to continue operating in the PSHB market. Each of these
scenarios could trigger potential downstream effects on utilization and
premiums and will be important to monitor. OPM invites comment on all
topics addressed in this section.
Alternatives
There are no feasible alternatives to this regulation as it
implements section 8903c, as added by the PSRA, which establishes the
PSHB Program and is mandated by the law. Therefore, OPM does not have
the discretion to forego issuing regulations altogether. However, we
considered alternatives to certain aspects of this regulation.
Initial Enrollment in the PSHB Program and Medicare Part B
OPM recognizes that, for a small portion of Postal Service
annuitants and their family members who take advantage of the Medicare
Part B SEP from April 1 to September 30, 2024, there may be confusion
about having two consecutive separate health plan enrollment events
given that the PSHB Program Open Season for plan year 2025 will occur
from November 11 through December 9, 2024. As with current FEHB plans,
however, OPM's rate review process for PSHB plans will not be completed
until September 2024, which makes simultaneous enrollment in Medicare
Part B and PSHB plans extremely problematic. Should OPM open PSHB plan
enrollment at the same time as the Medicare SEP, without completing the
rate review process, enrollees would be selecting PSHB plans for which
the monthly cost is entirely unknown, leading to more confusion than
leaving the Medicare SEP and PSHB Open Enrollment separate.
We explored an opportunity for Postal Service annuitants to ``pre-
enroll'' in PSHB plans prior to OPM completing its PSHB rate review
process. Combining the opportunity to pre-enroll in a PSHB plan with
the Medicare SEP would allow Postal Service annuitants to complete both
actions simultaneously. Alternatively, Postal Service annuitants could
be automatically enrolled in a PSHB plan at the same time they enroll
in Medicare Part B. Automatic pre-enrollment could relieve these Postal
annuitants from making two separate enrollment decisions. However, we
found both of these options would be undesirable for enrollees and
their family members for several reasons.
Allowing individuals to pre-enroll in PSHB plans during the SEP
means they would sign up for a plan without knowing their premium
obligation. Similarly, because OPM will not have certified the future
PSHB plans by the time the Medicare SEP occurs, there would be no way
for an individual to know whether a given carrier will be participating
in the PSHB Program for the next plan year, let alone what the final
contract would look like. In general, while allowing those annuitants
taking advantage of the Medicare SEP to simultaneously pre-enroll in a
PSHB plan seems like it could reduce confusion and frustration from
having two separate enrollment obligations, the timing of simultaneous
PSHB pre-enrollment and the Medicare SEP would mean choosing a PSHB
plan with unknown benefits and premiums and likely having to review the
selection again during the PSHB Open Season period to ensure that the
plan an individual pre-enrolled in actually makes sense for them once
plan details are finalized and approved by OPM.
Much of the rationale for considering PSHB plan pre-enrollment can
be achieved by providing information about automatic enrollment to
Postal Service employees, Postal Service annuitants, and their family
members. Postal Service annuitants who wish to keep their plan or take
as little action as possible can have their needs met as easily with
automatic enrollment after Open Season ends instead of OPM implementing
a new pre-enrollment or automatic pre-enrollment. In addition, under 5
CFR 890.301(f)(2), the OPM Director has the authority to modify the
dates for Open Season or hold additional Open Seasons. These
authorities and flexibilities exist under current regulations and may
be exercised without needing to make any specific provisions under this
rulemaking.
Despite these findings, we invite comments on this approach.
Centralized Enrollment
OPM is developing a centralized enrollment system simultaneously
with the implementation of the PSHB Program. As explained above, the
centralized enrollment system will shift certain responsibilities from
the employing office to a new system which will function as an
electronic enrollment solution for all PSHB stakeholder groups. With
the advancement of technology over time, the existing decentralized
processes related to FEHB enrollment may no longer be the most
efficient methods for accomplishing enrollment functions. Developing a
centralized enrollment system for the PSHB Program allows OPM to take
advantage of IT solutions and create a modern enrollment system for
Postal Service employees, Postal Service annuitants, and their family
members. OPM considered maintaining the existing enrollment processes
that apply to enrollment in FEHB plans but ultimately determined that
the establishment of the PSHB provided an ideal opportunity to utilize
new technologies and centralization processes that will improve the
experience of PSHB stakeholders.
Reconsiderations
The standards for requesting reconsideration of an initial decision
affecting enrollment in the PSHB Program will be the same as current
FEHB standards at 5 CFR 890.104 and 890.308. Individuals will be made
aware of their right to an independent review and generally, the time
and manner for requesting reconsideration. OPM is considering
establishing PSHB-specific processes and will closely track the
implementation of the PSHB Program particularly as Postal Service
employees, Postal Service annuitants, family members, PSHB Carriers,
employing agencies, and retirement systems become more familiar with
the centralized enrollment system.
Effective Date
OPM considered keeping the effective date of coverage for PSHB
plans as the first day of the first pay period of the calendar year for
Postal Service employees, as is currently done for
[[Page 20402]]
FEHB plans. Keeping this effective date for PSHB plans that Postal
Service employees are familiar with will not result in implementation
costs or risk confusing existing enrollees. However, the benefits of a
January 1 effective date outweigh the costs of implementation and
educating enrollees, as implementation costs are one-time and after
several years there will be little to no ongoing enrollee education
needs. Conversely, the benefits of the January 1 date will remain
indefinitely. A calendar year start date is easier for enrollees to
track and follow and is consistent with the industry standard and many
similar programs, including health savings accounts, the Federal
Employees Dental and Vision Insurance Program, and the cutoff date for
Postal Service Medicare covered annuitants who qualify for an exception
to the Medicare enrollment requirement.
Regulatory Flexibility Act
OPM certifies this regulation will not have a significant economic
impact on a substantial number of small entities.
Federalism
OPM has examined this rule in accordance with Executive Order
13132, Federalism, and have determined that this rule will not have any
negative impact on the rights, roles and responsibilities of State,
local, or Tribal governments.
Civil Justice Reform
This regulation meets the applicable standard set forth in
Executive Order 12988, Civil Justice Reform.
Unfunded Mandates Reform Act of 1995
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending by State, local, and
Tribal governments in any 1 year of $100 million in 1995 dollars,
updated annually for inflation. In 2023, that threshold is
approximately $177 million. This interim final rule does not mandate
any requirements for State, local, or Tribal governments, or for the
private sector.
Congressional Review Act
Subtitle E of the Small Business Regulatory Enforcement Fairness
Act of 1996 (also known as the Congressional Review Act) (5 U.S.C. 801
et seq.) requires rules (as defined in 5 U.S.C. 804) to be submitted to
Congress before taking effect. OPM will submit to Congress and the
Comptroller General of the United States a report regarding the
issuance of this action before its effective date, as required by 5
U.S.C. 801. OMB's Office of Information and Regulatory Affairs has
determined that this is a major rule as defined by the Congressional
Review Act (5 U.S.C. 804(2)).
Paperwork Reduction Act
Notwithstanding any other provision of law, no person is required
to respond to, nor shall any person be subject to a penalty for failure
to comply with a collection of information subject to the requirements
of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (PRA),
unless that collection of information displays a currently valid Office
of Management and Budget (OMB) Control Number.
OPM is investigating whether to create a new information collection
or revise an existing information collection for the PSHB Program and
seeks public comment on this question. If an information collection is
revised, it will be the SF-2809, Health Benefits Election Form, under
OMB Control number 3206-0160. Information regarding the collection,
including all current supporting materials, can be accessed at <a href="https://www.reginfo.gov/public/do/PRAMain">https://www.reginfo.gov/public/do/PRAMain</a>. The systems of records notice for
this collection is: OPM/Central-23, ``FEHB Program Enrollment
Records,'' available at <a href="https://www.federalregister.gov/d/2021-01259">https://www.federalregister.gov/d/2021-01259</a>
(86 FR 6377, January 21, 2021). Regardless of whether a revision to the
SF-2809 is pursued or a new collection is proposed, OPM will publish a
separate 60-day notice at a later date requesting comments.
List of Subjects
5 CFR Part 890
Administrative practice and procedure, Government employees, Health
facilities, Health insurance, Health professions, Postal Service
employees, Reporting and recordkeeping requirements, Retirement.
48 CFR Parts 1602 and 1609
Government employees, Government procurement, Health insurance,
Postal Service employees, Reporting and recordkeeping requirements.
Office of Personnel Management.
Stephen Hickman,
Federal Register Liaison.
Accordingly, OPM amends 5 CFR part 890 and 48 CFR chapter 16
(FEHBAR) as follows:
Title 5--Administrative Personnel
PART 890--FEDERAL EMPLOYEES HEALTH BENEFITS PROGRAM
0
1. The authority citation for part 890 is revised to read as follows:
Authority: 5 U.S.C. 8913; Sec. 890.102 also issued under
sections 11202(f), 11232(e), and 11246 (b) of Pub. L. 105-33, 111
Stat. 251; Sec. 890.111 also issued under 36 U.S.C. 5522; Sec.
890.112 also issued under 2 U.S.C. 2051; Sec. 890.113 also issued
under section 1110 of Pub. L. 116-92, 133 Stat. 1198 (5 U.S.C. 8702
note); Sec. 890.301 also issued under 26 U.S.C. 9801; Sec.
890.302(b) also issued under 42 U.S.C. 300gg-14; Sec. 890.803 also
issued under 50 U.S.C. 3516 (formerly 50 U.S.C. 403p) and 22 U.S.C.
4069c and 4069c-1; subpart L also issued under section 599C of Pub.
L. 101-513, 104 Stat. 2064 (5 U.S.C. 5561 note); subpart M also
issued under 10 U.S.C. 1108 and 25 U.S.C. 1647b; and subpart P
issued under 5 U.S.C. 8903c.
Subpart A--Administration and General Provisions
0
2. Amend Sec. 890.101 in paragraph (a) by:
0
a. Revising the introductory text; and
0
b. Adding the definitions of ``Federal Employees Health Benefits (FEHB)
Program,'' ``FEHB plan,'' ``Medicare covered member of family,''
``Postal Service Health Benefits (PSHB) Program,'' ``Postal Service
Medicare covered annuitant,'' and ``PSHB plan'' in alphabetical order.
The revision and additions read as follows:
Sec. 890.101 Definitions; time computations.
(a) In this part, the terms annuitant, carrier, employee, employee
organization, former spouse, health benefits plan, member of family,
and service have the meanings set forth in 5 U.S.C. 8901; the terms
Postal Service, Postal Service annuitant, and Postal Service employee
have the meanings set forth in 5 U.S.C. 8903c; and these terms
supplement the following definitions:
* * * * *
Federal Employees Health Benefits (FEHB) Program means the health
insurance program administered by the Office of Personnel Management
and established under 5 U.S.C. chapter 89.
FEHB plan means a health benefits plan as defined in 5 U.S.C.
8901(6) and governed by this part, with the exception of a PSHB plan.
* * * * *
Medicare covered member of family means an individual who is both a
covered Medicare individual and a member of family of a Postal Service
Medicare covered annuitant.
* * * * *
[[Page 20403]]
Postal Service Health Benefits (PSHB) Program means the health
insurance program established under 5 U.S.C. 8903c within the Federal
Employees Health Benefits Program.
Postal Service Medicare covered annuitant means an individual who
is both a covered Medicare individual and a Postal Service annuitant.
PSHB plan means a health benefits plan offered under the PSHB
Program.
* * * * *
0
3. Add Sec. 890.115 to read as follows:
Sec. 890.115 Special provisions for Postal Service employees, Postal
Service annuitants, and their eligible family members.
Special provisions for Postal Service employees, Postal Service
annuitants, and their eligible family members are set forth at subpart
P of this part. Provisions of this part generally apply to Postal
Service employees, Postal Service annuitants, and their eligible family
members, except for provisions which are inconsistent with provisions
of 5 U.S.C. 8903c or subpart P.
Subpart C--Enrollment
0
4. Amend Sec. 890.301 by adding paragraph (p) to read as follows:
Sec. 890.301 Opportunities for employees to enroll or change
enrollment; effective dates.
* * * * *
(p) Postal Service employees and Postal Service annuitants eligible
to enroll only in PSHB plans. After December 31, 2024, a Postal Service
employee or Postal Service annuitant is not eligible to be enrolled in
an FEHB plan but may only enroll in a PSHB plan in accordance with
subpart P of this part.
0
5. Amend Sec. 890.302 by revising paragraphs (a)(1) and (a)(2)(i) to
read as follows:
Sec. 890.302 Coverage of family members.
(a)(1) Enrollment. An enrollment for self plus one includes the
enrollee and one eligible family member. An enrollment for self and
family includes all family members who are eligible to be covered by
the enrollment except as provided in Sec. 890.308(h). Proof of family
member eligibility may be required, and must be provided upon request,
to the carrier, the employing office, or OPM. Except as provided in
paragraph (a)(2) of this section, no employee, former employee,
annuitant, child, or former spouse may enroll or be covered as a family
member if they are already covered under another person's self plus one
or self and family enrollment.
(2) * * *
(i) Prohibition on dual enrollment. A dual enrollment exists when
an individual is covered under more than one enrollment under this
part. Dual enrollments are prohibited except when an eligible
individual would otherwise not have access to coverage and the dual
enrollment has been authorized by the employing office.
* * * * *
0
6. Amend Sec. 890.303 by adding paragraph (j) to read as follows:
Sec. 890.303 Continuation of enrollment.
* * * * *
(j) On transfer to or from Postal Service. The eligibility of a
Postal Service employee to continue enrollment under 5 U.S.C. chapter
89 continues without change when they move from the Postal Service to
another employing office, without a break in service of more than 3
days, whether the personnel action is designated as a transfer or not.
In such a circumstance they may no longer enroll in a PSHB plan under
subpart P of this part, and they may only enroll in an FEHB plan. The
eligibility of an employee or annuitant to continue enrollment under 5
U.S.C. chapter 89 continues without change when they move from another
employing office to the Postal Service, without a break in service of
more than 3 days, whether the personnel action is designated as a
transfer or not; however, they may no longer enroll in an FEHB plan,
and they may only enroll in a PSHB plan under subpart P.
0
7. Amend Sec. 890.308 by adding paragraph (i) read as follows:
Sec. 890.308 Disenrollment and removal from enrollment.
* * * * *
(i) Disenrollment and removal from enrollment: Medicare enrollment
requirement for certain Postal Service annuitants and family members.
Postal Service Medicare covered annuitants not enrolled in Medicare
Part B may be disenrolled, and Medicare covered members of family not
enrolled in Medicare Part B may be removed from coverage, pursuant to
Sec. 890.1608(b).
Subpart E--Contributions and Withholdings
0
8. Amend Sec. 890.501 by revising paragraph (b) introductory text to
read as follows:
Sec. 890.501 Government contributions.
* * * * *
(b) In accordance with the provisions of 5 U.S.C. 8906(a) which
takes effect with the contract year that begins in January 1999, OPM
will determine the amounts representing the weighted average of
subscription charges in effect for each contract year, for FEHB plans
and for PSHB plans, respectively, for self only, self plus one, and
self and family enrollments, as follows:
* * * * *
Subpart O--[Added and Reserved]
0
9. Add reserved subpart O.
0
10. Add subpart P, consisting of Sec. Sec. 890.1601 through 890.1614,
to read as follows:
Subpart P--Postal Service Health Benefits Program
Sec.
890.1601 Purpose.
890.1602 Definitions and deemed references.
890.1603 Eligibility for the Postal Service Health Benefits Program.
890.1604 Medicare enrollment requirement for certain Postal Service
annuitants and eligible family members.
890.1605 Enrollment in the initial contract year.
890.1606 Opportunities to enroll, change enrollment, or reenroll;
effective dates.
890.1608 Disenrollment, removal, termination, cancellation, and
suspension.
890.1609 Temporary extension of coverage, conversion, or temporary
continuation of coverage.
890.1610 Minimum standards for PSHB Program plans and Carriers.
890.1611 Withdrawal of approval of health benefits plan or carrier.
890.1612 Information sharing.
890.1613 Contributions and withholdings.
890.1614 Other administrative provisions.
Sec. 890.1601 Purpose.
This subpart sets forth the establishment, administration, and
requirements of the Postal Service Health Benefits Program under 5
U.S.C. 8903c, within the FEHB Program under 5 U.S.C. chapter 89. This
subpart incorporates provisions of this part to the extent generally
applicable and not inconsistent with this subpart.
Sec. 890.1602 Definitions and deemed references.
(a) In this subpart, the terms set out in Sec. 890.101 apply
unless stated otherwise.
(b) In this subpart, the terms covered Medicare individual, initial
contract year, initial participating carrier, Medicare Part A, Medicare
Part B, and Postal Service Medicare covered annuitant have the meanings
set forth in 5 U.S.C. 8903c.
(c) In this subpart--
Cancel means to submit to the employing office an appropriate
request electing not to be enrolled in a PSHB
[[Page 20404]]
plan, by an enrollee who is eligible to continue enrollment, including
because the enrollee did not enroll in, or chose to disenroll from,
Medicare Part B.
Election not to enroll means to submit an appropriate request
electing not to be enrolled in a PSHB plan by an individual who is
eligible to enroll, including because the individual chooses not to
enroll in Medicare Part B.
Medicare coverage means coverage that meets the requirements of
Sec. 890.1604.
(d) In this subpart, wherever reference is made to other subparts
of this part--
(1) A reference to employee is deemed a reference to Postal Service
employee;
(2) A reference to enrollee is deemed a reference to a Postal
Service employee or Postal Service annuitant in whose name the
enrollment is carried;
(3) A reference to annuitant, survivor annuitant, or an individual
with entitlement to an annuity is deemed a reference to Postal Service
annuitant;
(4) A reference to employer, employing agency, employing office, or
agency for Postal Service employees is deemed a reference to the Postal
Service, for Postal Service annuitants is deemed a reference to the
appropriate retirement system or other appropriate entity for
compensationers, those enrolled under TCC or Spouse Equity, and
annuitants whose annuity is insufficient to withhold the cost of health
benefits premiums; and
(5) A reference to carrier is deemed a reference to a PSHB Carrier.
Sec. 890.1603 Eligibility for the Postal Service Health Benefits
Program.
(a) Except as provided by paragraph (b) of this section, the
following individuals are eligible to enroll, or to be covered under an
enrollment, in a health benefits plan described at 5 U.S.C. 8903c and
under this subpart:
(1) Postal Service employee;
(2) Postal Service annuitant; and
(3) Member of family of an individual in paragraph (a)(1) or (2) of
this section.
(b) For purposes of this subpart, a Postal Service employee
includes a Postal Service employee who receives monthly compensation
under 5 U.S.C. chapter 81, subchapter I (``compensationer''), who is
determined by the Secretary of Labor to be unable to return to duty.
(c) The following individuals may not enroll, or be covered under
an enrollment, in this subpart:
(1) Any Postal Service Medicare covered annuitant who is not
enrolled in Medicare Part B and is required to be enrolled in Medicare
Part B, in accordance with Sec. 890.1604;
(2) Any Medicare covered member of family of a Postal Service
Medicare covered annuitant who is not enrolled in Medicare Part B and
is required to be enrolled in Medicare Part B, in accordance with Sec.
890.1604; or
(3) Any individual covered by an FEHB plan under this part, except
as permitted by Sec. 890.302(a)(2).
(d) Former spouses of Postal Service employees and Postal Service
annuitants may establish their eligibility to enroll under subpart H of
this part. A former spouse of a Postal Service employee or Postal
Service annuitant who is enrolled in an FEHB plan on or before December
31, 2024, may continue enrollment in an FEHB plan and is not required
to enroll in a PSHB plan. A former spouse who is eligible under Sec.
890.803(a)(2) because of their enrollment in a PSHB plan is not
eligible to enroll or remain enrolled in a PSHB plan; they may enroll
in an FEHB plan and, accordingly, the Medicare enrollment requirements
in Sec. 890.1604 would not apply.
(e) Survivor annuitants have the same eligibility for reinstatement
of enrollment as described in Sec. 890.303(d) for enrollment in a PSHB
plan or an FEHB plan as applicable to the service that gives rise to
the survivor annuitant status, except that the Medicare enrollment
requirements in Sec. 890.1604 would apply to reinstatements of
enrollment into a PSHB plan.
(f) Individuals enrolled or covered under the PSHB Program are
eligible to elect temporary continuation of coverage as provided under
subpart K of this part.
Sec. 890.1604 Medicare enrollment requirement for certain Postal
Service annuitants and eligible family members.
(a) Except as provided by paragraph (c)(1) of this section, a
Postal Service Medicare covered annuitant may not enroll or continue
enrollment in a health benefits plan under this subpart unless the
annuitant is entitled to benefits under Medicare Part A and enrolled in
Medicare Part B.
(b) Except as provided by paragraph (c)(2) of this section, where a
Postal Service annuitant is a covered Medicare individual and is
required to enroll in Medicare Part B in order to be enrolled in a
health benefits plan under this subpart, a Medicare covered member of
family of the Postal Service annuitant may not enroll in a health
benefits plan under this subpart as a member of family of the Postal
Service annuitant unless the member of family is enrolled in Medicare
Part B.
(c) Pursuant to paragraph (d) of this section, the requirements
under paragraphs (a) and (b) of this section, as applicable, shall not
apply to the following individuals:
(1) A Postal Service Medicare covered annuitant who--
(i) As of January 1, 2025, is a Postal Service annuitant who is not
both entitled to Medicare Part A and enrolled in Medicare Part B;
(ii) As of January 1, 2025, was a Postal Service employee who is at
least 64 years of age;
(iii) Resides outside the United States (which includes the States,
the District of Columbia, the Commonwealth of Puerto Rico, the Virgin
Islands, Guam, American Samoa, and the Northern Mariana Islands),
provided that the individual demonstrates such residency to the Postal
Service;
(iv) Is enrolled in health care benefits provided by the Department
of Veterans Affairs (VA) under 38 U.S.C. chapter 17, subchapter II,
including individuals who are not required to enroll in the VA's system
of patient enrollment referred to in 38 U.S.C. 1705(a), subject to the
documentation requirements in paragraph (d)(2) of this section; or
(v) Is eligible for health services from the Indian Health Service,
subject to the documentation requirements in paragraph (d)(3) of this
section.
(2) A Medicare covered member of family who--
(i) Is eligible for PSHB coverage based on a Postal Service
Medicare covered annuitant who is not required to enroll in Medicare
Part B in order to be eligible for coverage under this subpart;
(ii) Resides outside the United States (which includes the States,
the District of Columbia, the Commonwealth of Puerto Rico, the Virgin
Islands, Guam, American Samoa, and the Northern Mariana Islands),
provided that the individual demonstrates such residency to the Postal
Service;
(iii) Is enrolled in health care benefits provided by the VA under
38 U.S.C. chapter 17, subchapter II, including individuals who are not
required to enroll in the VA's system of patient enrollment referred to
in 38 U.S.C. 1705(a) to receive VA hospital care and medical services,
subject to the documentation requirements in paragraph (d)(2) of this
section; or
(iv) Is eligible for health services from the Indian Health Service
subject to the documentation requirements in paragraph (d)(3) of this
section.
(d) To qualify for an exception under paragraph (c) of this
section, a Postal Service Medicare covered annuitant or a Medicare
covered member of family must meet one of the following documentation
requirements:
[[Page 20405]]
(1) Demonstrating qualification to the Postal Service for the
exceptions at paragraphs (c)(1)(iii) and (c)(2)(ii) of this section;
(2) Documentation from the Department of Veterans Affairs in a
form, manner, and frequency as prescribed by OPM demonstrating the
individual meets an exception identified in paragraphs (c)(1)(iv) and
(c)(2)(iii) of this section; or
(3) Documentation from the Indian Health Service (IHS) in a form,
manner, and frequency as prescribed by OPM in consultation with IHS
demonstrating the individual meets an exception identified in
paragraphs (c)(1)(v) and (c)(2)(iv) of this section.
(e) A Postal Service Medicare covered annuitant or a Medicare
covered member of family may notify the Postal Service, in writing, if
they choose not to enroll in or to disenroll from Medicare Part B as
described in Sec. 890.1608(e). This will have the effect of a
termination of coverage, pursuant to Sec. 890.1608(b).
(f) The process for disenrollment or removal from PSHB enrollment
for non-enrollment in Medicare Part B is described in Sec.
890.1608(b).
Sec. 890.1605 Enrollment in the initial contract year.
(a) Definitions. In this section--
Current enrollment type means the type of coverage (self only, self
plus one, or self and family) of the FEHB plan in which the individual
is enrolled during the contract year immediately preceding the initial
contract year;
Current option with respect to an individual, means the option
under a FEHB plan in which the individual is enrolled during the
contract year immediately preceding the initial contract year; and
Current plan means, with respect to an individual, the FEHB plan in
which the individual is enrolled during the contract year immediately
preceding the initial contract year.
(b) Transitional Open Season. (1) During the Open Season that
immediately precedes the initial contract year (i.e., the transitional
Open Season), a Postal Service employee or Postal Service annuitant--
(i) May elect to enroll or elect not to enroll in a PSHB plan; and
(ii) Will not be enrolled or continue enrollment in an FEHB plan
under this part as a Postal Service employee or a Postal Service
annuitant.
(2) A Postal Service employee or Postal Service annuitant who is
eligible to enroll in a PSHB plan and is enrolled in an FEHB plan but
who does not make an election during the transitional Open Season
either to enroll in a PSHB plan or not to enroll in a PSHB plan will be
automatically enrolled in a PSHB plan pursuant to paragraph (c) of this
section.
(3) During the transitional Open Season, a Postal Service employee
in a nonpay status, such as leave without pay, except for the case of a
365-day period of nonpay status as set forth at Sec. 890.303(e), may
enroll in a PSHB plan or may be automatically enrolled in a PSHB plan
pursuant to paragraph (b)(2) of this section.
(c) Automatic enrollment. Each Postal Service employee or Postal
Service annuitant who is enrolled in a current plan and does not enroll
or make an election not to enroll, for the initial contract year, will
be automatically enrolled in a PSHB plan by OPM as follows:
(1) In a PSHB plan by the carrier of the individual's current plan
if the carrier offers only one plan under this subpart.
(2) If the carrier of the individual's current plan offers more
than one health benefits plan or option under this subpart, in the plan
and option offered by that carrier that provides coverage with
equivalent benefits and cost sharing to the individual's current plan
and option, as determined by OPM.
(3) If there is no such plan as identified by OPM in paragraph
(c)(1) or (2) of this section, in the lowest-cost nationwide plan
option offered under this subpart that is not a high deductible health
plan and does not charge an association or membership fee as determined
by OPM.
(4) All enrollments under paragraph (c)(1) of this section will be
in the same enrollment type as the current enrollment type.
(d) Automatic enrollment--effect on family members. A Postal
Service employee or Postal Service annuitant automatically enrolled
under paragraph (c) of this section will be enrolled in the same
enrollment type they were enrolled in immediately preceding the initial
contract year. The enrollee's family member(s), if eligible, will be
covered under the same enrollment type they were covered under
immediately preceding the initial contract year.
(1) A self plus one enrollment will cover the same eligible family
member as in the current plan. Automatic enrollment does not verify
eligibility of family members. The enrollee must make an affirmative
enrollment change to remove an ineligible family member and may replace
them with an eligible family member or change the enrollment to a self
only or to a self and family enrollment type. Failure to affirmatively
change an automatic enrollment to remove an ineligible family member
from a self plus one enrollment will result in coverage only for the
enrollee but premium withholding for a self plus one enrollment.
(2) A self and family enrollment will include all eligible members
of family. Automatic enrollment does not verify identity of eligible
family members. The enrollee must affirmatively notify the PSHB
Carrier, employing office, or OPM of any changes to members of family.
(e) Belated enrollment and enrollment changes. Belated enrollments
and enrollment changes will be permitted as follows:
(1) In general, belated enrollments or belated enrollment changes
are permitted in accordance with Sec. 890.301(c) for Postal Service
employees and Sec. 890.306(c) for Postal Service annuitants.
(2) Any individuals who should have been automatically enrolled
pursuant to this section but were not, are deemed to have met the
requirement to show that they were unable to enroll for cause beyond
their control.
(3) OPM may, in its discretion, deem other individuals or groups of
individuals to have met the requirement to show that they were unable
to enroll for cause beyond their control.
(4) Unless required to be a prospective change by governing premium
conversion under part 892 of this chapter, a belated Open Season
enrollment or enrollment change, coverage, and premium obligation take
effect on January 1 of the contract year.
Sec. 890.1606 Opportunities to enroll, change enrollment, or
reenroll; effective dates.
(a) Except as otherwise provided in this subpart, a Postal Service
employee may enroll or change enrollment, as provided by Sec. 890.301,
in a PSHB plan and may not enroll in a FEHB plan as a Postal Service
employee.
(b) Except as otherwise provided in this subpart, a Postal Service
annuitant may change enrollment or reenroll as provided by Sec.
890.306, in a PSHB plan and may not enroll or reenroll in a FEHB plan
as a Postal Service annuitant.
(c) Except as otherwise provided in this subpart, reinstatement of
enrollment in accordance with Sec. 890.305 is permitted in a PSHB
plan.
(d) Except as otherwise provided in this subpart, initial decisions
and reconsiderations on enrollment and eligibility under this subpart
will be made pursuant to Sec. 890.104.
(e) Under this subpart, an enrollment, change of enrollment, or
reenrollment
[[Page 20406]]
made during Open Season takes effect on the January 1 of the next year.
(f) Under this subpart, OPM will effectuate the following health
benefits actions: to enroll or change enrollment; to elect not to
enroll; and to reenroll. The employing office makes determinations of
eligibility under 5 U.S.C. chapter 89, pursuant to application of 39
U.S.C. 1005.
Sec. 890.1608 Disenrollment, removal, termination, cancellation, and
suspension.
(a) Enrollment in FEHB plan terminates prior to the initial PSHB
contract year. For individuals who are eligible to enroll under this
subpart pursuant to Sec. 890.1603(a), enrollment in an FEHB plan and
coverage of the enrollee and covered family members under that FEHB
plan will terminate at the end of the contract year preceding the
initial contract year. Coverage under a FEHB plan will remain available
for an eligible family member who is or becomes covered as a member of
family of a FEHB plan enrollee who is not eligible for a PSHB plan
pursuant to Sec. 890.1603(a)(1) or (2). Individuals whose coverage is
terminated under this paragraph (a) are not eligible for temporary
continuation of coverage under subpart K of this part pursuant to Sec.
890.1103(b).
(b) Disenrollment and removal from enrollment: Postal Service
Medicare covered annuitants and Medicare covered members of family not
enrolled in Medicare Part B. (1) Unless the individual qualifies for an
exception under Sec. 890.1604(c), a Postal Service Medicare covered
annuitant may be disenrolled and a Medicare covered member of family
may be removed from PSHB coverage if not enrolled in Medicare Part B
either:
(i) By the end of their Medicare initial enrollment period or
applicable Medicare special enrollment period; or,
(ii) Any time after January 1, 2025, that the PSHB Carrier, the
Postal Service, or OPM determines that the individual was required to
be enrolled but has not enrolled in Medicare Part B.
(2) A Postal Service Medicare covered annuitant will not be
disenrolled and a Medicare covered member of family will not be removed
from PSHB coverage in a case where that individual was not informed of
their obligation to enroll in Medicare Part B, or it would be against
equity and good conscience to remove the individual. In such a case,
that individual will be permitted to stay enrolled in or covered by
PSHB if they enroll in Medicare during their next enrollment
opportunity, such as the next Medicare general enrollment period.
(3) A Postal Service Medicare covered annuitant will not be
disenrolled and a Medicare covered member of family will not be removed
from PSHB coverage due to not being enrolled in Medicare Part B if such
individual qualifies for one of the exceptions in Sec. 890.1604(c).
(4) A Postal Service Medicare covered annuitant may not be
disenrolled if they have suspended PSHB enrollment while enrolled in a
Medicare-sponsored plan under section 1833, 1876, or 1851 of the Social
Security Act as described in Sec. 890.304(d)(2).
(5) Disenrollment of a Postal Service Medicare covered annuitant
from a PSHB plan under this section shall be considered a termination
with entitlement of the enrollee and PSHB covered family members to a
31-day temporary extension of coverage and the right of conversion
under Sec. 890.401.
(c) Ineligibility under this subpart. The PSHB Carrier, Postal
Service, other applicable employing offices, or OPM, as appropriate,
may take action to disenroll ineligible individuals from enrollment or
remove covered members of family from an enrollment pursuant to Sec.
890.308.
(d) Removal due to fraud or misrepresentation. Pursuant to Sec.
890.308(e)(3) and (f)(3), fraud or intentional misrepresentation of the
fact of non-enrollment in, or disenrollment from, Medicare Part B may
be grounds for retroactive disenrollment and removal to the date of
loss of eligibility.
(e) Cancellation of PSHB in writing to the Postal Service due to
lack of Medicare coverage. As required by 5 U.S.C. 8903c(g)(3)(D), the
Postal Service Medicare covered annuitant or a Medicare covered member
of family may cancel coverage under this subpart in writing to the
Postal Service because the individuals choose not to enroll in or to
disenroll from Medicare Part B. In such a case, PSHB enrollment or
coverage under this subpart will be cancelled as described in
paragraphs (e)(1) through (4) of this section.
(1) The cancellation of a Postal Service Medicare covered
annuitant's PSHB plan enrollment--
(i) Is effective as of the last day of the last pay period in which
the Postal Service Medicare covered annuitant was enrolled in Medicare
Part B, or the last day of the last pay period before the individual
became a Postal Service Medicare covered annuitant; and
(ii) Cancels the PSHB plan coverage of any family members covered
under a self plus one or self and family enrollment, subject to
applicable provisions at Sec. 890.1609.
(2) The cancellation of a Medicare covered member of family's PSHB
plan coverage is effective the last day in which the Medicare covered
family member was enrolled in Medicare Part B, or the last day before
the individual became eligible for Medicare but did not enroll.
(3) When writing to notify the Postal Service that a Medicare
covered member of family will not enroll in or will disenroll from
Medicare Part B, the Postal Service Medicare covered annuitant may
elect to decrease their PSHB plan enrollment type as described in Sec.
890.306(e).
(4) Cancellation of PSHB enrollment or coverage under this
paragraph (e) shall be treated as a termination and an enrollee or
covered family member whose enrollment or coverage is canceled is
entitled to a 31-day temporary extension of coverage and right of
conversion in accordance with Sec. 890.401.
(f) Temporary extension of coverage and conversion. A Postal
Service employee, Postal Service annuitant, or their covered family
member whose enrollment or coverage is terminated other than by
cancellation of the enrollment or discontinuance of the plan, in whole
or part, is entitled to a 31-day temporary extension of coverage and
right of conversion in accordance with Sec. 890.401.
Sec. 890.1609 Temporary extension of coverage, conversion, or
temporary continuation of coverage.
(a) A 31-day temporary extension of coverage and right of
conversion under subpart D of this part is available from the health
benefits plan under 5 U.S.C. chapter 89 in which the enrollee or
covered family member was most recently enrolled or covered.
(b) If an individual was enrolled in or covered by a PSHB plan
until becoming eligible for temporary continuation of coverage under
subpart K of this part, the individual may elect coverage under subpart
K by a PSHB plan offered under this subpart.
Sec. 890.1610 Minimum standards for PSHB Program plans and Carriers.
(a) Minimum standards for PSHB plans. To qualify for approval by
OPM, a health benefits plan under this subpart shall--
(1) Meet the minimum standards for health benefits plans at Sec.
890.201, unless otherwise stated in this subpart;
(2) Provide prescription drug benefits pursuant to 5 U.S.C.
8903c(h)(2);
(3) Provide equivalent benefits and cost-sharing in the initial
contract year to the carrier's FEHB plan, as applicable, pursuant to
section 8903c(c)(2);
[[Page 20407]]
(4) Maintain separate reserves, including contingency reserves,
with respect to enrollees in each PSHB plan as directed by OPM; and
(5) Begin coverage on January 1 of each year.
(b) Minimum standards for PSHB Carriers. The minimum standards for
health benefits carriers under this subpart shall be those contained in
48 CFR 1609.70.
(c) Approval of plans with 1,500 or more Postal enrollees. To the
greatest extent practicable, in the initial contract year, OPM shall
approve a health benefits plan offered by a carrier under this subpart
that has equivalent benefits and cost-sharing to the FEHB plan offered
by that carrier in which the total enrollment of Postal Service
employees and Postal Service annuitants was 1,500 or more in the 2023
contract year. OPM may exempt a comprehensive medical plan, as
described in 5 U.S.C. 8903(4), from the requirement in this paragraph
(c).
(d) Withdrawal of plan approval. Failure on the part of the PSHB
Carrier's plan to meet the standards in this section is cause for OPM's
withdrawal of approval of the plan in accordance with Sec. 890.1611.
Sec. 890.1611 Withdrawal of approval of health benefits plan or
carrier.
(a) OPM may withdraw approval of a health benefits plan or carrier
under this subpart and may give notice of non-renewal of a contract
pursuant to Sec. 890.204 if the standards in Sec. 890.1610 and 48 CFR
1609.70 are not met.
(b) Contracts to offer health benefits plans in the PSHB Program
pursuant to 5 U.S.C. 8903c(c)(1)(A) are subject to nonrenewal in
accordance with Sec. 890.205.
Sec. 890.1612 Information sharing.
(a) OPM shall establish periodic agreements with the Social
Security Administration regarding Postal Service annuitants and their
eligible family members for purposes of:
(1) Determining whether Postal Service Medicare covered annuitants
and Medicare covered members of family of those annuitants satisfy the
Medicare enrollment requirements at Sec. 890.1604; and
(2) Determining which Postal Service annuitants and family members
of such annuitants may be eligible to enroll in Medicare Part B under
section 1837(o) of the Social Security Act.
(b) OPM shall identify Postal Service annuitants and their eligible
family members who may be covered Medicare individuals from OPM's
stored enrollment data. OPM will provide identifying information about
these annuitants and their eligible family members to the Social
Security Administration via secure data transfer for the purposes as
outlined in the periodic agreements.
(c) OPM shall establish periodic agreements with the Department of
Health and Human Services, the United States Postal Service, the
Department of Veterans Affairs, and other Federal agencies as needed to
share data and information as is necessary to carry out 5 U.S.C. 8903c
and this subpart.
(d) These agreements shall specify, at a minimum, the purpose and
legal authorities that govern the elements of information or data to be
shared, the process that will be used for sharing the information or
data, the frequency of sharing the information and data, and the
permitted uses and redisclosure of the information and data.
(e) The agreements established under paragraph (c) of this section
shall, to the greatest extent practicable, ensure that data is shared
for the following purposes:
(1) To determine which Postal Service employees or Postal Service
annuitants may be eligible to enroll in a PSHB plan; and which family
members may be covered;
(2) To determine which Postal Service Medicare covered annuitants
and their Medicare covered members of family may be subject to the
enrollment requirements described in Sec. 890.1604; and
(3) To create a system for data sharing as needed for carrying out
5 U.S.C. 8903c and this subpart.
Sec. 890.1613 Contributions and withholdings.
(a) In general. The calculations for contributions and withholdings
for coverage under this subpart will be made in the same manner as 5
U.S.C. 8906 and subpart E of this part.
(b) Postal Service contribution. The Government contribution with
respect to the Postal Service for health benefits plans under this
subpart shall be determined annually in accordance with Sec. 890.501
commencing 2024 using the weighted average of rates offered by PSHB
plans for the following year with respect to self only, self plus one,
and self and family enrollments. For the initial contract year, the
weighted average applicable for determining the Government contribution
by the Postal Service will be determined using the calculation at 5
U.S.C. 8903c(i), except that OPM will use available data with respect
to Postal Service enrollment for 2024, taking into account 2023 data.
(c) Medicare late enrollment penalty. Upon request by the Postal
Service, and only until the Postal Service Retiree Health Benefits Fund
is depleted, OPM will pay out of the Fund any late enrollment penalties
required under section 1839(e)(1) of the Social Security Act for
individuals who enrolled during the special enrollment period
established under section 1837(o) of the Social Security Act (42 U.S.C.
1395p).
(d) Calculations for the Postal Service Retiree Health Benefits
Fund. As directed by 5 U.S.C. 8909a OPM shall make annual computations
with respect to the cost of claims attributable to Postal Service
annuitants and their covered family members, and the United States
Postal Service shall pay into the Fund annually according to those
computations.
(e) Clarification of statutory terms. OPM has determined that
``future net claims costs'' in the calculation in 5 U.S.C. 8909a(e)(1)
is equivalent to ``estimated net claims costs'' as defined in 5 U.S.C.
8909a(g).
Sec. 890.1614 Other administrative provisions.
(a) Correction of errors. Correction of errors under this subpart
may be made according to Sec. 890.103, except that retroactive
corrections to an enrollment under this subpart may not apply
retroactively beyond the initial contract year. OPM retains authority
to order correction of errors under this subpart.
(b) Carrier entitlement to pursue subrogation and reimbursement
recoveries. Carrier entitlement to pursue subrogation and reimbursement
recoveries must follow the requirements of Sec. 890.106.
(c) Enrollment reconciliation. (1) OPM and each PSHB Carrier must,
at OPM's direction and in the manner requested by OPM, reconcile PSHB
plan enrollment records, including with a list of the Postal Service
Medicare covered annuitants and their Medicare covered members of
family that satisfy the Medicare enrollment requirements at Sec.
890.1604.
(2) Any Postal Service Medicare covered annuitant or a Medicare
covered member of family of such annuitant that is found to be enrolled
or covered under a PSHB plan without satisfying the Medicare enrollment
requirements at Sec. 890.1604 shall be disenrolled or removed pursuant
to Sec. 890.1608.
(d) Information about PSHB Program enrollment requirements. OPM
shall provide timely information about PSHB Program enrollment
requirements to the United States Postal Service to disseminate to
Postal Service
[[Page 20408]]
employees, Postal Service annuitants, and their eligible family
members. Any requests for more information should be directed, in
writing, to the United States Postal Service.
(e) All other provisions. Other requirements of this part not
referenced within this subpart shall be interpreted to apply to the
PSHB Program consistent with definitions and deemed references, unless
it conflicts with this subpart, as determined by the Director.
(f) Conflicts. In the event of a conflict between a provision of
this subpart and a provision in this part, as determined by the
Director, this subpart will supersede.
Title 48--Federal Acquisition Regulations System
CHAPTER 16--OFFICE OF PERSONNEL MANAGEMENT FEDERAL EMPLOYEES HEALTH
BENEFITS ACQUISITION REGULATION
PART 1602--DEFINITIONS OF WORDS AND TERMS
0
11. The authority citation for part 1602 is revised to read as follows:
Authority: 5 U.S.C. 8903c and 8913; 40 U.S.C. 486(c); 48 CFR
1.301.
0
12. Add sections 1602.170-17 through 1602.170-22 to read as follows:
Sec.
* * * * *
1602.170-17 Postal Service.
1602.170-18 Postal Service annuitant.
1602.170-19 Postal Service employee.
1602.170-20 PSHB Carrier.
1602.170-21 PSHB plan.
1602.170-22 PSHB Program.
* * * * *
1602.170-17 Postal Service.
Postal Service means the United States Postal Service.
1602.170-18 Postal Service annuitant.
Postal Service annuitant has the meaning set forth in 5 U.S.C.
8903c(a)(8).
1602.170-19 Postal Service employee.
Postal Service employee has the meaning set forth in 5 U.S.C.
8903c(a)(9).
1602.170-20 PSHB Carrier.
PSHB Carrier means a carrier that enters into a contract with OPM
under 5 U.S.C. 8902 to offer a health benefits plan in the PSHB
Program.
1602.170-21 PSHB plan.
PSHB plan means a health benefits plan offered under the PSHB
Program.
1602.170-22 PSHB Program.
Postal Service Health Benefits (PSHB) Program means the Program
established under 5 U.S.C. 8903c within the Federal Employees Health
Benefits Program.
PART 1609--CONTRACTOR QUALIFICATIONS
0
13. The authority citation for part 1609 is revised to read as follows:
Authority: 5 U.S.C. 8903c and 8913; 40 U.S.C. 486(c); 48 CFR
1.301.
0
14. Add section 1609.7002 to read as follows:
1609.7002 Minimum standards for Postal Service Health Benefits
Carriers.
(a) The carrier of a PSHB plan shall meet the minimum standards as
described in 1609.7001.
(b) To the greatest extent practicable, an FEHB Carrier (defined in
1602.170-1) that offers an FEHB plan (defined in 1602.170-9) in which
the total enrollment includes 1,500 or more Postal Service employees or
Postal Service annuitants in the contract year beginning January 2023
must offer a PSHB plan in the initial contract year. OPM may exempt a
comprehensive medical plan, as described in 5 U.S.C. 8903(4), from the
requirement in this paragraph (b).
[FR Doc. 2023-07080 Filed 4-4-23; 4:15 pm]
BILLING CODE 6325-63-P
</pre></body>
</html>Indexed from Federal Register on April 6, 2023.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.