Rule2024-24796
Postal Service Health Benefits Program: Additional Requirements and Clarifications
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
October 24, 2024
Effective
October 24, 2024
Issuing agencies
Personnel Management Office
Abstract
The Office of Personnel Management (OPM) is issuing this final rule to clarify and establish additional requirements regarding the Postal Service Health Benefits (PSHB) Program, which was established pursuant to the Postal Service Reform Act of 2022 (PSRA). This final rule expands on previous regulations concerning the PSHB Program and is intended to provide greater detail and clarity necessary to properly implement PSHB in 2025 and beyond. In particular, this final rule includes details on reconsideration of PSHB eligibility decisions, the Medicare Part B enrollment requirement, allocation of reserve credits, calendar year alignment of Government contribution requirements, financial reporting and actuarial calculations, premium payment prioritization from the Postal Service Retiree Health Benefits Fund, and Medicare Part D integration.
Full Text
<html>
<head>
<title>Federal Register, Volume 89 Issue 206 (Thursday, October 24, 2024)</title>
</head>
<body><pre>
[Federal Register Volume 89, Number 206 (Thursday, October 24, 2024)]
[Rules and Regulations]
[Pages 85012-85034]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-24796]
[[Page 85011]]
Vol. 89
Thursday,
No. 206
October 24, 2024
Part II
Office of Personnel Management
-----------------------------------------------------------------------
5 Part 890
Postal Service Health Benefits Program: Additional Requirements and
Clarifications; Final Rule
Federal Register / Vol. 89 , No. 206 / Thursday, October 24, 2024 /
Rules and Regulations
[[Page 85012]]
-----------------------------------------------------------------------
OFFICE OF PERSONNEL MANAGEMENT
5 CFR Part 890
[Docket ID: OPM-2024-0002]
RIN 3206-AO59
Postal Service Health Benefits Program: Additional Requirements
and Clarifications
AGENCY: Office of Personnel Management.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Office of Personnel Management (OPM) is issuing this final
rule to clarify and establish additional requirements regarding the
Postal Service Health Benefits (PSHB) Program, which was established
pursuant to the Postal Service Reform Act of 2022 (PSRA). This final
rule expands on previous regulations concerning the PSHB Program and is
intended to provide greater detail and clarity necessary to properly
implement PSHB in 2025 and beyond. In particular, this final rule
includes details on reconsideration of PSHB eligibility decisions, the
Medicare Part B enrollment requirement, allocation of reserve credits,
calendar year alignment of Government contribution requirements,
financial reporting and actuarial calculations, premium payment
prioritization from the Postal Service Retiree Health Benefits Fund,
and Medicare Part D integration.
DATES: This final rule is effective October 24, 2024.
FOR FURTHER INFORMATION CONTACT: Cameron Stokes, Senior Policy Analyst,
at (202) 936-2847 or <a href="/cdn-cgi/l/email-protection#d695b7bbb3a4b9b8f885a2b9bdb3a596b9a6bbf8b1b9a0"><span class="__cf_email__" data-cfemail="90d3f1fdf5e2fffebec3e4fffbf5e3d0ffe0fdbef7ffe6">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
Executive Summary
On May 24, 2024, OPM issued a notice of proposed rulemaking (NPRM)
``Postal Service Health Benefits Program: Additional Requirements and
Clarifications'' at 89 FR 45782, to clarify and establish additional
requirements regarding the Postal Service Health Benefits (PSHB)
Program, which was established pursuant to the PSRA. The NPRM followed
OPM's May 6, 2024, publication of a final rulemaking, ``Postal Service
Reform Act; Establishment of the Postal Service Health Benefits
Program'' at 89 FR 37061, that established the PSHB Program for Postal
Service employees, Postal Service annuitants, and their eligible family
members. The May 6, 2024, final rule adopted the provisions of OPM's
interim final rule, published April 6, 2023, at 88 FR 20383, with minor
clarifying changes.
Background
OPM, the United States Postal Service (USPS or Postal Service), and
PSHB Carriers have been working to implement the provisions of the PSHB
Program set out in the PSRA and previous rulemaking in anticipation of
the 2024 Open Season. The provisions in this final rule are intended to
complement and clarify various areas of the program that have been
identified during its development. While OPM intends for this final
rule, combined with the PSRA and the earlier interim final rule with
request for comment and its subsequent final rule, and notice of
proposed rulemaking, to create a comprehensive legal framework for the
PSHB Program's January 1, 2025 start date, the agency recognizes the
operation of the program will inevitably give rise to further changes
as the Program is implemented over time.
As with previous PSHB rulemakings, OPM consulted with partner
agencies in the development of these regulations as consistent with 5
U.S.C. 8903c. OPM has worked closely with USPS and the Centers for
Medicare & Medicaid Services (CMS), specifically, on the substance of
this rulemaking, particularly as it relates to the impact of the Part D
benefit integration on Postal Service annuitants and eligible family
members.
The May 24, 2024, proposed rule had a 30-day comment period during
which OPM received 22 comments, of which 15 comments were responsive,
addressing the issues raised in the proposed rule. Five comments were
from organizations consisting of employee unions, Federal Employees
Health Benefits (FEHB) or potential PSHB Carriers, and trade groups,
and 10 were from individuals or anonymous commenters with six
nonresponsive or duplicative comments and one comment from an
individual that is not publicly available due to the inclusion of
personally identifiable information. The comment containing personally
identifiable information expressed concerns about the personal impact
of the Medicare integration provisions of the PSRA. The responsive
comments are summarized and responded to below.
Court Review--5 CFR 890.107(f)
OPM proposed to add new paragraph (f) to 5 CFR 890.107 to establish
that PSHB enrollment related lawsuits concerning Postal Service
annuitants and their family members, involving data received under
agreements with source agencies but where OPM lacks authority or means
to obtain independent verification, may not be brought later than
December 31 of the third year after the year in which the enrollment
action was effectuated. This proposal also limited the review of OPM
final decisions based on data obtained under data exchange agreements
with source agencies to the administrative record before OPM when OPM
effectuated the enrollment action.
OPM did not receive any comments on this proposal. OPM is adopting
this provision as proposed.
Definitions and Deemed References--5 CFR 890.1602(c)
OPM proposed to add new definitions for ``Reconsideration'' and
``Source agency'' for purposes of initial decisions and
reconsiderations of eligibility determinations. Under existing
regulations at Sec. 890.1602, for purposes of this part, the USPS is
the employing office for Postal Service employees, and the Retirement
Services office within OPM is the employing office for Postal Service
annuitants. These proposed changes reflect that OPM would retain
authority under this part to reconsider certain initial decisions and
issue final agency decisions regarding enrollments and coverage of
family members with respect to Postal Service employees and Postal
Service annuitants in the PSHB Program.
Two commenters expressed support for OPM's approach to determining
eligibility for family members of USPS employees and annuitants. The
commenters suggest that this approach, which streamlines eligibility
determinations within OPM for these groups, will enhance consistency
and accuracy of eligibility determinations.
OPM welcomes these comments in support of the proposed approach to
determining eligibility for family members of USPS employees and
annuitants. OPM agrees that this approach will result in efficiencies
in the eligibility process and will promote accuracy in the process.
Another commenter requested clarification on what would make a
Postal Service employee or annuitant ineligible for the PSHB Program.
They asked whether there are pre-existing condition exclusions or any
other eligibility limitations based on health status.
OPM appreciates this comment and request for clarification around
PSHB eligibility. This comment is beyond the scope of this rulemaking
as this rulemaking does not establish new eligibility criteria for PSHB
Program participation. In response to the inquiry about the use of
health status in
[[Page 85013]]
eligibility determinations, OPM is clarifying that the FEHB statute, at
5 U.S.C. 8902(f), prohibits the use of health status, including pre-
existing conditions, in eligibility determinations in FEHB and PSHB.
OPM and USPS have developed, and will continue to develop, educational
resources that address questions such as those relating to eligibility.
More information about the PSHB is available on OPM's website,\1\ and
USPS has additional resources including the USPS MyHR \2\ PSHB page and
<a href="http://keepingposted.org">keepingposted.org</a>.\3\ OPM and USPS encourage anyone with questions to
review these resources. OPM is finalizing these definitions as
proposed.
---------------------------------------------------------------------------
\1\ OPM's PSHB Program information can be found at <a href="https://www.opm.gov/healthcare-insurance/pshb/">https://www.opm.gov/healthcare-insurance/pshb/</a>.
\2\ MyHR is the new USPS human resources website and is only
accessible to USPS employees. The name and location of USPS human
resources website is subject change with time.
\3\ Keeping Posted is a USPS-operated website providing benefits
information targeted at Postal retirees. The PSHB resources page can
be accessed at <a href="https://www.keepingposted.org/postal-service-health-benefits.htm">https://www.keepingposted.org/postal-service-health-benefits.htm</a>. The name and location of the USPS website is subject
change with time.
---------------------------------------------------------------------------
Medicare Enrollment Requirement for Certain Postal Service Annuitants
and Eligible Family Members; Survivor Annuitants--5 CFR 890.1604(c),
(d), and (f)
OPM proposed in Sec. 890.1604(c) to clarify that a survivor
annuitant who is entitled to Medicare Part A \4\ must be enrolled in
Medicare Part B to continue enrollment in PSHB, unless the individual
qualifies for an exception as set forth in Sec. 890.1604(d)(3). In
Sec. 890.1604(d)(3), OPM proposed exceptions to the Medicare Part B
enrollment requirement for those survivor annuitants who are entitled
to Part A. Specifically, OPM proposed that a survivor annuitant would
retain any exception that the Postal Service annuitant qualified for
prior to the annuitant's death. A survivor annuitant would also
individually qualify for a Part B enrollment exception in several
additional circumstances: if the survivor annuitant resides outside of
the United States and its territories, if the survivor annuitant is
enrolled in health care benefits provided by the Department of Veterans
Affairs (VA) (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)), or if the survivor annuitant is eligible for health services
from the Indian Health Service. Survivor annuitants would be subject to
all documentation requirements. In Sec. 890.1604(f), OPM proposed to
require all Medicare covered annuitants, Medicare covered family
members, and survivor annuitants to provide OPM or the Postal Service
with written notification if the individual chooses not to enroll in or
disenrolls from Medicare Part B. The following scenarios were included
in the preamble of the NPRM and are being reproduced here to provide
additional clarity:
---------------------------------------------------------------------------
\4\ Under 5 U.S.C. 8903c(a)(1), as adopted by reference in 5 CFR
890.1602(b), the definition of a Medicare covered individual
excludes those eligible to enroll pursuant to sections 1818 and
1818A of the Social Security Act. All references to Medicare Part A
should be read to exclude those enrolled under these sections.
---------------------------------------------------------------------------
Example 1. A spouse is married to a Postal Service annuitant who is
not required to enroll in Part B as a condition of eligibility to
enroll in a PSHB plan under Sec. 890.1604(c)(1)(i) (as of January 1,
2025, the annuitant was not both entitled to premium-free Medicare Part
A and enrolled in Part B). The spouse, who is eligible for Medicare, is
also not required to enroll in Part B as their Postal Service annuitant
spouse has an exception to Part B enrollment. If the Postal Service
annuitant dies and the surviving spouse becomes a survivor annuitant,
the surviving spouse will not be required to enroll in Part B to
continue enrollment in a PSHB plan.
Example 2. A spouse is married to a Postal Service annuitant who is
not required to enroll in Part B as a condition of eligibility to
enroll in a PSHB plan under Sec. 890.1604(c)(1)(iv) (enrolled in VA
health care benefits). The spouse is not eligible for Medicare because
they are not yet 65. If the Postal Service annuitant dies before the
surviving spouse becomes eligible for Medicare and the surviving spouse
becomes a survivor annuitant, the surviving spouse will not be required
to enroll in Part B to continue enrollment in a PSHB plan when becoming
eligible for Medicare.
Several commenters, including an association representing Federal
employees and a labor organization, expressed support for the proposal
to clarify an exception to the requirement to enroll in Medicare Part B
for certain survivor annuitants who had relied on a Part B enrollment
exception of a deceased annuitant while they were enrolled as a family
member. The commenters generally supported this approach as consistent
with the statute and noted that the failure to clarify this exception
could result in inequities for some survivor annuitants and therefore
supported finalizing as proposed. One commenter suggested this proposal
would impact a limited number of individuals and would have a
negligible financial impact on the program.
OPM appreciates comments supporting this proposal and agrees that
it will promote fairness and predictability for survivor annuitants who
made decisions regarding Medicare Part B enrollment based on the
expectation that the annuitant's Part B exception would continue to
apply to them. As noted by commenters, this approach will also ensure
the individuals who reasonably relied on the deceased annuitant's Part
B exception do not later become subject to a Medicare Part B late
enrollment penalty which could make coverage unaffordable or even
result in the loss of coverage. Accordingly, OPM is finalizing as
proposed.
Enrollment in the Initial Contract Year--5 CFR 890.1605(c)
Section 890.1605(c) implements the automatic enrollment
requirements of the PSRA found at 5 U.S.C. 8903c(f)(2). As proposed,
OPM would automatically enroll each Postal Service employee, annuitant,
and their covered family members into a plan offered by their 2024 FEHB
Carrier if the carrier offers a 2025 PSHB plan. If the carrier offers
the corresponding plan in FEHB and PSHB in 2025, with at least one
option that has equivalent benefits and cost sharing, the enrollees and
their covered family would be enrolled into that carrier's plan and the
equivalent option. If the carrier does not offer an equivalent option,
the enrollees and their family members would be enrolled in the lowest
cost option that is not a high deductible health plan (HDHP) and does
not charge an association or membership fee, unless the only option is
a HDHP. If the only option is a HDHP, individuals would be enrolled in
that carrier's HDHP.
Individuals enrolled in a carrier's 2024 FEHB plan where the
carrier does not offer a 2025 FEHB plan would be enrolled in the
carrier's 2025 PSHB plan if the plan offers at least one option with
similar benefits and cost sharing as the 2024 FEHB plan. Individuals
would be enrolled into the similar option with similar benefits and
cost sharing as the 2024 FEHB option. If there is no similar option,
individuals would be enrolled in the lowest-cost option of the 2025
PSHB plan. If the plan has more than two options, the individuals would
be enrolled the lowest cost option that is not a HDHP.
If an individual's 2024 FEHB Carrier's plan does not meet any of
the other criteria, that individual would be enrolled in the lowest
cost nationwide plan that is not a HDHP and does not
[[Page 85014]]
charge an association or membership fee. All determinations on
equivalent or similar plans would be determined by OPM. All Postal
Service annuitants and employees would be automatically enrolled into
the same enrollment type (self, self plus one, or self and family), as
their 2024 enrollment type. All automatic enrollment decisions would
take into account the geographic region limitations of the plan
offered.
Commenters were generally supportive of the approach in proposed
Sec. 890.1605(c). One carrier suggested that this approach would
increase continuity of coverage and reduce administrative burdens
during the transition from FEHB to PSHB. Another commenter supported
the approach and stressed that the process for automatic enrollment
should be made clear in educational information distributed to Postal
Service employees and annuitants.
A carrier asked whether OPM intended to enroll as many enrollees as
possible into a 2025 PSHB plan offered by the carrier of their 2024
FEHB enrollment and, in scenarios where this is not possible, to use
the default plan as defined in Sec. 890.1605.
Under 5 U.S.C. 8903c(f), OPM is required to automatically enroll
Postal Service employees and annuitants who do not make an election to
enroll in a PSHB plan during the transitional Open Season. OPM's intent
is to minimize disruption for Postal Service employees and annuitants
as they transition to the PSHB Program. Without a process for automatic
enrollment, an individual transitioning to the PSHB Program for 2025
who takes no action during the transitional Open Season--either because
they are not aware of the new program or do not understand they must
make an affirmative selection in order to effectuate their enrollment--
otherwise would lose their health insurance coverage for plan year 2025
(or lose eligibility for PSHB coverage altogether in the case of
annuitants) unless they have a qualifying life event. The proposed
automatic enrollment process would prevent such unintended loss of
coverage for individuals transitioning from FEHB to PSHB. In addition,
this proposal would ensure that individuals are enrolled into coverage
that is equivalent or similar to their 2024 FEHB plan when available.
Individuals will be enrolled into the default plan as required by the
law only when enrollment with the same carrier is not available.
One commenter raised a concern about this approach as it relates to
enrollees in certain U.S. territories. The commenter suggested the
nationwide plans are less competitive and more expensive than the
regional plans would be. The commenter recommended altering Sec.
890.1605 so that when an enrollee's FEHB Carrier is not participating
in the PSHB Program within the enrollee's geographic area and the
enrollee takes no action during transitional Open Season, the enrollee
would be automatically enrolled in a comparable PSHB plan offered by an
approved regional carrier.
OPM appreciates the concerns raised by the commenter. The proposed
approach on automatic enrollment aligns with the statutory requirements
under 5 U.S.C. 8903c(f)(2), which, in certain circumstances, includes
automatically enrolling an individual in the lowest-cost nationwide
plan option that is not a HDHP and does not charge a membership fee.
For individuals in certain geographical areas, enrollees may have
limited PSHB plan options. In some cases, certain carriers offering
plans in geographic areas with fewer PSHB Carriers would not be
included in the automatic enrollment hierarchy proposed in Sec.
890.1605. OPM recognized that, in some instances, under the proposed
automatic enrollment hierarchy, individuals may be enrolled into a plan
that does not best meet their needs. However, the proposed approach is
designed to meet the needs of the majority of Postal Service enrollees,
while ensuring that all Postal Service enrollees have continuous
coverage without requiring active plan selections. Therefore, OPM is
finalizing Sec. 890.1605 as proposed. This approach will ensure that
the vast majority of PSHB enrollees who take no action during
transitional Open Season will have the best outcome for 2025 coverage.
OPM is adopting this approach to ensure that the majority of Postal
Service enrollees who do not actively select a plan are not surprised
with an unexpectedly high premium and ensures as robust of a network as
possible across the United States, regardless of the enrollee's
location.
In addition, pursuant to 5 CFR 890.301(n), which describes how OPM
determines the lowest-cost nationwide plan option, OPM reserves the
right to select an alternate plan for automatic enrollment if
circumstances warrant it, as determined by OPM. Therefore, if, for
example, OPM determines that the automatic fallback option for
enrollees in a certain geographic area is not in the best interest of
enrollees, OPM may designate an alternate plan option most suitable to
the circumstances of those enrollees.
Enrollees are encouraged to review all available PSHB plans leading
up to and during the upcoming transitional Open Season to assist them
in making the best selection for their personal circumstances. OPM's
PSHB decision support tool is designed to provide enrollees with the
information necessary to make an informed decision regarding PSHB
coverage. The tool is scheduled to be available by Open Season at
<a href="http://www.opm.gov/pshb">www.opm.gov/pshb</a>.
OPM is finalizing its proposal with two minor technical changes. In
Sec. 890.1605(c), OPM is replacing the reference to ``Sec.
890.1605(b)'' with the term ``paragraph (b) of this section'' for
consistency within the section. In Sec. 890.1605(c)(1), OPM is
replacing the term ``same'' with the term ``corresponding'' for
consistency within the section. Otherwise, OPM is finalizing Sec.
890.1605 as proposed.
Opportunities To Enroll, Change Enrollment, or Reenroll; Effective
Dates--5 CFR 890.1606(c) and (d)
OPM proposed to amend 5 CFR 890.1606(c) related to automatic
reinstatement of enrollment for individuals returning to civilian
status after separation from the uniformed services, as described in 5
CFR 890.305. OPM identified that this proposal was included in the NPRM
in error and is not finalizing this proposed amendment in this rule. 5
CFR 890.1606(c) remains unchanged.
OPM proposed to amend 5 CFR 890.1606(d) to reflect the initial
decision and reconsideration process that would govern PSHB eligibility
or enrollment decisions as proposed in Sec. 890.1607. As proposed,
this provision was also amended to remove the existing cross-references
to the process set forth at Sec. 890.104, which would no longer apply
to PSHB. See the discussion below for additional details about the
initial decision and reconsideration process under 5 CFR 890.1607. OPM
did not receive any comments on the proposed amendments to Sec.
890.1606. OPM is finalizing 5 CFR 890.1606(d) as proposed.
Initial Decision and Reconsideration--5 CFR 890.1607
OPM proposed a process for initial decisions and reconsideration to
reflect OPM's new role in eligibility determinations. As proposed,
individuals would file a request with the employing office or OPM, as
applicable. OPM would be responsible for initial decisions concerning
family member eligibility determination under Sec. 890.302, as well as
initial decisions concerning whether a Postal Service annuitant or
their family member is not required to enroll in Medicare Part B
[[Page 85015]]
because the annuitant or family member is entitled to Department of
Veterans Affairs (VA) benefits under 38 U.S.C. 1705(a), or whether a
Postal Service annuitant or their family members is not required to
enroll in Medicare Part B because they are eligible for health services
from the Indian Health Service (IHS). OPM would also be responsible for
initial decisions based on information OPM receives as the result of an
information sharing agreement between OPM and a source agency. As
proposed, a reconsideration must be an independent review at or above
the level at which the initial decision was issued. Reconsiderations
must be filed within 30 calendar days from the date of the decision
stating the right to reconsideration. The employing agency or OPM can
extend the time limit if the individual shows they were not informed,
needed to obtain information from an outside source, or if they were
prevented by circumstances beyond their control from complying with the
time limit. The employing agency or OPM would issue a final decision
within 30 days of the request for reconsideration.
OPM did not receive any comments on this proposal. OPM is
finalizing as proposed with a minor technical correction in Sec.
890.1607(d) to change a reference to the ``employing office'' to
``employing agency'' for consistency within the section. Otherwise, the
provision is finalized without modification.
Disenrollment, Removal, Termination, Cancellation, and Suspension--5
CFR 890.1608(b)
As proposed, a Postal Service annuitant or family member who is
required, as a condition of PSHB Program eligibility, to be enrolled in
Medicare Part B but is not enrolled in Part B, would be given a one-
time opportunity to enroll in Part B during the next available Medicare
enrollment period. As proposed, the individual would not be removed
from PSHB coverage until after the end of the next Medicare enrollment
period. OPM requested comment on this proposal, including the deadline
by which the individual must be enrolled in Part B before PSHB coverage
is terminated.
Commenters generally supported the proposed one-time opportunity
for individuals who are required to be, but are not yet, enrolled in
Part B in order to be eligible to enroll in the PSHB Program. One
carrier commented that this approach provides clear parameters for
enrollees, smooths the transition to PSHB, and reduces the risk of
interruption in an individual's health coverage. A carrier also
commented to support the proposed approach but requested that OPM
provide Postal Service annuitants with as generous of a window as
possible to enroll in Part B, noting that the goal is to assist people
with enrolling in Part B as soon as possible. A commenter sought
confirmation that the approach outlined would allow individuals who are
required to enroll in Part B, but have not done so, to remain enrolled
in a PSHB plan if they enroll in Part B during their next Medicare
enrollment period. The commenter suggested that, if the individual
fails to enroll in Part B at that point, OPM may disenroll the
individual from the PSHB plan.
One commenter, a union organization, suggested the Medicare Part B
enrollment deadline for these individuals should be the end of the next
Medicare General Enrollment Period that starts at least six months
after the individual is required to enroll in Part B, suggesting that
this privilege would be infrequently utilized. In some cases, such as
where the individual is required to enroll near the end of a calendar
year, the enrollment opportunity could run beyond a full year, because
the next Medicare General Enrollment period would not start at least
six months after the individual is required to enroll in Part B.
OPM supports providing a generous opportunity for Part B enrollment
and understands that the PSHB program eligibility rules and enrollment
processes may be confusing for Postal Service annuitants and their
families during the early stages of this program, especially as it
relates to the Part B enrollment requirement. It is for these reasons
that OPM proposed the one-time enrollment opportunity for these
individuals. The approach proposed by the commenter, recommending
extending the deadline to the Medicare General Enrollment Periods
starting at least six-months after the individual is required to enroll
in Part B, could conflict with the cost savings intent of the PSRA.
Providing PSHB enrollees, in certain circumstances, with more than a
full plan year to enroll in Part B could result in a higher cost burden
on USPS and the PSHB program. This cost-saving goal must be balanced
against the flexibility provided to enrollees. OPM agrees with the
commenter's assertion that these enrollment opportunities should be
needed infrequently, particularly as education and experience regarding
the PSHB Program improves and believes that the policy as proposed by
OPM will provide sufficient flexibility for these individuals to enroll
in Part B and remain enrolled in the PSHB Program. OPM is finalizing
with two minor technical corrections. In Sec. 890.1608(b) the term
``re-enroll'' has been replaced with ``reenroll'' to conform to
drafting conventions in Subpart P. In Sec. 890.1608(b)(6), the term
``from'' was moved within the first sentence from after ``. . . initial
decision disenrolling them from PSHB or removing . . .'' to after
``them'' and before ``coverage under a PSHB enrollment at the time OPM
becomes aware of the Medicare disenrollment'' to correct a
typographical error.
Information Sharing--5 CFR 890.1612(f) and (g)
OPM proposed to amend the information sharing provisions at Sec.
890.1612 by adding new paragraphs (f) and (g). First, in subsection
(f), OPM proposed to provide a written notice prior to issuing an
initial decision on eligibility for PSHB enrollment or coverage based
on information or data OPM receives from a source agency through an
information sharing agreement that establishes a basis that the
individual may be ineligible for PSHB enrollment or coverage. The
proposed notice would include certain required information, such as the
specific data impacting the individual's PSHB enrollment or coverage,
source agency contact information, timelines, and information on the
individual's rights during the dispute. OPM solicited comments on this
proposal.
In proposed paragraph (g) of Sec. 890.1612 OPM proposed that, if
OPM issues an initial decision to remove or disenroll the individual
based on the information or data from a source agency, the individual
would have reconsideration rights pursuant to Sec. 890.1607. As
proposed, reconsideration would be limited to the data or information
from the source agency that was before OPM at the time OPM made the
initial decision.
OPM did not receive any comments on these proposals. OPM is
finalizing as proposed.
A trade association commented to request that OPM expand its
information sharing rule at 5 CFR 890.1612 to include the entire FEHB
Program, not just PSHB, and allow carriers access to that database for
coordination of benefits and Section 111 reporting purposes. The
commenter noted that Medicare Part A becomes primary over FEHB coverage
on the last day of work preceding retirement and requests that OPM
include a field for this date in the database.
OPM appreciates this feedback, but this comment is beyond the scope
of
[[Page 85016]]
this rulemaking. As a general matter, OPM agrees that information
sharing between agencies is critical to administer the PSHB Program
effectively. OPM is not expanding its information sharing effort to the
entire FEHB Program since the PSRA's information sharing provisions are
intended to implement the PSHB Program and its Medicare enrollment
requirement for certain Postal Service annuitants and their family
members. Similarly, OPM does not intend to provide the information that
is the subject of interagency information sharing agreements with
carriers, except in limited circumstances required to operate the PSHB
Program as permitted under the Privacy Act.
Postal Service Contract Year Beginning Date, Medicare Late Enrollment
Penalty, Calculations for the Postal Service Retiree Health Benefits
Fund, and Clarifications of Statutory Terms--5 CFR 890.1613(a), (c),
and (e)
OPM proposed in Sec. 890.1613(a) to calculate the contributions
and withholdings for coverage for the PSHB program as described under 5
U.S.C. 8906 and subpart E of part 890. As proposed, the subscription
charge and the Government contribution would begin on January 1 of each
year for Postal Service annuitants and Postal Service employees.
Under Sec. 890.1613(c), OPM proposed that, upon request from the
USPS, and until the Postal Service Retiree Health Benefits Fund (the
PSRHBF) is depleted, OPM will pay out from the PSRHBF 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). As required under the PSRA, if the PSRHBF is depleted,
the Postal Service will pay the late enrollment penalties from the
Postal Service Fund, established under 39 U.S.C. 2003. OPM has proposed
to prioritize use of the PSRHBF to pay health benefit premiums of
individuals described in 5 U.S.C. 8906(g)(2)(A) before use of the
PSRHBF for payment of late enrollment penalties.
In Sec. 890.1613(e), OPM proposed that the ``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). As proposed, the
computations for post-retirement health obligations computed under 39
U.S.C. 3654(b) will be performed using an aggregate entry-age normal
cost method described in 5 U.S.C. 8331(17) and in accordance with OPM's
actuarial funding methods under 5 U.S.C. 8348(h). OPM proposed to
remove the word ``future'' from before ``net claim costs'' in Sec.
890.1613(e)(1) to clarify the equivalence in terms is between net
claims costs and estimated net claims costs.
OPM did not receive any comments on these proposals. OPM is
finalizing as proposed with a minor technical correction in Sec.
890.1613(c) to change a reference to the ``special enrollment period''
to ``Special Enrollment Period'' to conform with the drafting
conventions of the Social Security Act. Otherwise, OPM is finalizing
without change.
Other Administrative Provisions--5 CFR 890.1614(a)
OPM proposed to amend Sec. 890.1614(a) to reflect OPM's central
role in administering the PSHB enrollment process. As proposed, OPM may
make prospective or retroactive corrections of administrative errors at
any time and may make a correction of an administrative error for
purposes of equity and good conscience, in addition to ordering an
employing office to make such corrections. OPM, rather than the
employing office, would also be able to make retroactive corrections of
enrollee enrollment code errors. OPM proposed to adopt the standards in
Sec. 890.103(d) with the addition of a reference to PSHB. As proposed,
retroactive corrections would be subject to withholdings and
contributions under the provisions of both Sec. Sec. 890.502 and
890.1613.
OPM did not receive any comments on these proposed amendments to 5
CFR 890.1614(a). OPM is finalizing as proposed.
Crediting Separate Reserves for PSHB--5 CFR 890.1615
OPM proposed a Reserve credit methodology for crediting the
reserves from FEHB options to PSHB options. To effectively credit
reserves OPM proposed definitions that only apply for crediting
purposes. These definitions include 2024 FEHB Option premium, 2024
Postal Service premium, Amount available, Corresponding PSHB option,
Option, Plan, and Runout. OPM proposed to credit reserves as soon as
practicable on or after January 1, 2025, using the methodology proposed
in this section. Reserves will be credited by determining the 2024
Postal Service premium by multiplying the 2024 FEHB Option's enrollment
types (self only, self plus one, self and family) by the number of
Postal Service enrollments of the Option and taking the sum of those
amounts. OPM will then determine the Postal Service Percentage, which
is the 2024 premium attributable to Postal Service enrollees divided by
the 2024 premium attributable to both Postal Service and non-Postal
Service enrollees, for each 2024 FEHB Option. OPM proposed to apply
that percentage to the amounts available in the 2024 FEHB Option's
reserves, taking into account the need for Runout, for each 2024 FEHB
Option as of December 31, 2024. OPM will credit the resulting reserve
amount to the PSHB Options for 2025. The reserves will be allocated to
the PSHB Options, for experience-rated and community-rated Options,
depending on the conditions that the Option meets. Each condition is
based on the number of 2024 FEHB Options and the number of
Corresponding PSHB Options offered by the carrier in 2025. OPM also
proposed conditions for 2024 FEHB Carriers that do not offer a 2025
PSHB plan and for those 2025 PSHB Carriers that do not offer a 2025
FEHB plan.
As proposed, OPM will estimate the Runout amount considering any
income attributable to periods for FEHB experience-rated Options.
Finally, OPM proposed that any funds OPM receives under 5 U.S.C.
8909(b) for premiums attributable to periods on or before, but not yet
received by, December 31, 2024, will be credited to PSHB Options' and
FEHB Options' Contingency Reserves using the Reserve Credit methodology
detailed above.
Two commenters addressed the reserve credit portion of the proposed
rule. A carrier commented to note the importance of codifying reserve
allocation guidance provided in a detailed carrier letter, Methodology
for Crediting Postal Service Health Benefits (PSHB) Program Plan
Reserves and Earned FEHB Medical Loss Ratio Credits (Letter Number
2023-13),\5\ dated July 19, 2023, on the topic of reserve credit and
stated its appreciation for this detailed guidance. A trade association
commented to request that OPM confirm that the letter remains in effect
except to the extent it conflicts with this rule.
---------------------------------------------------------------------------
\5\ Methodology for Crediting Postal Service Health Benefits
(PSHB) Program Plan Reserves and Earned FEHB Medical Loss Ratio
Credits (Letter Number 2023-13), July 19, 2023, available at <a href="https://www.opm.gov/healthcare-insurance/carriers/fehb/2023/2023-13.pdf">https://www.opm.gov/healthcare-insurance/carriers/fehb/2023/2023-13.pdf</a>.
---------------------------------------------------------------------------
OPM confirms that Carrier Letter 2023-13 remains in effect. While
OPM is unaware of any conflict between Carrier Letter 2023-13 and this
rule, nonetheless we agree that a conflict between the Carrier Letter
and the rule would properly be resolved in favor of this rule.
[[Page 85017]]
Another commenter sought clarity on requirements for Runout
accounts. Specifically, the commenter asked whether plans would need
two separate runout accounts: one for FEHB paying claims for services
rendered on or before December 31, 2024, but paid after January 1,
2025, and another account for PSHB.
As it relates to Runout accounts, there could be up to three LOCA
Runout accounts: one for paying FEHB claims for services rendered on or
before December 31, 2024, but paid after January 1, 2025, one for FEHB
claims for services on or after January 1, 2025, and one for PSHB
claims for services on or after January 1, 2025.
A commenter also recommended that OPM promote fair allocation of
carrier reserves.
As stated in the proposed rule and Carrier Letter 2023-13, reserves
will be allocated proportionately, based on 2024 premium attributable
to the Postal Service and non-Postal Service populations for each
Option. OPM considered incorporating a risk component in the allocation
of reserves; however, OPM determined the method outlined in Carrier
Letter 2023-13 is most consistent with current FEHB practice.
Finally, a trade association requested that OPM issue guidance
soliciting waiver requests from any FEHB plan that expects the cost of
calculating the reserve transfer will approximate or exceed the amount
of the reserve transfer, with a submission deadline of October 1, 2024.
This comment is outside of the scope of this regulation. OPM notes
that any carrier concerns can be addressed to the appropriate
contracting officer.
OPM is finalizing the proposal without changes.
Medicare Part D--5 CFR 890.1616
Sec. 890.1616(a): Carrier Requirement To Offer Medicare Part D
Prescription Drug Benefits
As proposed, a carrier offering a plan in the PSHB program must
provide prescription drug benefits to any Part D-eligible Postal
Service annuitant and their family members who are Part D-eligible
through a Medicare Part D employer group waiver plan (EGWP). The
carrier must offer a Part D EGWP through a prescription drug plan (PDP)
EGWP or contract with a PDP sponsor. A carrier may, with the approval
of OPM, offer a Medicare Advantage plan (MAPD) EGWP in PSHB; however,
the carrier must also offer a PDP EGWP. All PSHB Carriers must be
approved by and contracted with CMS prior to offering PSHB Part D
coverage through a PDP or MAPD EGWP.
A commenter recommended that OPM allow carriers to decide whether
to offer a PDP EGWP or MAPD EGWP, or both, rather than requiring PSHB
Carriers to offer a PDP EGWP as the default method of Part D benefits
integration.
Section 8903c(h)(2) of title 5 U.S.C. states that OPM ``shall
require each Program plan'' to provide prescription drug benefits to
Part D-eligible Postal Service annuitants and their eligible family
members through a PDP EGWP or ``through a contract with a PDP
sponsor.'' The statute requires all carriers to offer a PDP EGWP to all
Part D-eligible annuitants and their Part D-eligible family members.
OPM's final rule ``Postal Service Reform Act; Establishment of the
Postal Service Health Benefits Program'' (at 89 FR 37061) permits
carriers to offer an MAPD EGWP, as approved by OPM, in PSHB so long as
the carrier also offers a PDP EGWP pursuant to the statutory
requirement. OPM does not have the authority under the statute to
permit carriers to decide whether to offer a PDP EGWP in the PSHB
Program.
Another commenter suggested that OPM align PSHB EGWP guidance with
existing FEHB EGWP guidance.
While the PSHB is included under the FEHB Program umbrella, PSHB is
subject to distinct statutory requirements, including those governing
the requirement to offer a PDP EGWP and to integrate Medicare Part D
benefits under 5 U.S.C. 8903c(h)(1) and (2). When enacting the PSRA,
Congress was addressing specific policy goals, including increasing
enrollment in Medicare by USPS annuitants and promoting long term
financial health for the PSHB Program, which require certain variances
from policies that are generally applicable in the FEHB Program. As
discussed in more detail below, the specific statutory requirements
governing the PSHB Program as well as the unique policy goals of PSHB
require separate regulations, policies, and implementation of PSHB
EGWPs within the FEHB Program.
OPM is finalizing the proposal without changes.
Sec. 890.1616(b): Prescription Drug Coverage Under a PSHB Plan Through
Medicare Part D and Sec. 890.1616(e): Effect of Opting Out of Group
Enrollment Into or Disenrolling From a Medicare EGWP
In 5 CFR 890.1616(b), OPM proposed that Postal Service annuitants
and family members who are Part D-eligible must be enrolled in the PSHB
plan's Part D EGWP to receive prescription drug coverage under the PSHB
plan. A Part D-eligible individual who is not covered by the EGWP would
not receive prescription drug coverage as a benefit under the PSHB
plan. OPM also proposed that a Part D-eligible individual would also
not receive prescription drug coverage through their PSHB coverage if
they opted out of the PSHB Part D group enrollment process in 5 CFR
890.1616(e) and did not otherwise select a PDP EGWP or MAPD EGWP
associated with their PSHB plan.
As proposed, OPM would require all PSHB Carriers to group enroll
all Part D-eligible Postal Service annuitants and their Part D-eligible
family members into the EGWP offered by their PSHB plan. This proposal
is consistent with CMS rules \6\ and permits these Part D-eligible
individuals to opt out of the group enrollment process. OPM proposed
that, if an individual opts out of group enrollment, the individual
would not receive prescription drug coverage under the PSHB plan. The
individual would retain their rights to change their elections during
Open Season or a qualifying life event and could later elect to enroll
in Part D coverage offered by their chosen PSHB plan.
---------------------------------------------------------------------------
\6\ See 40.1.6--Group Enrollment Mechanisms for Employer/Union
Sponsored PDPs, Medicare Prescription Drug Benefit Manual, Chapter
3--Eligibility, Enrollment and Disenrollment, available at <a href="https://www.cms.gov/Medicare/Eligibility-and-Enrollment/MedicarePresDrugEligEnrol/Downloads/CY_2018_PDP_Enrollment_and_Disenrollment_Guidance_6-15-17.pdf">https://www.cms.gov/Medicare/Eligibility-and-Enrollment/MedicarePresDrugEligEnrol/Downloads/CY_2018_PDP_Enrollment_and_Disenrollment_Guidance_6-15-17.pdf</a>.
---------------------------------------------------------------------------
OPM received numerous comments on these proposals. One carrier
stated they were aligned with the proposal and stated that they are
prepared to proceed as proposed. Another carrier supported the approach
and noted the importance of ensuring PSHB enrollees understand their
options for receiving prescription drug coverage. The carrier suggested
that allowing Part D-eligible individuals to opt out of the PDP EGWP
and into an MAPD EGWP serves the interests of annuitants.
Other commenters, including individuals and a union, indicated that
individuals may want to opt out of the Part D plan offered by their
PSHB Carrier to avoid paying an Income-Related Monthly Adjustment
Amount (IRMAA), an income-related monthly adjustment amount assessed
and applied by Medicare. An individual commenter also noted that Postal
Service annuitants and their family members who opted out of Part D
would be paying for a plan that includes drug coverage and not
receiving any of the
[[Page 85018]]
benefits because declining Part D coverage would not result in a
reduced premium. Another commenter noted that Part D enrollees cannot
use drug company discounts for expensive drugs, thus limiting PSHB
enrollees' access to these discounts.
A union representing Federal employees and retirees stated that it
believes OPM incorrectly interpreted the statute, specifically noting
that the PSRA does not impose a Part D enrollment requirement on
Medicare Part D-eligible Postal Service annuitants but instead mandates
that PSHB Carriers provide prescription drug benefits through Part D
benefits integration. The union suggested that Congress would not
create detailed grandfathering and exemption provisions from the Part B
requirement and not do the same for Part D if the Part D provisions
were a mandate. Thus, the commenter concluded that Congress intended to
allow Part D-eligible individuals to opt out of the Part D EGWPs
without losing all prescription drug coverage under the PSHB plan.
Instead, the commenter suggested, OPM and carriers could limit the
number of opt-outs by educating Postal Service annuitants about the
substantial changes to the Part D program in 2025. Several commenters
also noted that the PSRA does not impose a Part D enrollment
requirement on Medicare Part D-eligible Postal Service annuitants and
their family members, but instead mandates that PSHB plans provide
prescription drug benefits through Part D. Several commenters requested
that OPM allow Postal Service annuitants and their family members to
choose whether to enroll in the Part D EGWP offered by their PSHB plan
or to retain the non-Medicare prescription drug coverage offered by
their PSHB plan.
Finally, a trade association commented asserting that the FEHB
program is subject to Section 1557 of the Affordable Care Act (ACA) and
that a Medicare-eligible annuitant in the PSHB program could allege the
Part D opt-out proposal violates Section 1557's prohibition on age
discrimination. This commenter argued that this proposal would impose
additional cost-sharing or impose other limitations on coverage for a
protected class of individuals. The commenter requested that OPM
provide a legitimate, non-discriminatory basis for this proposal.
OPM appreciates these comments and the thoughtful concerns they
raised. OPM believes that its proposed approach--namely, that Part D-
eligible Postal Service annuitants and their eligible family members
who opt out of the Medicare Part D plan offered by their PSHB plan will
lose prescription drug benefits under their PSHB plan--is most
consistent with the PSRA and its policy goals. As commenters noted, the
PSRA, at 5 U.S.C. 8903c(h)(2), clearly requires carriers to provide
PSHB prescription drug benefits to Part-D eligible annuitants and their
Part-D-eligible family members through a Medicare Part D EGWP. And it
requires, at 5 U.S.C. 8903c(c)(2), for carriers to integrate Part D
coverage. While commenters are correct that the PSRA does not
explicitly require Part D-eligible annuitants and their family members
to enroll in Medicare Part D as a condition of PSHB enrollment--and,
indeed, CMS regulations afford individuals that are group enrolled into
a Part D EGWP the right to opt-out--the PSRA's express goal is to
create cost savings for the PSHB Program, in part through shifting
costs to Medicare. OPM believes that requiring Part D-eligible
annuitants and their Part D-eligible family members to obtain PSHB
prescription drug coverage through a Part D EGWP, rather than through
their PSHB plan, best advances Congress' intent.
Further, OPM expects very few PSHB enrollees and family members to
opt out of or decline coverage from their PSHB plan's Part D EGWP, as
the vast majority of individuals eligible for Part D will be better off
retaining their PSHB prescription drug coverage, there will be seamless
coordination between the PSHB plan and Medicare, and the cost of the
Part D EGWP will be included in their PSHB premium, with no reduction
for those who opt out. Those who choose to opt out of group enrollment
into the PSHB plan's EGWP or decline enrollment once effectuated will
be doing so after receiving notice regarding the loss of prescription
drug coverage under the PSHB plan. For these reasons, OPM is finalizing
the proposal to require Part D-eligible Postal Service annuitants and
their eligible family members to receive their prescription drug
benefits under their PSHB plan through the Medicare Part D plan offered
by their PSHB plan.
OPM is, however, making changes in response to comments expressing
concern about the consequences of opting out of or disenrolling from
the Part D EGWP for individuals who make the choice inadvertently or
without full awareness of the implications of their decision. OPM is
finalizing with changes to 5 CFR 890.1616(d), discussed in more detail
in a separate section, and paragraph (e) to address these concerns. OPM
believes that these changes will add important protections for Part D-
eligible annuitants and their Part D-eligible family members.
OPM is amending proposed 890.1616(e) to add new subparagraph (4)
establishing enrollment flexibility to individuals who opt out or
decline the plan's Part D EGWP due to an error. OPM is clarifying that
a Part D-eligible annuitant or family member who is not enrolled in the
Part D EGWP, either by opting out of group enrollment or actively
declining the plan's Part D EGWP, can enroll in the plan's Part D EGWP
during this limited enrollment flexibility. This flexibility is
available where an individual opted out or declined the plan's Part D
EGWP due to an error. OPM's policy is to construe this flexibility
broadly, especially during the first year of the PSHB Program,
consistent with applicable law.
This enrollment flexibility will allow individuals who are not
enrolled in the Part D EGWP to enroll in Part D EGWP coverage within 90
days from the date at which their Part D coverage would have been
effective. The effective date of the enrollment will be retroactive to
the extent permitted in CMS regulations and guidance. OPM has
determined the high risk of confusion, especially during early years of
implementation of the PSHB Program, and the potential consequences for
Part D-eligible annuitants and family members associated with errors
around Part D EGWP enrollment, warrants this flexibility to allow for
corrections when timely reported. OPM notes that this enrollment
flexibility itself does not impact whether or not an individual may be
subject to a Part D LEP if they remain without Medicare Part D or other
creditable prescription drug coverage for more than 63 consecutive
days.\7\ As the PSHB Program matures and there is more familiarity with
Part D, the need for this flexibility is anticipated to decline and it
is our expectation that it will be needed infrequently.
---------------------------------------------------------------------------
\7\ See 42 CFR 423.46(a).
---------------------------------------------------------------------------
Recognizing that the flexibility in Sec. 890.1616(e)(4)(i) may not
provide sufficient time for all individuals to request correction of
Part D EGWP enrollment errors, OPM is further clarifying in Sec.
890.1616(e)(4)(ii) that individuals who identify an error 91 days or
more after their plan's effective date can also request Part D EGWP
plan corrections with a prospective effective date. An individual may
be permitted to enroll or reenroll into the Part D EGWP plan offered by
their PSHB plan option based on exceptional circumstances, broadly
defined and as determined by OPM. The effective date of enrollment
[[Page 85019]]
will be prospective. The flexibilities described above are limited to
new Part D EGWP enrollments (either PDP or MAPD, as applicable). The
flexibility does not permit a change to the individual's PSHB plan
enrollment and does not permit an individual to change enrollment from
a PDP EGWP to an MAPD EGWP, or from an MAPD EGWP to a PDP EGWP, offered
by their PSHB plan. OPM appreciates and shares commenters' concerns
with making sure that all PSHB enrollees have access to prescription
drug coverage. OPM believes that its final rule--which requires Part D-
eligible annuitants and their Part D-eligible family members to obtain
drug coverage through a Part D EGWP but provides significant enrollment
flexibility for those who opt out of Part D inadvertently or without
understanding the consequences--appropriately balances the PSRA's
express goals of cost-savings with the important goal of protecting
enrollees and making sure they have the option of obtaining
prescription drug coverage.
In response to the comment raising concerns related to Section 1557
of the Patient Protection and Affordable Care Act (ACA), and age
discrimination issues in particular, OPM notes that discrimination
complaints in the PSHB are not subject to the Section 1557 complaint
process; rather, as stated in HHS's May 6, 2024 final rule implementing
Section 1557, entitled ``Nondiscrimination in Health Programs and
Activities,'' 89 FR 37522, 37627, HHS will ``refer to OPM complaints
alleging discrimination in the FEHB Program (including the Postal
Service Health Benefits Program).'' More substantively, OPM ensures
that the FEHB and PSHB Programs comply with applicable Federal
nondiscrimination laws, and, as noted above, has chosen this approach
to Part D coverage for multiple nondiscriminatory reasons, including
that it is most consistent with the PSRA and helps advance the PSRA's
cost-saving goals.
Medicare Part D Enrollment for Part D-Eligible Postal Service
Annuitants and Family Members Living Abroad
One commenter, a carrier organization, noted that individuals
living outside of the United States cannot obtain Medicare Part D
coverage, as eligibility is limited to individuals who live within a
Part D plan's service area, which must be within the United States. The
commenter suggested that Part D-eligible Postal Service annuitants and
their family members who live outside the United States and its
territories be exempt from the requirement that their PSHB plan may
only provide them with prescription drug coverage through a Part D
EGWP. OPM appreciates this comment raising this important issue
regarding access to Part D coverage outside of the United States.
After considering these issues, OPM recognizes the need for a
narrow exception to the proposal to group enrollment and limitation of
prescription drug coverage for Part D-eligible annuitants and their
eligible family members who reside outside of the Part D plan's service
area and are ineligible to enroll in Medicare Part D. Under CMS rules,
individuals must live within a Part D plan's service area to be
eligible to enroll in that Part D plan.\8\ OPM is clarifying in the
final rule that Part D-eligible Postal Service annuitants and their
family members who live outside of the United States (including the 50
States, the District of Columbia, the Commonwealth of Puerto Rico, the
Virgin Islands, Guam, American Samoa, and the Northern Mariana Islands)
would not be group enrolled into their PSHB plan's Part D EGWP because
they reside outside of the Part D plan's service area and are therefore
not eligible to enroll. Accordingly, OPM is amending Sec. 890.1616(b)
to clarify that PSHB plans may not group enroll individuals residing
outside of the United States into the Part D plan and must provide
these individuals with prescription drug coverage through the PSHB plan
benefits.
---------------------------------------------------------------------------
\8\ See 42 CFR 423.4, 423.30 and 423.44(b)(2)(i), as well as 42
CFR 422.2, 422.50(a)(3), and 422.74(b)(2)(i).
---------------------------------------------------------------------------
Sec. 890.1616(c): PSHB Plan Enrollment or Disenrollment and Medicare
EGWPs
In Sec. 890.1616(c), OPM proposed that changes to PSHB enrollments
during Open Season or because of a qualifying life event, as defined in
part 892, would include the ability to change enrollment in the Part D
EGWP offered by the PSHB Carrier.
Two commenters, a carrier and an individual, requested clarity on
the specific timeframes and circumstances in which an individual would
be allowed to enroll into a Part D EGWP or make changes to their
enrollment. The individual asserted that FEHB MAPDs allow members to
enroll in or disenroll from the MAPD during the plan year and asked
whether Postal Service enrollees would only be allowed to enroll in the
PSHB MAPD EGWP during Open Season or pursuant to a qualifying life
event. The commenter also requested clarity on whether the Medicare
Part D-eligible annuitant who opts out of or disenrolls from their PSHB
plan's MAPD EGWP would be automatically enrolled in their PSHB plan's
PDP EGWP or would instead receive no prescription drug benefits under
PSHB.
We appreciate these comments and requests for clarification.
Consistent with the rules governing FEHB enrollment, PSHB enrollees
will be allowed to make changes to their enrollment during Open Season
or subject to a qualifying life event. These existing rules will apply
to PSHB Part D coverage, either through the PSHB PDP EGWP or an MAPD
EGWP, the same as they apply to the PSHB plan, meaning a Part D-
eligible annuitant or family member will have an opportunity to enroll
in Part D coverage during the next available Open Season or during any
qualifying life event that may apply. An individual who opts out of or
disenrolls from their PSHB MAPD plan would have opted out of the Part D
plan offered by their PSHB Carrier and would not receive prescription
drug coverage as a benefit under the PSHB plan unless they make an
active plan selection into the PDP EGWP during Open Season or any
available qualifying life events (or during the flexibility period
under 1616(e)(4)). The individual would not be automatically group
enrolled into the PSHB Carrier's PDP EGWP. OPM is finalizing as
proposed.
Sec. 890.1616(d): Carrier Requirements for Group Enrollment Into
Medicare EGWPs
OPM proposed that all carriers automatically group enroll all Part
D-eligible Postal Service annuitants and their eligible family members
into the plan's Part D EGWP. Group enrollment is a waiver permitted by
CMS that allows carriers to enroll individuals into the Part D EGWP
without the need for the individual to complete an additional
enrollment. All carriers are required to comply with all applicable CMS
requirements, including all notice requirements for group enrollment
into PDP and MAPD EGWPs. As proposed, the group enrollment requirement
for carriers does not impact the individual's right to choose a PSHB
plan during Open Season or during a qualifying life event.
The proposed requirement for automatic group enrollment applies to
both PDP and MAPD EGWPs. For PDP EGWPs, the carrier, at the end of Open
Season or during a qualifying life event, would be required to
automatically group enroll Part D-eligible annuitants and their Part D-
eligible family members into the PDP EGWP, unless the individual elects
to enroll into the plan's MAPD EGWP or opts out of group enrollment.
For MAPD EGWPs, at the
[[Page 85020]]
end of Open Season or during a qualifying life event, the carrier must
automatically group enroll Part D-eligible Postal Service annuitants
and family members if they elect to enroll in the carrier's MAPD EGWP.
During the 2025 transitional Open Season, a PSHB MAPD EGWP may only
automatically group enroll individuals if they were covered by the
carrier's 2024 FEHB MAPD or if the individual actively elects to enroll
in the carrier's MAPD plan for plan year 2025. OPM has also proposed
that in addition to CMS notice requirements, that each year, not less
than 30 days prior to Open Season, PSHB Carriers must send notice to
Part D-eligible individuals detailing that the carrier intends to group
enroll the individual into the Part D plan, that the individual may opt
out of the group enrollment, the impact of opting out, the date by
which the individual must opt out, how to opt out, that the individual
will not receive prescription drug coverage under the PSHB plan, and
that no adjustment will be made to the premium. An MAPD plan must also
inform the individual that they may enroll in the plan's PDP EGWP and
inform individuals that they may be required to remain enrolled in
Medicare Part B to maintain eligibility for the PSHB Program.
Two carriers expressed support for the use of automatic group
enrollment of individuals eligible for Part D and not currently
receiving a Medicare Part D product. Each commenter counseled caution,
however, stressing the importance of coordination between OPM and
carriers to ensure smooth enrollment and clear communication to
affected enrollees, as well as the tight timing between group
enrollment, Open Season, and the January 1 PSHB coverage effective
date.
OPM appreciates the comments in support of this proposal as well as
comments raising concerns about the potential risks associated with
this proposal. OPM is committed to working closely with PSHB Carriers
to ensure a seamless process for Part D-eligible annuitants and their
Part D-eligible family members. OPM understands the carriers' concerns
about the timeline between Open Season and the PSHB coverage effective
date of January 1, 2025. OPM is working on additional guidance for
carriers to ensure a smooth transition to the PSHB Program for both the
enrollees and the carriers. OPM is clarifying that all Part D-eligible
Postal Service annuitants and their eligible family members will be
automatically group enrolled into the Part D plan offered by their
carrier in 2025. There is no limitation to only those annuitants and
family members currently enrolled in a Part D plan in 2024.
Additionally, OPM is amending Sec. 890.1616(d)(1)(ii), to require the
carriers to group enroll and provide the required notice to all Postal
Service annuitants and family members, annually. This amendment
requires carriers to annually group enroll all Medicare Part D-eligible
Postal Service annuitants and family members regardless of the
individual's decision to opt out of the plan's Part D EGWP in the prior
plan year. OPM is amending this section in consideration of the
comments, as detailed in Sec. 890.1616(b) and (e), about the risk of
Postal Service annuitants and family members not understanding the
consequences of opting out of the group enrollment into the Part D EGWP
offered by their PSHB plan. This amendment will require an individual
to opt out of the Part D EGWP offered by their PSHB plan on an annual
basis.
OPM is finalizing the Medicare Part D group enrollment requirement
with the amendments described above.
Sec. 890.1616(f): EGWP Prescription Drug Benefits
OPM proposed that a carrier must provide the same prescription drug
benefits to Part D-eligible individuals under the PDP or MAPD EGWP, as
the carrier provides to the non-Part D-eligible individuals enrolled in
prescription drug benefits under the PSHB plan, except to the extent
necessary to integrate Medicare Part D prescription drug benefits, as
determined by OPM. OPM identified that in the preamble text this
standard was described as requiring carriers to offer ``equal or
better'' benefits in their Part D plans as is offered in the PSHB plan
formulary, whereas in the proposed regulatory text the standard was
described as ``the same.'' This error is addressed in the final rule,
as discussed in more detail below.
Several commenters provided feedback on this proposal. One
commenter supported the approach, emphasizing the importance of OPM's
position. A carrier commented that it understood the proposal to
require Part D EGWP formularies to cover the same medications as PSHB
formularies, with equivalent or better cost-sharing and tiering.
A Federal employee association requested clarification about the
difference in language used in the preamble to the proposed rule,
proposing the ``equal or better'' standard, from the proposed
regulatory language at 5 CFR 890.1616(f), proposing that benefits must
be the ``same.'' This commenter requested additional clarity around
these standards to ensure Part D-eligible individuals receive coverage
that is equal or better than existing coverage. A commenter asserted
that some Part D coverage offered in the FEHB Program in plan year 2024
may not have met the equal or better standard, noting that in certain
instances tier classifications may have resulted in enrollees paying
higher out-of-pocket costs for the same prescription medication. This
commenter supported language included in the 2024 Carrier Call
Letter,\9\ issued February 8, 2024, which included a requirement that
PDP EGWP formularies include the same covered drugs at the same or
lower cost-sharing as the plan's non-PDP EGWP formulary, and encouraged
OPM to incorporate similar language in the final rule to ensure that
Part D coverage is really equal to or better than PSHB plan drug
coverage.
---------------------------------------------------------------------------
\9\ See Federal Employees Health Benefits and Postal Service
Health Benefits Programs Call Letter, Office of Personnel
Management, Letter No. 2024-04, Feb. 8, 2024, available at <a href="https://www.opm.gov/healthcare-insurance/carriers/fehb/2024/2024-04.pdf">https://www.opm.gov/healthcare-insurance/carriers/fehb/2024/2024-04.pdf</a> at
pp 6-7.
---------------------------------------------------------------------------
A carrier requested further clarity regarding the specifics of
formulary match standards between the Part D EGWP prescription drug
benefit and the PSHB plan prescription drug benefit. The commenter
requested greater detail on formulary design requirements and clarity
on cost implications. This commenter further stated that carriers could
promote health care savings and promote enrollee choice in the PSHB
Program by designing PSHB formularies to meet the needs for active
employees, while designing PDP formularies to meet the needs of
Medicare Part D-eligible individuals.
One commenter suggested that the language in proposed Sec.
890.1616(f) is not strong enough to ensure that Part D drug coverage
will be equal to or better than PSHB plan drug coverage. The other
suggested a potentially unintended impact on the ability to generate
cost savings based on the proposed requirement that Part D EGWP
formularies cover the same drugs as PSHB formularies, with equivalent
or better cost-sharing and tiering. The commenter suggested that the
requirement for parity in prescription drug benefits could limit the
flexibility needed to leverage rebates and innovative pricing
strategies effectively on the smaller membership population. These
constraints might reduce the potential for cost savings typically
achieved through negotiated agreements and formulary management within
the Part D framework. They suggested that
[[Page 85021]]
OPM consider these factors to ensure that the implementation of this
requirement does not inadvertently hinder cost-saving opportunities for
the PSHB Program and its enrollees.
OPM appreciates these comments requesting additional clarifications
and is finalizing with amendments to provide more clarity and to better
ensure Postal Service annuitants and family members who are Medicare
Part D enrollees receive at least equal benefits to those offered in
the corresponding PSHB plan, to the extent consistent with applicable
Medicare Part D requirements. OPM previously provided carriers with
details on PSHB formulary requirements in Carrier Letter 2024-06,\10\
and OPM is amending Sec. 890.1616(f) to explicitly incorporate these
standards. Section 890.1616(f), as amended, adds new paragraphs (1) and
(2) that require that the Part D EGWP formularies within the PSHB
Program include the same medications, products, and supplies as covered
in the PSHB formulary with the same or lower cost-sharing, and that
carriers may not lower or otherwise limit or restrict benefits, such as
by limiting the number or types of medications on the formulary or
increasing cost sharing, offered in the PSHB formulary to meet this
standard. New paragraph (3) provides that OPM has authority to grant
exceptions to these requirements, in OPM's discretion to the extent
necessary and consistent with applicable law, where requested by
carriers.
---------------------------------------------------------------------------
\10\ Technical Guidance and Instructions for 2025 Benefit
Proposals, Letter No. 2024-06, March 7, 2024, available at <a href="https://www.opm.gov/healthcare-insurance/carriers/fehb/2024/2024-06.pdf">https://www.opm.gov/healthcare-insurance/carriers/fehb/2024/2024-06.pdf</a>.
---------------------------------------------------------------------------
We appreciate comments seeking additional flexibility to innovate
and leverage prescription medication rebates. While OPM appreciates the
benefits that may be derived from carrier innovation, the need to
ensure all PSHB enrollees receive equal benefits, regardless of their
Part D eligibility status, outweighs the potential theoretical benefits
that may be derived through the types of innovations commenters
asserted may be limited by the proposed approach. OPM believes that
this approach strikes a balance between innovation and ensuring that
all individuals in the PSHB Program continue to have access to the same
high quality prescription drug coverage.
Medicare Part D Premium
One individual commenter expressed concern that mandating payment
of Medicare Part D premiums will increase the cost of health coverage
for Postal Service annuitants, given they will already be required to
pay Medicare Part B premiums.
OPM appreciates this comment seeking clarity regarding the Part D
premium. A Part D-eligible Postal Service annuitant and family member
enrolled in the Part D EGWP will not pay an additional premium for Part
D coverage. Part D coverage is included in the premium for PSHB
coverage. The FEHB Program requires that all FEHB enrollees enrolled in
the same plan and coverage level, as well as all PSHB enrollees
enrolled in the same plan and coverage level, pay the same premium
whether an eligible individual chooses to stay in or opt out of the
available Part D EGWP.\11\ This means that those who opt out of Part D
coverage will not receive a reduction in premium costs as a result of
opting out of Part D.
---------------------------------------------------------------------------
\11\ See 5 U.S.C. 8906(d).
---------------------------------------------------------------------------
Comments Beyond the Scope of This Rulemaking
The following comments are outside of the scope of this rulemaking,
but OPM summarizes them here for the sake of completeness.
Contracting and Carrier Requirements
A trade association submitted comments raising several questions
pertaining to contracting issues. The commenter asserted that OPM did
not request advance agreement as it relates to precontract costs under
the FEHBAR (48 CFR 1631.205-77) from FEHB plans joining the PSHB
Program, asserting that OPM stated this would be an unnecessary
technicality. The commenter requested that OPM state in the final rule
that such precontract costs ``are allowable to the extent they would
have been allowable if incurred after the date of the contract.'' OPM
appreciates this comment, but it is beyond the scope of the proposed
rule.
PSHB Special Enrollment Period
Two commenters made suggestions regarding the Postal Service Reform
Act's Medicare Part B Special Enrollment Period, which ran from April
1, 2024, through September 30, 2024. One commenter suggested that the
existence of a Medicare Part B Special Enrollment Period for Postal
Service annuitants is wrong or unlawful given that a number of Postal
Service annuitants are already paying late enrollment penalties for
Medicare Part B. This commenter requested that USPS pay Part B late
enrollment penalties for all Postal Service annuitants, regardless of
when the Postal Service annuitant or the family member enrolled in
Medicare Part B. The other commenter suggested USPS would not pay Part
B late enrollment penalties for those who enroll in Part B during the
Postal SEP.
With respect to the first comment, we note that the Special
Enrollment Period at issue is established by the PSRA. In any event,
both comments are beyond the scope of this rulemaking.
Automatic Enrollment Into Medicare Part B
One commenter suggested that OPM explore with SSA and CMS automatic
enrollment into Medicare Part B like there is for Part D group
enrollment.
OPM appreciates this commenter's suggestion to simplify the
Medicare Part B enrollment requirement for Postal Service annuitants
and their eligible family members and promote administrative
simplicity, but this comment is outside of the scope of this
regulation.
True Out-of-Pocket and Maximum Out-of-Pocket Metrics
One carrier commenter recommended that OPM maintain separate
accumulation metrics for true out-of-pocket (TrOOP) and maximum out-of-
pocket (MOOP) metrics, suggesting that integrating the two metrics
could strain government budgets by allowing individuals to reach their
out-of-pocket limits quicker and placing more of the cost burden on the
Federal system. Another carrier commenter added that the Inflation
Reduction Act (IRA) included significant changes to the PDP plans that
go into effect on January 1, 2025. The changes make the PDP designs
institute zero-dollar cost share once the enrollee meets the $2,000
TrOOP.
OPM appreciates these comments, but they are outside the scope of
this regulation.
General Program Education
Multiple comments from USPS employees, annuitants, and their
families made it clear that enrollee and family member education remain
very important as the PSHB Program moves towards implementation and
providing coverage. Several commenters asked for available resources to
learn about Medicare-related options and costs, as well as eligibility
requirements for the PSHB, rights related to the Medicare Part B
Special Enrollment Period, and how Medicare-related matters relate to
PSHB integration. Another requested a PSHB plan comparison tool to
facilitate plan selection during the first PSHB Open Season.
OPM appreciates commenters raising these questions and concerns and
[[Page 85022]]
understands the importance of providing Postal Service employees and
annuitants with sufficient information to make informed PSHB plan
enrollment decisions. While these comments are out of scope, OPM
reminds stakeholders of the range of educational resources currently
available from OPM \12\ and USPS through the MyHR \13\ PSHB page and
<a href="http://keepingposted.org">keepingposted.org</a>,\14\ in addition to PSHB educational resources mailed
to employees and annuitants. Anyone with questions about the range of
options available under the PSHB Program and the impacts on Postal
Service employees and annuitants are encouraged to review all available
resources.
---------------------------------------------------------------------------
\12\ OPM's PSHB Program information can be found at <a href="https://www.opm.gov/healthcare-insurance/pshb/">https://www.opm.gov/healthcare-insurance/pshb/</a>.
\13\ MyHR is the new USPS human resources website and is only
accessible to USPS employees.
\14\ Keeping Posted is a USPS-operated website providing
benefits information targeted at Postal retirees. The PSHB resources
page can be accessed at <a href="https://www.keepingposted.org/postal-service-health-benefits.htm">https://www.keepingposted.org/postal-service-health-benefits.htm</a>.
---------------------------------------------------------------------------
In addition, individuals will have available a web-based decision
support tool to simplify the comparison of covered benefits, premiums,
provider networks and pharmacy information for enrollees choosing among
a wide array of plan choices. OPM plans to launch the tool in late
October, and it will be available within the PSHB System, the online
enrollment portal.
OPM continues to work closely with USPS to develop and release PSHB
educational materials for Postal Service employees, annuitants, and
their family members. In June 2024, OPM posted a series of FAQs
explaining parts of the proposed rule for consumers.\15\ In late July
2024, USPS developed and distributed a new PSHB guide covering OPM's
proposed rules on EGWP coverage, among other relevant updates.
---------------------------------------------------------------------------
\15\ Office of Personnel Management, Postal Service Health
Benefits Program, ``PSHB Program NPRM FAQ,'' June 11, 2024,
available at <a href="https://www.opm.gov/healthcare-insurance/pshb/#url=FAQs">https://www.opm.gov/healthcare-insurance/pshb/#url=FAQs</a>.
---------------------------------------------------------------------------
Regulatory Changes in This Final Rule
OPM is making several changes to this final rule from the NPRM in
response to comments as well as changes to address one error in the
proposed rule and several technical corrections.
OPM is making minor technical corrections throughout this rule to
replace the term ``open season'' with ``Open Season'' to reflect
drafting conventions in part 890 of Title 5. OPM is also making minor
technical corrections throughout this rule to add the term
``paragraph'' where applicable to conform with drafting conventions in
part 890 of Title 5. This change was made to Sec. Sec. 890.1602(c)(4),
890.1604(d)(3)(i), and 890.1616(f).
Section 890.1606(c)
The proposed rule included a proposed amendment to Sec.
890.1606(c). This amendment was included in error, so OPM is not
finalizing this proposal.
Section 890.1605(c)
OPM is making a minor technical correction in Sec. 890.1605(c) to
replace the reference to ``Sec. 890.1605(b)'' with the term
``paragraph (b) of this section'' for consistency within the section.
OPM is making a minor technical correction in Sec. 890.1605(c)(1)
to replace the term ``same plan'' with the term ``corresponding plan''
for consistency within the section.
Section 890.1607(d)
OPM is making a minor technical correction in Sec. 890.1607(d) to
replace the term ``employing office'' with the term ``employing
agency'' for consistency within the section.
Section 890.1608(b)
OPM is making two minor technical corrections in Sec. 890.1608(b).
First, the term ``re-enroll'' has been replaced with ``reenroll'' to
conform to drafting conventions in Subpart P. In Sec. 890.1608(b)(6),
the term ``from'' was moved to correct a typographical error.
Section 890.1613(c)
OPM is making minor technical corrections in this section to
replace the term ``special enrollment period'' with ``Special
Enrollment Period'' to conform to drafting conventions of the Social
Security Act.
Section 890.1616(a)
OPM is making minor technical corrections in this section to add
the term ``section'' prior to 1860D-22(b), (c)(1), to conform to the
drafting conventions of the Social Security Act.
Section 890.1616(b)(1)
Under 5 CFR 890.1616(b), a Part D-eligible individual (as defined
in section 1860D-1(a)(3)(A) of the Social Security Act) must be
enrolled in their PSHB plan's Part D EGWP by their PSHB Carrier in
order to receive prescription drug coverage under the PSHB Program.
However, under CMS regulations at 42 CFR 423.30(a)(1)(ii), an
individual who is living abroad is not eligible to enroll in Part D as
they cannot meet the requirement of residing in the service area of a
Part D plan.
In Sec. 890.1616(b)(1), OPM is clarifying that a Part D-eligible
Postal Service annuitant or family member of annuitant who resides
outside of the United States must not be group enrolled in the Part D
EGWP. Instead, these individuals will receive non-Medicare prescription
drug coverage provided by the PSHB plan for as long as they reside
outside of the United States.
Section 890.1616(d)
In consideration of the comments about the risk of Postal Service
annuitants and family members not understanding the consequences of
opting out of the Part D EGWP offered by their PSHB plan, OPM is
amending Sec. 890.1616(d)(1)(ii), to require the carriers to group
enroll and provide the required notice to all Postal Service annuitants
and family members, annually. This amendment also requires carriers to
annually group enroll all Medicare Part D-eligible Postal Service
annuitants and family members regardless of the individual's decision
to opt out of the plan's Part D EGWP in the prior plan year. This
amendment will require an individual to opt out of the Part D EGWP
offered by their PSHB plan on an annual basis. OPM is making this
change in part to address concerns about individuals losing access to
prescription drug benefits unintentionally.
Section 890.1616(e)(4)
OPM received several public comments expressing concern for
individuals who may opt out of or disenroll from the Part D EGWP due to
a lack of complete understanding of the consequences of that decision,
despite OPM's and USPS's best efforts to provide education and
awareness to the affected population. In the interest of providing
greater flexibility for Postal Service annuitants and their family
members during the transition to PSHB, OPM is establishing a Part D
EGWP enrollment flexibility for Part D-eligible Postal Service
annuitants and their eligible family members. This enrollment
flexibility will allow these individuals to enroll in their PSHB plan
option's Part D EGWP for up to 90 days after the start of the plan year
or the effective date of coverage after a qualifying life event that
permitted a plan change. For those who utilize the enrollment
opportunity, Part D coverage will be retroactive to the extent
permitted by CMS regulations and guidance. In addition, for individuals
who seek to enroll after 90 days, an individual will be permitted to
request to enroll or reenroll into the Part D plan offered by their
PSHB plan option based on exceptional circumstances, as
[[Page 85023]]
determined by OPM. For those who utilize this enrollment opportunity,
Part D coverage will be prospective as permitted by OPM regulations.
These enrollment flexibilities are limited. This flexibility does not
permit a change to the individual's PSHB plan enrollment and does not
permit an individual to change enrollment from a PDP EGWP to an MAPD
EGWP, or from an MAPD EGWP to a PDP EGWP.
OPM notes that a Part D-eligible individual may be subject to a
Part D LEP if they remain without Medicare Part D or other creditable
prescription drug coverage for more than 63 consecutive days.\16\ This
possible LEP is not affected by the availability of the enrollment
opportunity. This Part D LEP is separate and apart from the Part B LEP
that is paid by the Postal Service for annuitants participating in the
PSRA SEP. All Part D LEP for delayed Part D enrollment is the
responsibility of the enrollee.
---------------------------------------------------------------------------
\16\ See 42 CFR 423.46(a).
---------------------------------------------------------------------------
Section 890.1616(f)(1) & (2)
As proposed in the NPRM, carriers would be required to provide the
same prescription drug benefits to Part D-eligible individuals under a
PSHB plan's EGWP as the prescription drug benefits provided to
individuals covered under the PSHB plan who are not eligible for Part D
and not enrolled in the PSHB plan's EGWP except to the extent
necessary, as determined by OPM, to integrate the Medicare Part D
prescription drug benefit coverage.
As a result of comments received, OPM is amending Sec. 890.1616(f)
by changing ``the same as'' standard to ``equal to or better'' to
correct the drafting error in the NPRM. OPM is also adding new (f)(1),
(2), and (3) to specify that: (1) Prescription drug benefits under the
EGWP must cover the same medications as in the PSHB formulary with the
same or lower cost-sharing, to the extent consistent with applicable
Medicare provisions; (2) Carriers must not lower benefits, such as by
limiting the number or types of medications on the formulary or
increasing cost sharing offered in the PSHB formulary to meet this
standard; and (3) a carrier may request OPM approval to offer different
medications, products, or supplies, or modify cost sharing on their
EGWP formulary, subject to OPM's approval, where the requests are
necessary and consistent with applicable law.
Expected Impact of This Final Rule
Statement of Need
This rulemaking follows a previous rulemaking \17\ implementing
sections 101 and 102 of the PSRA, which directed OPM to establish the
PSHB Program for Postal Service employees, Postal Service annuitants,
and their eligible family members. The PSHB Program is codified within
5 U.S.C. chapter 89, which governs the FEHB Program generally.
---------------------------------------------------------------------------
\17\ The previous rulemaking referred to here is the collective
interim final rule and the final rule under the title Postal Service
Reform Act; Establishment of the Postal Service Health Benefits
Program. These documents are herein referred to collectively as the
``initial rulemaking.'' The final rule can be found at 89 FR 37061,
which adopted the provisions of OPM's interim final rule, published
at 88 FR 20383, with minor clarifying changes.
---------------------------------------------------------------------------
While developing and implementing the regulatory provisions found
in the initial rulemaking, OPM determined that a number of topics
associated with the PSHB Program needed further refinement,
development, or clarification. For example, in the initial rulemaking,
OPM enacted procedures for handling requests for reconsideration of
initial decisions affecting enrollment in the PSHB Program. After
further consideration, OPM determined that specific changes were needed
to distinguish the different relationship between employing offices and
OPM as it relates to the PSHB Program as compared to the FEHB Program.
Similarly, several regulatory changes to the PSHB Medicare Part B
requirement were identified as needed to make the transition from FEHB,
where there is no Medicare Part B requirement, to PSHB as consumer
friendly as possible and to provide policies for certain processes and
situations that were not contemplated when the interim final rule was
initially developed. As an example, OPM received public comments on the
interim final rule concerning survivor annuitants as it relates to the
Medicare Part B requirement indicating a need to provide clear
regulation of the treatment of this group and informed the proposal in
the proposed rule.
In addition, some issues required more time for policy development
and were not able to be included in the initial rulemaking. Those
issues included reconsiderations of PSHB eligibility decisions, various
applications of the Medicare Part B enrollment requirement, allocation
of reserves credits, calendar year alignment of Government contribution
requirements, financial reporting and actuarial calculations, premium
payment prioritization from the PSRHBF, and Medicare Part D
integration.
Because the PSRA included a statutory deadline for OPM to publish
regulations for the program, OPM reserved for this rulemaking some of
the more complex issues that required more time than the interim final
rule timeframe allowed, such as the methodology for allocation of
reserve credits. This rulemaking provides an additional vehicle for a
more comprehensive regulatory scheme before the PSHB Program begins
operation in 2025.
OPM is finalizing the provisions in 5 CFR 890.1607 regarding
reconsiderations, which will ensure that policies and procedures
related to eligibility decisions in the PSHB Program properly account
for aspects that are unique to the PSHB Program. Without these
clarifications, there would be confusion among agencies as to their
responsibilities when faced with a PSHB reconsideration request. These
PSHB-specific reconsideration regulations also account for the use of a
centralized enrollment system, which is not used for enrollment in FEHB
plans. Because some of the data used in eligibility determinations will
come from source agencies rather than OPM directly, the regulations
establish a multistep process for an affected individual where the
information does not belong to OPM and therefore cannot be
independently verified.
OPM is further clarifying Medicare Part B requirements and
exceptions in this rulemaking. While the most common Part B exception
scenarios are provided in the PSRA and largely clarified in detail
through OPM's initial rulemaking, the scenarios addressed in this final
rule regarding the applicability of the Medicare Part B requirement and
exceptions to survivor annuitants were beyond the scope of the initial
rulemaking. Confusion or inequitable treatment among current or future
Postal Service annuitants and their family members could result if OPM
does not address these scenarios before PSHB enrollment begins.
Several of the policies found in this rulemaking are necessary to
properly operationalize financial aspects of the PSHB Program before it
begins in 2025. The inclusion of the methodology for the allocation of
reserve credits from 2024 FEHB plans, with Postal Service employee and
Postal Service annuitant enrollees, to 2025 PSHB plans is necessary to
implement the calculations of this one-time allocation that is required
in order create the reserves for PSHB plans. Implementing
[[Page 85024]]
requirements that align the government contribution adjustment for
Postal Service employees and Postal Service annuitants with the
calendar year is necessary to ensure the adjustment aligns with the
PSHB plan year, which is also on a calendar-year basis. Regulations
regarding financial reporting and actuarial calculations are necessary
to align PSRA financial requirements of both OPM and USPS with current
actuarial methods. This rule's provisions regarding prioritizing
premium payments from the PSRHBF, and thereafter Medicare Part B late
enrollment penalty payments, establish an order of priority for funds.
Without this section, it would be unclear how OPM prioritizes payments
statutorily allowed from the PSRHBF at times when the fund may be
depleted.
Finally, the integration of Medicare Part D benefits into the PSHB
Program, which is a significant aspect of the PSRA, requires further
regulation, particularly as it relates to group enrollment into the
Part D EGWP as well as how an individual may opt-out or decline Part D
coverage and the consequences of doing so. This clarification is
necessary to fully implement the Part D integration sections of the
PSRA, as interpreted and determined appropriate by OPM, in compliance
with Medicare regulations and requirements.
In addition, this rulemaking is necessary to clarify the meaning of
the statutory provision contained in 5 U.S.C. 8903c(h)(2) that requires
carriers to provide prescription drug benefits to Postal Service
annuitants and their eligible family members who are Part D-eligible
(as defined in the statute) through employment-based retiree health
coverage via a Part D prescription drug plan (PDP) or contracts between
a carrier and a PDP sponsor. Specifically, this rule codifies preamble
discussion from the interim final rule stating that a carrier may, in
addition to offering one of the above options, also offer a Medicare
Advantage Prescription Drug (MAPD) Plan. This rule codifies that
carriers must group enroll all Medicare Part D-eligible annuitants and
their eligible family members, consistent with applicable CMS
requirements, including the right to opt out or decline Part D EGWP
coverage. This rule further clarifies that PSHB Part D EGWP
prescription drug coverage must be equal to or better than the PSHB
prescription drug coverage available to active PSHB employees and their
family members, to ensure that Medicare Part D-eligible PSHB annuitants
and their eligible family members continue to receive the same high
level of coverage. Further, the rule makes clear that the only way that
a Medicare Part D-eligible annuitant or their eligible family member
may receive PSHB prescription drug coverage is through a carrier's PSHB
EGWP, unless the Part D-eligible annuitant or their eligible family
member resides outside of the United States. OPM determined that
regulations were necessary to provide clarity to both carriers and
Postal Service annuitants on implementation of 5 U.S.C. 8903c(h)(2).
These issues were not addressed in the initial rulemaking with
sufficient clarity for the regulated community and other stakeholders.
Impact
This rulemaking establishes additional requirements and
clarifications for the operations and management of the PSHB Program.
Based on OPM's estimates, OPM determined that this regulation will not
have a significant impact on the broader Federal health insurance
market. In 2023, Postal premiums accounted for about 21% of the total
FEHB premiums, meaning that Postal Service employees, Postal Service
annuitants, and their family members make up about one fifth of health
insurance carriers' overall FEHB books of business.
As with the initial rulemaking, this rulemaking is intended to help
promote the financial stability and long-term viability of the Postal
Service by implementing the PSHB Program as effectively as possible,
while ensuring minimal disruptions to enrollees during the early years
of the program. The largest potential impact from this rule is found in
the regulatory portions addressing reserves. OPM estimates that $4.9
billion of the estimated $23 billion in total FEHB reserves--which
includes contingency reserves and the Letter of Credit Account within
the EHB Fund--as of the end of 2023 is attributable to the Postal
population. In addition, OPM estimates that the vast majority of PSHB
enrollees will remain with the same carrier during the move from FEHB
to PSHB. In this scenario, the move of funds from FEHB to PSHB reserves
will have no economic impact--the money will remain with the same
carrier, still overseen by OPM. Based on 2023 enrollment and expected
carrier participation in the PSHB, OPM estimates that the total
reserves that will be transferred between carriers will be
approximately $100 million.
The other changes in this rule are not expected to be economically
significant. The reconsideration process largely mirrors that of the
FEHB Program, except to the extent the PSHB Program requires
incorporation of verification of the requirement to enroll in Medicare
Part B. Discussions of the application of various Part B exceptions are
clarifications rather than deviations from the status quo. To the
extent there are impacts from the various proposals, they are discussed
below.
A. Impacts on PSHB Carriers
The reserves policies addressed in this rule will result in a shift
of funds from FEHB plan reserves to PSHB Option reserves based on the
proportion of enrollment attributable to Postal Service employees and
Postal Service annuitants between 2024 and 2025. However, as discussed
above, in large part we expect these funds to shift between plans or
Options within the same carrier, as we expect many PSHB enrollees to
remain with their current FEHB Carrier to the extent possible.\18\
---------------------------------------------------------------------------
\18\ The reserves for FEHB and PSHB are held in the Employees
Health Benefits Fund. Interest on the reserves accrues to the Fund.
---------------------------------------------------------------------------
B. Impacts on PSHB Enrollees
The rule provides clarification on several circumstances concerning
Medicare Part B enrollment requirements and exceptions under the PSHB
Program. The rule clarifies treatment of survivor annuitants as well as
Postal Service annuitants and family members returning to the U.S.
after living abroad as it relates to PSHB Program exception regarding
Medicare Part B enrollment. These clarifications benefit affected
enrollees and family members by providing greater certainty relating to
an affected individual's rights or responsibilities concerning Part B
enrollment as they remain enrolled in the PSHB Program. They also allow
affected enrollees and family members to plan ahead when making
Medicare enrollment decisions upon reaching Medicare eligibility.
This rule also reiterates the policy first included in the interim
final rule at 88 FR 20387 and codified at 5 CFR 890.1608(b)(2) that
individuals who are required under the PSRA to enroll in Medicare Part
B in order to enroll in the PSHB Program will be given the opportunity
to correct a non-enrollment in Part B if OPM discovers the discrepancy
after the individual is enrolled in the PSHB Program. This policy is
intended only to allow for good-faith corrections of inadvertently or
mistakenly missing Part B coverage and should apply to a very small
number of individuals. This rule clarifies that this opportunity is a
one-time benefit, and any subsequent instances where the individual
lacks required Medicare Part B enrollment
[[Page 85025]]
would result in PSHB termination. OPM expects the number of individuals
who face multiple good-faith instances of missing Medicare Part B
enrollment to be negligible, so the impact of limiting this benefit to
one use will be very small.
The right to request reconsideration of PSHB Program eligibility
and enrollment decisions is important to enrollees and family members.
The FEHB Program has a robust reconsideration process, and the PSHB
Program incorporates FEHB Program rights and processes where
appropriate. However, this rulemaking is necessary to clarify
differences due to several unique aspects of the PSHB Program. Without
these clarifying regulations, enrollees could face confusion over which
agency should receive their reconsideration request and how they may
challenge an adverse PSHB determination that is not covered by the
reconsideration process related to FEHB plan eligibility and
enrollment. Most notably, the PSHB Program contains a Medicare Part B
enrollment requirement for many Postal Service annuitants and eligible
family members, which does not exist for annuitants or family members
eligible for enrollment in FEHB plans. OPM will receive information
from various source agencies that have the ability to verify certain
information about an individual upon which OPM can determine PSHB
eligibility and compliance with Medicare Part B requirements.
C. Impacts on Employing Agencies
Under this rule, employing agencies (USPS for Postal Service
employees, or OPM for Postal Service annuitants) will have similar
responsibilities when addressing reconsideration requests for the PSHB
Program as they do for the FEHB Program. With the Medicare Part B
requirement for most Medicare-eligible Postal Service annuitants and
eligible family members in order to be enrolled in or covered under the
PSHB Program, there will be additional verification for affected
Medicare-eligible Postal Service annuitants and family members. In
addition to performing verification checks where appropriate, an
adverse outcome for enrollees and family members may increase the
number of eligibility reconsideration requests made by individuals
seeking coverage.
This rule will also ensure that the government contribution
adjustment for PSHB premiums aligns with the January 1 to December 31
PSHB plan year already set out in the May 6, 2024 Final Rule. Changing
the effective date for the government contribution adjustment to align
with the PSHB plan year will have a slight impact on employing agencies
that are responsible for ensuring amounts withheld from the pay of each
enrolled Postal Service employee and from the annuity of each enrolled
Postal Service annuitant are correctly calculated and align with the
pro-rated period of coverage for which premium is being paid and that
may need to adapt procedures for timing the adjustment. Because the
changes to the plan year and government contribution adjustment date
only apply to the PSHB Program, the overall impact is limited to USPS,
OPM, and DOL.
OPM determined that prioritizing PSHB premium payments over
Medicare Part B late enrollment penalties payments from the PSRHBF will
not result in increased costs for USPS, regardless of the extent to
which Postal Service annuitants take advantage of the PSRA Medicare
Part B Special Enrollment Period. Should the PSRHBF be depleted at any
time and OPM is unable to pay Part B late enrollment penalties out of
the fund, the Part B late enrollment penalties will be paid directly by
USPS' general operating fund, as described in the PSRA. The status of
the PSRHBF will not jeopardize USPS' ability to pay these penalties on
behalf of their Postal Service annuitants.
Carriers will need to account for the Part D opt-outs in
calculating overall premiums, although the effect of opt-outs on
premiums is expected to be insignificant. The impact for enrollees who
retain Part D coverage through the PSHB plan is expected to be
negligible; however, the impact for any Part D-eligible individual who
opts out will be large as those who opt out will pay an identical
premium but receive no prescription drug benefit through PSHB. In the
event that they opt out erroneously or due to not understanding the
negative implications of doing so, the financial penalty could be
severe. Out-of-pocket drug costs can be high, particularly for name
brand drugs, and should an individual later choose to opt back into the
Part D EGWP, they may be faced with a Part D late enrollment penalty
from Medicare. In an effort to ensure that all PSHB enrollees
understand the consequences of opting out of Medicare Part D under the
PSHB plan, OPM and USPS will provide education regarding the
consequences of opting out of Part D coverage and the effect that will
have on their prescription drug benefits. This education will be
provided in addition to a detailed notice that all PSHB enrollees will
receive, as required by CMS regulations. OPM is also finalizing the
rule to provide enrollment flexibility for Medicare Part D-eligible
annuitants and family members who opt out or disenroll from their
plan's Part D EGWP in error. OPM seeks to ensure that any individual
who opts out is doing so based on an informed understanding of the
consequences and that anyone who opts out in error can have their Part
D EGWP enrollment corrected.
Costs
OPM does not anticipate that this regulatory action will result in
significant or quantifiable economic costs. The provisions related to
reserves are strictly distributional and are not expected to result in
any costs. Discussions of the application of the various PSHB Program
Medicare Part B exceptions are clarifications of the requirements
established in the interim final rule. Thus, while costs may be
incurred as a result of specific, individual scenarios, these costs
were addressed in the initial rulemaking and will not be significantly
impacted by the clarifications provided by this rule.
In particular, this rule clarifies the May 6, 2024 final rulemaking
provision related to PSHB enrollees and family members who are
belatedly discovered to be ineligible based on their non-enrollment in
Part B by limiting the exception to a one-time privilege, thus
minimizing the potential costs to agencies. To the extent that these
scenarios result in additional costs, OPM anticipates that these would
be negligible, given the number of eligibility checks, and would be
infeasible to quantify. Because enrollees and family members who use
this one-time privilege may be responsible for a Part B late enrollment
penalty, there remains a financial incentive to enroll in Part B when
first eligible.
Benefits
As with the interim final rule, this final rule is intended to
promote the financial stability and long-term viability of the Postal
Service by implementing the PSHB Program as effectively as possible.
The resulting societal benefits associated with these outcomes were
appropriately discussed in the interim final rule and are not expected
to be significantly impacted by these clarifications.
Distributional Effects
OPM estimates that $4.9 billion of the $23 billion in 2023 FEHB
reserves will be attributable to PSHB enrollees, based on 2023
enrollment, and will therefore be reallocated to PSHB plans in 2025.
Despite the size of funds being reallocated, OPM does not expect these
[[Page 85026]]
transactions to result in an economically significant transfer, as
defined in OMB Circular A-4, for several reasons.
First, although allocated to individual plans, unobligated reserves
ultimately belong to the FEHB and PSHB Programs upon the carrier's
discontinuation of its plan under the FEHB. Program Payments or
transfers from the contingency reserves are regulated, as outlined in 5
CFR 890.503 and in 48 CFR chapter 16, the Federal Employees Health
Benefits Program Acquisition Regulation (FEHBAR) at 48 CFR 1632.770,
and balances are closely monitored by OPM to ensure compliance with
minimum balance standards. Further, if an existing Employee
Organization plan is discontinued and not merged with other Employee
Organizations under the FEHB Program, or if a Comprehensive Medical
Plan is discontinued under the FEHB Program, the reserve balances
credited to those plans are redistributed to the plans continuing under
the FEHB Program, as indicated at 5 U.S.C. 8909(e).
Second, OPM estimates that more than 97% of the reserve fund
transfers will be attributed to FEHB Carriers that plan to offer PSHB
plans. In these cases, reserve funds will remain with the carrier and
will be reallocated from FEHB plans to the PSHB plans, as outlined in
the proposed methodology (scenarios found in Sec. 1615(c)(5)(i)-(iii).
Thus, to the degree that reserve funds afford any monetary benefit, the
aggregated benefit afforded to the carrier, across the entire portfolio
of plans offered, would remain the same.
Third, OPM estimates that less than 3% of the funds transferred
will be attributed to FEHB Carriers that do not plan to offer PSHB
plans. In these cases, a portion of the reserve funds for each FEHB
plan will be redistributed across the PSHB Options based on the
percentage of 2024 premiums attributable to Postal enrollees, as
described in the proposed methodology (scenario found in Sec.
1615(c)(5)(iv)). Based on 2023 enrollments and anticipated carrier
participation in the PSHB Program, OPM estimates that the total amount
of these between-carrier transfers will be approximately $100M, well
below the $200M threshold for economic significance.
Alternatives
This rule provides that individuals eligible for Medicare Part D
may opt out of group enrollment or disenroll from the Part D EGWP
associated with their PSHB plan. As a result of opting out or
disenrolling from their PSHB plan's Part D EGWP, the individual will
not receive prescription drug benefits under the Part D EGWP or under
the PSHB plan. OPM considered this policy and several alternatives
extensively and ultimately decided on the policy as written considering
enrollee and family member interests, the PSRA Medicare integration
requirement, the cost saving intent of the PSRA, and consistency with
Medicare regulations.
One alternative approach would have been to prohibit Part D-
eligible individuals from opting out of the Part D EGWP associated with
their PSHB plan. Construing Medicare Part D as an eligibility
requirement would promote the goals of the PSRA by establishing
Program-wide enrollment in Part D, consistent with Congressional intent
to promote access to high-quality drug coverage and savings to the PSHB
Program. This approach combined with the group enrollment feature of
Medicare EGWPs would limit inadvertent failure to enroll or inadvertent
disenrollment from Medicare Part D and provide administrative
simplicity for OPM and carriers. Making Medicare Part D an eligibility
requirement, however, would create a burden for those who may have an
alternative Part D plan or for those who cannot access Part D benefits,
such as individuals living abroad. It would require a host of
exceptions to a Part D enrollment requirement. This approach would also
require carriers to communicate with OPM and Postal Service annuitants
and family members to ensure that they are aware that disenrolling or
failing to enroll in Part D would not only result in loss of access to
prescription drug coverage but also result in loss of PSHB coverage.
For Postal Service annuitants, PSHB coverage in retirement cannot be
reinstated once it is terminated. As established in the PSRA, the
requirement to provide Medicare Part D through a PDP EGWP rests with
the carrier. There is no equivalent requirement placed on a Postal
Service annuitant or their family member to enroll in Medicare Part D,
which is a voluntary program. The PSRA does not expressly require
Postal Service annuitants to enroll in Part D. While OPM identified
several benefits of this approach, OPM has declined to require
enrollment in Part D as an eligibility requirement as it is not the
most reasonable interpretation of the statute.
Another alternative OPM considered was to allow Part D-eligible
individuals to opt out of the Part D EGWP and receive prescription drug
benefits through their PSHB plan. This approach is consistent with the
current structure in the FEHB program, which does not require carriers
to offer Medicare Part D EGWPs. Annuitants who are not Postal Service
annuitants and who are enrolled in FEHB plans receive comprehensive
drug coverage through their FEHB plan without a need to enroll in a
Medicare Part D plan. However, OPM determined this was not the best
interpretation of the statute in light of Congressional intent.
Congress expressly mandated the integration of Medicare Part D in the
PSHB Program to coordinate benefits between PSHB plans and Medicare
Part D prescription drug coverage. Congress intended to achieve cost
savings to USPS through this coordination in part by providing
prescription drug coverage to Postal Service annuitants and their
family members through Medicare Part D. OPM finds that any alternative
approach that would provide individuals with the ability to opt out of
or otherwise decline Part D coverage under the PSHB plan and then
receive PSHB prescription drug benefits would not be the most efficient
approach to promote these cost-savings goals.
As a result, OPM considers the policy included in this rulemaking
to be the most consistent with the PSRA statutory language and
Congressional intent. This proposal provides Postal Service annuitants
and their family members with flexibility for enrollment in Medicare
Part D while creating incentives to enroll in the Medicare Part D EGWP
offered by their carrier, which are expected to lead to cost savings
for the program. This proposal is also consistent with the voluntary
nature of the Medicare Part D program. OPM views this approach to be
the most customer centric because it avoids the potential for loss of
PSHB eligibility for failing to enroll in Medicare Part D. This
approach strikes a balance between Congress' intent to save costs under
the PSHB Program and the prescription drug coverage needs of Postal
Service annuitants and their family members.
Treatment of survivor annuitants under the Program as it relates to
the requirement for Medicare Part B enrollment is another area where
OPM considered alternative approaches. OPM considered whether a
Medicare-eligible family member of a Postal Service annuitant could
lose their exception to the Part B requirement upon the death of that
Postal Service annuitant in a case where the family member does not
have their own Part B exception. The rationale for this approach is
that the family member's exception is derived from the Postal Service
annuitant's status, and with the Postal Service annuitant no longer on
the enrollment there is no Part B exception to apply to the family
member. However, this
[[Page 85027]]
alternative approach was deemed inequitable for the family member who
relied on their Postal Service annuitant's exception in making
decisions on their own Medicare enrollment options. To provide the most
consumer-friendly approach, OPM decided to establish the policy in this
rulemaking that a family member of a Postal Service annuitant will
receive that Postal Service annuitant's Part B exception permanently so
that, if they become a survivor annuitant who was entitled to a Part B
exception due to the status of their former Postal Service annuitant,
that exception remains with them going forward.
Administrative Procedure Act
OPM finds good cause to make this final rule effective upon
publication. See 5 U.S.C. 553(d)(3). As discussed more fully in the
NPRM, OPM is balancing the interests of carriers and Postal Service
employees, Postal Service annuitants, and their eligible family members
affected by this rulemaking. OPM worked with carriers on their plan
benefit proposals, and individuals who will be enrolled in the PSHB
Program as of January 1, 2025, have begun receiving information
regarding the transition. The provisions in this final rule are time-
sensitive, as they will address the remaining issues needed to finalize
the Program. For example, Postal Service Medicare covered annuitants
need information about their rights so that they can make informed
decisions about prescription drug coverage during the transitional Open
Season.
Generally, the delay in the effective date of a final rule provides
regulated parties with some time to make adjustments to come into
compliance with the new regulation. For this rule, the requirements are
all prospective in the sense that the PSHB Program will not be fully
operational until January 1, 2025. Nonetheless, carriers have long been
developing their proposals and plans for coverage and will benefit from
this rule being finalized immediately. Similarly, the individuals
eligible for coverage under the PSHB Program will not need to take
action in response to the finalization of the rule but will benefit
from the rule being final as the transitional Open Season begins.
Regulatory Flexibility Act
The Acting Director of OPM certifies that this rule will not have a
significant economic impact on a substantial number of small entities.
Regulatory Review
OPM has examined the impact of this rule as required by Executive
Orders 13563, 12866, and 14094, which 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, distributive impacts, and equity). The
Office of Management and Budget (OMB) has designated this rulemaking as
a ``significant regulatory action'' under section 3(f) of Executive
Order 12866, as supplemented by Executive Orders 13563 and 14094.
Severability
If any of the provisions of this final rule is held to be invalid
or unenforceable by its terms, or as applied to any person or
circumstance, it shall be severable from the remaining sections and
shall not affect the remainder thereof or the application of the
provision to other persons not similarly situated or to other
dissimilar circumstances. For example, if a court were to invalidate
any portions of this final rule regarding non-enrollment in Medicare
Part B, the other portions of the rule--including the provisions
regarding non-enrollment in Medicare Part D--would independently remain
workable and valuable. Similarly, the portions of this rule providing
procedures for challenging enrollment decisions can and would function
independently of any of the other portions of this rule.
E.O. 13132, Federalism
OPM examined this rule in accordance with Executive Order 13132,
Federalism, and determined that it will not have any negative impact on
the rights, roles, and responsibilities of State, local, or Tribal
governments.
E.O. 12988, Civil Justice Reform
This rule meets the applicable standard set forth in Executive
Order 12988, Civil Justice Reform.
Unfunded Mandates Reform Act of 1995
The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538)
(UMRA) requires Federal agencies to assess the effects of their
discretionary regulatory actions. Section 202 of the Unfunded Mandates
Reform Act of 1995 (UMRA) requires that agencies assess anticipated
costs and benefits before issuing any rule that would impose spending
costs on State, local, or Tribal governments in the aggregate, or on
the private sector, in any 1 year of $100 million in 1995 dollars,
updated annually for inflation. That threshold is currently,
approximately $183 million. Although we have not been able to quantify
all costs, this rule does not contain mandates that would impose
spending costs on State, local, and Tribal governments or the private
sector in excess of the threshold. Therefore, no actions were deemed
necessary under the provisions of the Unfunded Mandates Reform Act of
1995.
Congressional Review Act
The Administrator of the Office of Information and Regulatory
Affairs has determined that this rule does not meet the criteria
specified in 5 U.S.C. 804(2).
Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35)
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 OMB
Control Number.
The information collection for form SF 2809 (OMB Control Number
3206-0160) is currently approved with an estimated public burden of
9,000 hours. OPM notes that there is a corresponding health benefits
election form for retirees, OPM 2809. The information collection
request (OMB control number 3206-0141) associated with that information
collection is currently approved with an estimated public burden of
11,667 hours. A list of routine uses associated with these forms can be
found in the Privacy Act System of Records Notice (SORN), OPM/Central-
23 FEHB Program Enrollment Records, available at 89 FR 72902 (September
6, 2024) at <a href="https://www.federalregister.gov/d/2024-20061">https://www.federalregister.gov/d/2024-20061</a>.
On May 6, 2024, OPM published ``Submission for Review: Revision and
Consolidation of Two Existing Information Collections Related to Health
Benefits Election Forms'' (89 FR 37269). This publication provided a
60-day notice for an extension of this information collection. OPM
proposed changes to the SF 2809 and the OPM 2809 for clarity, ease of
use, and implementation of the PSHB Program. OPM provided copies of the
revised drafts of the SF 2809 and OPM 2809 forms for review in the
docket at <a href="https://www.regulations.gov/docket/OPM-2024-0011/document">https://www.regulations.gov/docket/OPM-2024-0011/document</a>.
OPM is not consolidating the SF 2809 and the OPM 2809 into a single
form; however, we are proposing to manage the two forms under a single
information collection, OMB Control No. 3206-0160, going forward.
During the 60-day comment period, OPM received fourteen
[[Page 85028]]
comments, including six unique comments and one comment representing
eight submissions, from agencies regarding aspects of the SF 2809.
One commenter suggested that the SF 2809 form should allow one to
list addresses for minor children who live at a different location than
enrollee. Another commenter noted that the SF 2809 form should allow an
option to remove a family member. We agree with these recommendations
and are amending the SF 2809 accordingly. Three commenters suggested
changes to the formatting of the paper form SF 2809. We are declining
to make these changes because most enrollees will use electronic
systems to enroll. There were also comments about the eOPF that were
beyond the scope of this information collection request. OPM made a
technical correction indicating that common law marriage must be
initiated in any ``state, the District of Columbia, or other
jurisdiction'' instead of ``state'' that recognizes such marriages; the
technical correction accounts for common law marriages in the District
of Columbia. OPM published a 30-day notice with a request for comments
on September 24, 2024, at 89 FR 77899.
List of Subjects in Title 5 CFR Part 890
Administrative practice and procedure, Government employees, Health
facilities, Health insurance, Health professions, Postal Service
employees, Reporting and recordkeeping requirements, Retirement.
Office of Personnel Management.
Kayyonne Marston,
Federal Register Liaison.
Accordingly, OPM amends 5 CFR part 890 as follows:
PART 890--FEDERAL EMPLOYEES HEALTH BENEFITS PROGRAM
0
1. The authority citation for part 890 continues 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. 890.107 by adding paragraph (f) to read as follows:
Sec. 890.107 Court review.
* * * * *
(f) A suit to compel enrollment or for equitable relief from an
adverse enrollment action founded on 5 U.S.C. chapter 89 that is based
on information received by OPM pursuant to an agreement with a source
agency as defined at Sec. 890.1602, to determine whether Postal
Service annuitants or family members of such annuitants satisfy the
enrollment requirements set forth in 5 U.S.C. 8903c, may not be brought
later than December 31 of the 3rd year after the year in which the
enrollment action was effectuated, and will be limited to the record
that was before OPM when it effectuated the enrollment action.
Subpart P--Postal Service Health Benefits Program
0
3. Amend Sec. 890.1602 by adding in alphabetical order definitions for
``Reconsideration'' and ``Source agency'' to paragraph (c) to read as
follows:
Sec. 890.1602 Definitions and deemed references.
* * * * *
(c) * * *
Reconsideration means the final level of administrative review of
an initial decision by an employing office or OPM, as applicable.
Source agency means an agency that periodically provides
information or data to OPM pursuant to an agreement under Sec.
890.1612.
* * * * *
0
4. Amend Sec. 890.1604, by adding paragraphs (c) and (d)(3) and
revising paragraph (f) to read as follows:
Sec. 890.1604 Medicare enrollment requirement for certain Postal
Service annuitants and eligible family members.
* * * * *
(c) Survivor annuitant. (1) A Postal Service annuitant's member of
family who is an annuitant as defined in 5 U.S.C. 8901(3)(B) and who is
entitled to Medicare Part A must be enrolled in Medicare Part B to
continue enrollment in a health benefits plan under this subpart,
except as otherwise provided by paragraph (d)(3) of this section;
(2) A Postal Service employee's member of family who is an
annuitant as defined in 5 U.S.C. 8901(3)(B) and who is entitled to
Medicare Part A, must be enrolled in Medicare Part B to continue
enrollment in a health benefits plan under this subpart, except as
provided in paragraphs (d)(3)(ii) through (iv) of this section.
* * * * *
(d) * * *
(3) To a survivor annuitant, as described in paragraph (c) of this
section, who:
(i) At the time of becoming a survivor annuitant the Postal Service
annuitant was subject to an exception under paragraph (d)(1) of this
section;
(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;
(iii) 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 (e)(2) of this
section; or
(iv) Is eligible for health services from the Indian Health
Service, subject to the documentation requirements in paragraph (e)(3)
of this section.
* * * * *
(f) Notification of non-enrollment in Medicare Part B. A Postal
Service Medicare covered annuitant, a Medicare covered member of
family, or a survivor annuitant, as described in paragraph (c) of this
section, who is required to be enrolled in Medicare Part B must
promptly notify OPM or 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).
* * * * *
0
5. Amend Sec. 890.1605 by revising paragraph (c) to read as follows:
Sec. 890.1605 Enrollment in the initial contract year.
* * * * *
(c) Automatic enrollment. Each Postal Service employee or Postal
Service annuitant who is enrolled in an FEHB plan on December 31, 2024,
and does not make an enrollment action during the transitional Open
Season under paragraph (b) of this section, will be automatically
enrolled in the PSHB Program as follows:
(1) Into corresponding plan. Individuals enrolled in a carrier's
2024 FEHB plan where the carrier offers the same plan in 2025 in FEHB
and offers a 2025 PSHB plan with at least one
[[Page 85029]]
option that has equivalent benefits and cost sharing and in the same
geographic area as the 2025 FEHB plan, will be enrolled in that 2025
PSHB plan and into an option as follows:
(i) Equivalent option. Individuals enrolled in a carrier's 2024
FEHB option where the carrier offers that option in 2025 in FEHB and
also offers a 2025 PSHB option with equivalent benefits and cost
sharing as the 2025 FEHB option, as determined by OPM, will be
automatically enrolled into that 2025 PSHB option; or
(ii) No equivalent option. Individuals enrolled in a carrier's 2024
FEHB option where the carrier does not offer a 2025 PSHB option that
meets the criteria in (1)(i), will be automatically enrolled into the
lowest-cost option of the 2025 PSHB plan, that is not a High Deductible
Health Plan (HDHP) and does not charge an association or membership
fee, except that if the only option is an HDHP, then the individual
will be enrolled in that HDHP option.
(2) Into a 2025 PSHB plan where the carrier offers no 2025 FEHB
plan. Individuals enrolled in a carrier's 2024 FEHB plan where the
carrier offers no 2025 FEHB plan and offers a 2025 PSHB plan with at
least one option with similar benefits and cost sharing and in the same
geographic area as the 2024 FEHB plan, as determined by OPM, will be
enrolled in that 2025 PSHB plan and into an option as follows:
(i) Similar option. Individuals enrolled in a carrier's 2024 FEHB
option where the carrier offers a 2025 PSHB option with similar
benefits and cost sharing as the 2024 FEHB option, as determined by
OPM, will be automatically enrolled into that 2025 PSHB option; or
(ii) No similar option. Individuals enrolled in a carrier's 2024
FEHB option where the carrier does not offer a 2025 PSHB option that
meets the criteria in paragraph (c)(2)(i) of this section, will be
automatically enrolled into the lowest-cost option of the 2025 PSHB
plan, or in the case where the 2025 PSHB plan has two or more options,
into the lowest-cost option that is not a High Deductible Health Plan
(HDHP) and does not charge an association or membership fee.
(3) Into different plan. Individuals enrolled in a carrier's 2024
FEHB plan where paragraphs (c)(1) and (2) of this section do not apply
will be enrolled in the lowest-cost nationwide PSHB option, consistent
with Sec. 890.301(n).
(4) Same enrollment type. Individuals automatically enrolled under
this section will be automatically enrolled into the same enrollment
type as the individual's 2024 enrollment type.
* * * * *
0
6. Amend Sec. 890.1606 by revising paragraph (d) to read as follows:
Sec. 890.1606 Opportunities to enroll, change enrollment, or
reenroll; effective dates.
* * * * *
(d) Initial decisions and reconsiderations of PSHB eligibility or
enrollment will be made pursuant to Sec. 890.1607.
* * * * *
0
7. Add Sec. 890.1607 to read as follows:
Sec. 890.1607 Initial decision and reconsideration.
(a) Who may file. An individual may request the employing agency or
OPM, as applicable, to reconsider the employing office's or OPM's
initial decision denying eligibility for, or enrollment in, or coverage
under, the PSHB Program. Individuals subject to Sec. 890.1112 are not
entitled to reconsideration as used in this subpart.
(b) Initial decision. An employing office's or OPM's initial
decision must be in writing and state the right to an independent level
of review (reconsideration).
(1) Except as otherwise provided in this subpart, employing offices
are responsible for initial decisions concerning PSHB eligibility for
Postal Service employees or Postal Service annuitants.
(2) OPM is responsible for initial decisions concerning:
(i) Verification that an individual is an eligible member of family
under Sec. 890.302;
(ii) Postal Service annuitants or their family members who are not
required to enroll in VA's system of patient enrollment referred to in
38 U.S.C. 1705(a), and who must provide documentation from the VA under
Sec. 890.1604(d)(2) indicating they satisfy the requirements for an
exception described in Sec. 890.1604(c)(1)(iv) or (c)(2)(iii); and
(iii) Postal Service annuitants or their family members who must
provide documentation from the Indian Health Service under Sec.
890.1604(d)(3) indicating they satisfy the requirements for an
exception described in Sec. 890.1604(c)(1)(v) or (c)(2)(iv).
(3) OPM is responsible for initial decisions regarding enrollment
actions made based on information received from source agencies with
which OPM has an information sharing agreement established pursuant to
Sec. 890.1612. An initial decision under this paragraph will be issued
only after the notice process under Sec. 890.1612 is completed.
(c) Reconsideration. (1) A request for reconsideration must be made
in writing, must include the claimant's name, address, date of birth,
Social Security number or other unique identifier, name of the carrier,
reason(s) for the request, documentary evidence in support of the
request, if any, and, if applicable, retirement claim number.
(2) The reconsideration review must be an independent review
designated at or above the level at which the initial decision was
rendered.
(d) Time limit. A request for reconsideration of an initial
decision must be filed with the employing agency or OPM, as applicable,
within 30 calendar days from the date of the written decision stating
the right to a reconsideration. The time limit on filing may be
extended, at the discretion of the employing agency or OPM, when the
individual shows that they were not notified of the time limit and were
not otherwise aware of it, demonstrates a good faith effort to obtain
the documentation as described under paragraph (b)(2)(ii) or (iii) of
this section, or that they were prevented by circumstances beyond their
control from making the request within the time limit. The employing
agency's or OPM's decision in response to a request for reconsideration
of an employing office's initial decision is a final decision as
described in paragraph (e) of this section.
Final decision. After reconsideration, the employing agency or OPM,
as applicable, must issue a final decision within 30 days of the
request for reconsideration, which must be in writing and must fully
set forth the findings and conclusions.
0
8. Amend Sec. 890.1608 by revising paragraph (a), adding paragraph (b)
introductory text, revising paragraphs (b)(2) and (5), and adding
paragraphs (b)(6) through (9) to read as follows:
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.
(1) Coverage under an FEHB plan will remain available for an
eligible family member who is or becomes covered as a member of family
of an FEHB plan enrollee who is not eligible for a PSHB plan pursuant
to Sec. 890.1603(a)(1) or (2).
[[Page 85030]]
(2) Coverage as a family member under an FEHB plan will remain
available for a Postal Service employee or Postal Service annuitant who
is or becomes covered under their family member's FEHB enrollment. A
Postal Service annuitant's or Postal Service employee's family member
who meets the eligibility requirements for their own enrollment in an
FEHB plan will remain eligible to enroll in an FEHB plan.
(3) 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) * * * An individual who is required to be enrolled in Medicare
Part B and is not enrolled in Medicare Part B will not be disenrolled
or removed from PSHB coverage immediately and will be given one
opportunity to remain enrolled in or covered by PSHB if they enroll or
reenroll in Medicare Part B during their next available Medicare
enrollment period, which may be the next Medicare General Enrollment
Period, except that an individual who was excepted from the Medicare
Part B requirement pursuant to Sec. 890.1604(d)(1)(iii) or (d)(2)(ii)
must enroll not later than the end of the Medicare General Enrollment
Period beginning January 1 of the following calendar year. Failure to
enroll or reenroll in Medicare Part B at the next enrollment period may
result in disenrollment from PSHB or removal from coverage under a PSHB
enrollment. If disenrolled, a Postal Service annuitant will not be
permitted to reenroll in PSHB, as described in paragraph (b)(5) of this
section, and a family member who is removed from coverage under a PSHB
enrollment, may have their PSHB coverage reinstated only as described
in paragraph (b)(9) of this section.
* * * * *
(2) A Postal Service Medicare covered annuitant will not be
disenrolled from PSHB 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.
* * * * *
(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 their covered family members to a
31-day temporary extension of coverage and the right of conversion
under Sec. 890.401, except as provided at paragraph (b)(5)(ii) of this
section.
(i) A Postal Service annuitant will have no further opportunity to
reenroll in a PSHB plan. Disenrollment of a Postal Service annuitant
will also result in the removal of covered family members from PSHB
coverage.
(ii) Disenrollment or removal from coverage under an enrollment
will be prospective in all cases except where fraud or intentional
misrepresentation of material fact is found, in which case the
individual's coverage will be terminated retroactively, as applicable,
and no right to a 31-day temporary extension of coverage or to
conversion under Sec. 890.401 will be available.
(iii) Disenrollment or removal under this section will occur only
after a notice process under Sec. 890.1612, if applicable, is
completed and an initial decision to disenroll or remove, subject to
reconsideration under Sec. 890.1607(b), is issued.
(6) An individual who is disenrolled from Medicare Part B, where
the individual is required to be enrolled in Medicare Part B and does
not have an exception under this subpart, will be issued an initial
decision disenrolling them from PSHB or removing them from coverage
under a PSHB enrollment at the time OPM becomes aware of the Medicare
disenrollment. Individuals disenrolled or removed from PSHB coverage
will be entitled to a 31-day temporary extension of coverage and rights
to conversion.
(7) Within 60 days of OPM's initial decision, a Postal Service
Medicare covered annuitant or Medicare covered member of family, as
applicable, may request reconsideration of OPM's initial decision to
disenroll or remove the individual from PSHB coverage. OPM will notify
the carrier when a request for reconsideration of the decision to
disenroll or remove the individual from the enrollment is made. The
time limit for filing may be extended as noted in Sec. 890.1607.
(8) If the Postal Service Medicare covered annuitant provides
acceptable proof of PSHB eligibility subsequent to disenrollment which
renders the disenrollment inappropriate, the enrollment shall be
reinstated retroactively so that there is no gap in enrollment, as
appropriate. A Postal Service Medicare covered annuitant's PSHB
enrollment cannot be reinstated after disenrollment from a PSHB plan
based on failure to enroll in, disenrolling from, or being disenrolled
from Medicare Part B, except that a one-time opportunity as set forth
at Sec. 890.1608(b) may be available if the Postal Service annuitant
has not previously invoked and used it.
(9) If the Postal Service Medicare covered member of family, who is
required to be enrolled in Medicare Part B and is removed from a Postal
Service Medicare covered annuitant's PSHB enrollment because the family
member failed to enroll in, disenrolls from, or is disenrolled from
Medicare Part B, the family member's PSHB coverage may be reinstated.
Reinstatement of the family member's PSHB coverage will be permitted
only if the Postal Service Medicare covered annuitant's PSHB enrollment
continues, and only if proof of the family member's Medicare Part B
enrollment which renders the removal inappropriate, is provided by the
Postal Service Medicare covered annuitant or Medicare covered member of
family, as applicable. The family member's PSHB coverage will be
reinstated upon request by the Postal Service Medicare covered
annuitant to reinstate the family member's PSHB coverage subsequent to
removal, at the Postal Service Medicare covered annuitant's option, as
follows:
(i) Prospectively, within 60 days of the Medicare covered family
member gaining coverage under Medicare Part B, or
(ii) Retroactively to the date of termination of PSHB coverage, so
that there is no gap in coverage, provided that the proof demonstrates
the family member was continuously enrolled in Medicare Part B since
that date and subsequent to removal, as appropriate.
* * * * *
0
9. Amend Sec. 890.1612 by adding paragraphs (f) and (g) to read as
follows:
Sec. 890.1612 Information sharing.
* * * * *
(f) If a source agency has provided information or data, regarding
a Postal Service Medicare covered annuitant or Medicare covered member
of family, which establishes a basis that the individual may be
ineligible for PSHB enrollment or coverage, OPM will provide the
individual with written notice that will contain at a minimum:
(1) An explanation of the PSHB enrollment requirements and
exceptions described in Sec. 890.1604 and the specific information or
data provided to OPM from the source agency that was the basis for the
notice;
(2) The source agency's contact information where the individual
may ask questions or contest the accuracy of the information or data on
which OPM based the notice;
(3) An explanation of the required process and timeframe(s) for
providing OPM with evidence that the individual
[[Page 85031]]
is engaged in a dispute with the source agency identified in the notice
for the purposes of seeking the source agency's correction of the
information or data, affecting the individual's PSHB eligibility,
provided to OPM pursuant to the agreements described in this section;
(4) That the individual will remain enrolled or covered under PSHB
while the individual is engaged in disputing the information or data
with the source agency, as described in paragraph (f)(2) of this
section;
(5) That the individual will be disenrolled or removed from PSHB,
as described in Sec. 890.1608 and subject to reconsideration, within
60 days of the date of the notice if the individual does not provide
sufficient evidence, in the discretion of OPM, as described in
paragraph (f)(3) of this section; and
(6) That the individual will be disenrolled or removed from PSHB,
as described in Sec. 890.1608 and subject to reconsideration, within
60 days of the notice, notwithstanding evidence of a dispute, if the
information or data OPM receives from the source agency continues to
provide no basis for OPM to establish that the individual satisfies
PSHB enrollment requirements.
(g) OPM will issue an initial decision in accordance with Sec.
890.1607(b)(3). If an individual will be disenrolled or removed from
PSHB based on the information or data from the source agency, in
paragraph (f) of this section, the individual will be notified in
writing that the disenrollment or removal, as applicable, is subject to
reconsideration pursuant to Sec. 890.1607, and that such
reconsideration is limited to a review of the source agency's data or
information, received pursuant to an agreement under this section or 5
U.S.C. 8903c(e)(3)(C) that was before OPM at the time it effectuated
the disenrollment or removal action.
0
10. Amend Sec. 890.1613 by revising the section heading and paragraphs
(a), (c), and (e) to read as follows:
Sec. 890.1613 Postal Service contract year beginning date, Medicare
late enrollment penalty, calculations for the Postal Service Retiree
Health Benefits Fund, and clarification of statutory terms.
(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. For purposes of this subpart,
the subscription charge and the Government contribution under 5 U.S.C.
8906(b) will begin on January 1 of each year for Postal Service
employees and Postal Service annuitants.
* * * * *
(c) Medicare late enrollment penalty. Upon request by the Postal
Service, and only until the Postal Service Retiree Health Benefits Fund
established under 5 U.S.C. 8909a is depleted, OPM will pay out of such
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). If at any time the PSRHBF is depleted,
USPS shall pay late enrollment penalties out of its funds established
under 39 U.S.C. 2003. In making such late enrollment penalty payments,
OPM, as administrator of the Fund under 5 U.S.C. 8909a(a), will
prioritize the payment of health benefit premiums for individuals
described in 5 U.S.C. 8906(g)(2)(A), over the late enrollment
penalties.
* * * * *
(e) Clarification of statutory terms. (1) OPM has determined that
``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).
(2) The computations for post-retirement health obligations
computed under 39 U.S.C. 3654(b) shall be performed using an aggregate
entry-age normal cost method described in 5 U.S.C. 8331(17) and in
accordance with 8348(h).
(3) In accordance with 5 U.S.C. 8348(h), for purposes of computing
the amounts described in 39 U.S.C. 3654(b), this includes:
(i) Current annuitants as described in 5 U.S.C. 8909a(e)(1)(A)
means individuals who are Postal Service annuitants on September 30 of
the relevant reporting year described in 5 U.S.C. 8909a(d); and
(ii) Current employees as described in 5 U.S.C. 8909a(e)(1)(B)
means individuals who are Postal Service employees on September 30 of
that year.
0
11. Amend Sec. 890.1614 by revising paragraph (a) to read as follows:
Sec. 890.1614 Other administrative provisions.
(a) Correction of errors. (1) Except as otherwise provided in this
section, the employing office or OPM may make prospective or
retroactive corrections of administrative errors at any time.
Retroactive corrections may not apply retroactively beyond the initial
contract year.
(2) OPM may order or make, as applicable, a correction of an
administrative error upon a showing satisfactory to OPM that it would
be against equity and good conscience not to do so.
(3) OPM may make retroactive correction of enrollee enrollment code
errors if the enrollee reports the error by the end of the pay period
following the one in which they received the first written
documentation (i.e., pay statement or enrollment change confirmation)
indicating the error.
(4) OPM may order the termination of an enrollment in any
comprehensive medical plan described in 5 U.S.C. 8903(4) and permit the
individual to enroll in another PSHB plan for purposes of this subpart,
upon a showing satisfactory to OPM that the furnishing of adequate
medical care is jeopardized by a seriously impaired relationship
between a patient and the comprehensive medical plan's affiliated
health care providers.
(5) Retroactive corrections are subject to withholdings and
contributions under the provisions of Sec. Sec. 890.502 and 890.1613.
* * * * *
0
12. Add Sec. Sec. 890.1615 and 890.1616 to read as follows:
Sec. 890.1615 Crediting separate reserves for PSHB.
(a) Definitions. For purposes of this section concerning crediting
separate reserves from FEHB Options to PSHB Options, and for these
purposes only, the following definitions apply:
2024 FEHB Option premium means, for a 2024 FEHB Option, the 2024
premium attributable to both Postal Service and non-Postal Service
enrollees.
2024 Postal Service premium means, for a 2024 FEHB Option, the 2024
premium attributable to Postal Service employees and Postal Service
annuitants as defined under 5 U.S.C. 8903c(a).
Amounts available means:
(i) With respect to experience-rated 2024 FEHB Options, the sum of
the balances in the Option's Contingency Reserve Account and Letter of
Credit Account less the Runout as of December 31, 2024; and
(ii) With respect to community-rated 2024 FEHB Options, the
Option's Contingency Reserve Account balance as of December 31, 2024.
Corresponding PSHB option means a 2025 PSHB Option that is in the
same geographic area and has equivalent benefits and cost-sharing as a
2025 FEHB Option, and that 2025 FEHB Option was also offered in 2024 by
the same carrier.
Option means a level of benefits offered by a carrier to self only,
self plus one, and self and family enrollees in a
[[Page 85032]]
specific geographic area, with a unique set of premiums.
Plan means all Options offered by a carrier within a defined
geographic area under a single contract.
Runout means the amount estimated by OPM, as of December 31, 2024,
needed to pay claims and expenses incurred but not paid for periods on
or before December 31, 2024, for an experience-rated FEHB Option,
considering any income attributable to periods on or before, but not
yet received by, December 31, 2024.
(b) Reserve credits. As soon as practicable on or after January 1,
2025, OPM will credit each PSHB Option's reserves according to the
method described in paragraph (c) of this section.
(c) Reserve credit methodology. OPM will determine the Reserve
credit for each 2024 FEHB Option and allocate it to the PSHB.
(1) OPM will determine the 2024 Postal Service premium by
multiplying a 2024 FEHB Option's self only, self plus one, and self and
family 2024 premiums by the number of Postal Service enrollments of
that Option in each enrollment type and taking the sum of these three
amounts.
(2) OPM will determine the 2024 FEHB Option premium by multiplying
each 2024 FEHB Option's self only, self plus one, and self and family
premiums by the number of total enrollments (inclusive of both Postal
Service and non-Postal Service enrollments) in each enrollment type for
that Option and taking the sum of these three amounts. OPM will use its
March 2024 enrollment reports to determine the total enrollments.
(3) OPM will calculate the Postal Service Percentage for each 2024
FEHB Option by dividing the 2024 Postal Service Premium by 2024 FEHB
Option Premium.
(4) OPM will calculate the Reserve Credit by multiplying the Postal
Service Percentage for each 2024 FEHB Option by the Amounts Available
for that Option.
(5) OPM will reallocate the Reserve Credit for each 2024 FEHB
Option into a PSHB Contingency Reserves and Letter of Credit Account,
as applicable, as follows:
(i) If a carrier offers an FEHB Plan with one, two, or three
Options in 2024 and offers the same number of Corresponding PSHB
Options in 2025, the Reserve Credits for those Options will be
allocated to the Corresponding PSHB Options' reserves.
(ii) If a carrier offers an FEHB Plan with two or three Options in
2024 and offers only one Corresponding PSHB Option in 2025, the Reserve
Credits attributable to all the 2024 FEHB Plan's Options will be
allocated to that Corresponding PSHB Option's reserve.
(iii) If a carrier offers an FEHB Plan with three Options in 2024
and offers only two Corresponding PSHB Options in 2025, the Reserve
Credits attributable to the two FEHB Options that have Corresponding
PSHB Options will be allocated to those two Corresponding PSHB Options'
reserves. The Reserve Credit from the third FEHB Option (that does not
have a Corresponding PSHB Option) will be allocated to one of the two
Corresponding PSHB Plan Options that has the lowest self only premium
and is not a High Deductible Health Plan (HDHP).
(iv) If a carrier offers an FEHB Plan in 2024 and offers no FEHB
Plan in 2025, but offers at least one 2025 PSHB Option with similar
benefits and cost sharing and in the same geographic area as the
carrier's 2024 FEHB Plan, as determined by OPM, the Reserve Credit(s)
attributable to that FEHB Plan will be credited to the reserves of the
carrier's 2025 PSHB Options as described in paragraphs (c)(5)(i)
through (iii) of this section as if the 2025 PSHB Option(s) were a
Corresponding PSHB Option.
(v) If a carrier offers an FEHB Plan in 2024, and offers that FEHB
Plan in 2025, but offers no Corresponding PSHB Options for that 2025
FEHB Plan, the Reserve Credit(s) attributable to that FEHB Plan will be
credited to the reserves of the PSHB Options offered in 2025,
proportionately, consistent with 5 U.S.C. 8903c(j)(2) where the
subscription charges paid are the 2024 Postal Service Premium.
(vi) If a carrier offers a 2025 PSHB Option for which no 2024
Postal Service Premium is attributable, then that 2025 PSHB Option will
receive no Reserve Credit.
Sec. 890.1616 Medicare Part D.
(a) Carrier requirement to offer Medicare Part D prescription drug
benefits. (1) A carrier that offers a PSHB plan must provide
prescription drug benefits to any Postal Service annuitant and member
of family of such annuitant who is a Part D-eligible individual (as
defined in section 1860D-1(a)(3)(A) of the Social Security Act) through
a Medicare Part D EGWP as described as employer-based retiree health
coverage under section 1860D-22(b), (c)(1), and (3)(A) of such Act .
(2) A carrier must provide Medicare Part D coverage through a
prescription drug plan (PDP), as defined in section 1860D-41(a)(14) of
such Act, or through contracts between the PSHB plan and a PDP sponsor,
as defined in section 1860D-41(a)(13) of such Act, of such a
prescription drug plan.
(3) A carrier may, in addition to offering a PDP required under
paragraph (a)(2) of this section and subject to OPM's approval, offer a
Medicare Advantage plan with prescription drug coverage (MAPD), as
defined in section 1860D-1(a)(3)(C) of such Act.
(b) Prescription drug coverage under a PSHB plan through Medicare
Part D. A Postal Service annuitant and a member of family of such
annuitant who is a Part D-eligible individual must be enrolled in a
PSHB plan's Part D EGWP in order to receive prescription drug coverage
under the PSHB plan. The prescription drug benefit is not covered under
a PSHB plan for a Part D-eligible individual who is not enrolled in the
PSHB plan's Part D EGWP.
(1) Prescription Drug Coverage for Medicare Part D-eligible
annuitants and members of family residing outside of the United States.
A carrier will not group enroll, as described in paragraph (d) of this
section, a Medicare Part D-eligible Postal Service annuitant or a
member of family of such annuitant who resides outside of 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) into the Medicare Part D EGWP offered
by the plan. A carrier must provide prescription drug coverage through
the PSHB plan to these individuals.
(c) PSHB plan enrollment or disenrollment and Medicare EGWPs.
Changes to enrollment during Open Season under Sec. 890.301(f) or
because of a qualifying life event as defined in part 892 of this
chapter apply with respect to changes to PSHB plans that include a
Medicare Part D EGWP.
(d) Carrier requirements for group enrollment into Medicare EGWPs.
A carrier must comply with all applicable CMS requirements regarding
Part D-eligible individual group enrollment into Medicare EGWPs,
including all applicable CMS notice requirements. Nothing in this
section shall be construed as affecting an individual's ability to
select a PSHB plan pursuant to Sec. 890.1606.
(1) PDP EGWP. Annually at the conclusion of Open Season under Sec.
890.301(f), or when an enrollee makes a change to their PSHB enrollment
because of a qualifying life event under Sec. 892.101 of this chapter,
a carrier must automatically group enroll a Part D-eligible individual,
who is covered by the carrier's PSHB plan, into the PSHB
[[Page 85033]]
plan's PDP EGWP, unless the individual:
(i) Elects to enroll or is enrolled in the PSHB plan's MAPD EGWP
described in paragraph (d)(2) of this section; or
(ii) Has opted out of group enrollment in the PSHB plan's PDP EGWP
or MAPD EGWP for the current or upcoming plan year, as applicable.
(2) MAPD EGWP. Annually, at the conclusion of Open Season under
Sec. 890.301(f), or when an enrollee makes a change to their PSHB
enrollment because of a qualifying life event, a carrier must
automatically enroll a Part D-eligible individual who is covered by the
carrier's PSHB plan into the carrier's PSHB plan's MAPD EGWP if the
individual elects to enroll in the carrier's MAPD EGWP. During the
transitional Open Season, a carrier must automatically enroll a Part D-
eligible individual into the carrier's 2025 PSHB plan's MAPD EGWP if
the individual is covered by that carrier's 2024 FEHB plan's MAPD EGWP,
and if the individual elects the carrier's 2025 PSHB plan or is
automatically enrolled into the carrier's 2025 PSHB plan under Sec.
890.1605.
(3) Notice. In addition to the CMS notice requirements, each year,
not less than 30 calendar days prior to the start of Open Season under
Sec. 890.301(f), a carrier must send written notice to Part D-eligible
individuals who are enrolled in the carrier's PSHB plan that they will
be group enrolled into the PDP EGWP offered under the carrier's PSHB
plan. In addition, when an enrollee makes a change because of a
qualifying life event, a carrier must send such written notice to the
Part D-eligible individuals covered under the enrollment. The notice
shall state:
(i) The carrier intends to enroll the individual in the carrier's
Medicare Part D PDP EGWP as described under paragraph (d)(1) of this
section, or MAPD EGWP as described under paragraph (d)(2) of this
section as applicable, during Open Season under Sec. 890.301(f), or as
a result of a qualifying life event, as applicable;
(ii) The individual may affirmatively opt out of group enrollment;
(iii) Opting out of group enrollment means that the individual is
deciding not to be enrolled in the PSHB plan's PDP EGWP, or MAPD EGWP
if applicable;
(iv) The date by which the individual must opt out of group
enrollment, if the individual chooses to opt out;
(v) The procedure for how an individual affirmatively opts out of
group enrollment;
(vi) The individual will not receive prescription drug coverage
under the PSHB plan if the individual is not enrolled in the PSHB
plan's PDP EGWP, or MAPD EGWP if applicable; and
(vii) That no adjustment will be made to the enrollee's share of
the PSHB plan option premium.
(4) Additional requirements for PSHB plans providing an MAPD EGWP.
If a PSHB plan offers an MAPD EGWP, the carrier must comply with all
applicable Medicare requirements and the carrier must also provide the
notices as described in (d)(3) of this section. In addition, such
notice must state how the individual can enroll in the PSHB plan's PDP
EGWP if the individual is opting out of group enrollment or
disenrolling from a PSHB plan's MAPD EGWP during Open Season or as a
result of a qualifying life event, the date by which the individual
must enroll in the PDP EGWP, and must state that if the individual is
required to be enrolled in Medicare Part B in order to maintain
eligibility for PSHB plan coverage and does not qualify for an
exception under Sec. 890.1604, the individual must remain enrolled in
Part B.
(5) Notices to be shared with OPM. A carrier must provide OPM with
the notices under this section and the notices that CMS requires
regarding PDP EGWP and MAPD EGWP group enrollment each year, at the
time the carrier submits its benefits and rate proposal.
(e) Effect of opting out of group enrollment into or disenrolling
from a Medicare EGWP--(1) Effect of opting out of group enrollment. By
opting out of group enrollment in a PSHB plan's Medicare PDP EGWP or
MAPD EGWP, as applicable, the individual will not receive prescription
drug coverage under the PSHB plan unless, during the Open Season or
pursuant to the qualifying life event in which the individual opted out
of group enrollment, the individual elects to enroll in a Part D EGWP
under their PSHB plan.
(2) Opportunity to enroll other than group enrollment. A Part D-
eligible individual may enroll in a PDP EGWP or, if eligible, an MAPD
EGWP, under a PSHB plan, under the same conditions that govern
enrollment in a PSHB plan during Open Season or pursuant to a
qualifying life event.
(3) Disenrollment. An individual may disenroll from their PSHB
plan's Part D EGWP at any time during the plan year which means they
will not receive prescription drug coverage under the PSHB plan.
(4) Enrollment flexibility. A Part D-eligible individual who is not
enrolled in the PDP EGWP or MAPD EGWP, as applicable, for prescription
drug benefits offered by their PSHB plan may request enrollment into
their PSHB plan's EGWP outside of Open Enrollment or a qualifying life
event to correct errors.
(i) Part D EGWP Enrollment Flexibility. A Part D-eligible
individual who opts out of Part D EGWP group enrollment or disenrolls
from their PSHB plan's Part D EGWP can request enrollment into their
plan's Part D EGWP within 90 days of the start of plan year or 90 days
from the effective date of coverage after a qualifying life event that
permitted a plan change. Enrollments made under this paragraph
(e)(4)(i) will be retroactive to the extent consistent with applicable
CMS regulations.
(ii) Exceptional circumstances. A Part D-eligible individual who
opts out of Part D EGWP group enrollment or disenrolls from their PSHB
plan's Part D EGWP can request enrollment into their plan's Part D EGWP
91 days or more after the start of the plan year or the effective date
of coverage after a qualifying life event that permitted a plan change
as determined by OPM. Enrollments made under this paragraph (e)(4)(ii)
will be prospective.
(iii) Changes to enrollment under this paragraph (e)(4) are limited
to new enrollments into the individual's current PSHB plan's Part D
EGWP.
(f) PDP EGWP and MAPD EGWP prescription drug benefits. A carrier
must provide prescription drug benefits to a PSHB EGWP plan's Part D-
eligible covered individuals that are equal to or better than the
prescription drug benefits provided to that PSHB plan's covered
individuals who are not eligible to enroll in Part D and not enrolled
in the plan's EGWP, subject to paragraph (f)(3) of this section. For
purposes of this section:
(1) A carrier must ensure that a Medicare Part D EGWP within the
PSHB Program includes the same medications, products, and supplies
covered in the corresponding plan option's PSHB pharmacy benefit with
the same or lower cost sharing, to the extent consistent with
applicable Medicare provisions; and
(2) A carrier must not reduce or otherwise limit prescription drug
benefits to meet this standard, for example by limiting the coverage of
medications, products, and supplies or increasing cost sharing of the
prescription drug benefits provided to individuals covered under the
PSHB plan who are not eligible for Part D.
[[Page 85034]]
(3) A carrier may request OPM approval to offer different
medications, products, or supplies, or modify cost sharing on their
EGWP formulary. OPM has discretion to determine whether and to what
extent a carrier request under this subsection is necessary and
consistent with 5 U.S.C. 8903c.
[FR Doc. 2024-24796 Filed 10-23-24; 8:45 am]
BILLING CODE 6325-38-P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on October 24, 2024.
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.