Last month, the Postal Service Reform Act of 2021 (H.R. 3076/S. 1720) was introduced in the House of Representatives and in the Senate. NALC strongly supports these bills, the first major postal reform legislation in 15 years, because the bills address two of NALC’s top priorities:
Many members may have questions about the FEHBP and Medicare provisions included in these bills. Unfortunately, misinformation about them is common. Let us start with the proposed changes in FEHBP.
Under the legislation, postal employees and annuitants would participate in a restructured FEHBP program. All the major plans now available to participants – Blue Cross Blue Shield, the NALC HBP, Kaiser, etc. – would continue to be offered to postal employees and retirees as a postal-only version of their FEHBP plans. But their premiums would be significantly reduced because postal participants would be placed in a separate risk pool with new rules regarding Medicare enrollment.
The new legislation would not change a current postal annuitant’s right to decide whether they want to enroll in Medicare. Although 90 percent of current postal annuitants are automatically enrolled in Medicare Part A (hospital services) and nearly 80 percent of them voluntarily enroll in Medicare Part B (medical services), no current annuitant would be required to enroll in either Medicare Part A or Part B. All active employees under the age of 64 (as of January 1, 2023) would be automatically placed in the postal version of the health plan they choose, and if retired upon reaching Medicare age, they would be enrolled in Medicare (absent the exceptions discussed below).
Active postal employees (as of January 1, 2023) who are 64 and older AND all current postal annuitants as of that date would be given the choice of whether to join the postal-only version of FEHBP plans (integrated with Medicare) or remain in the non-postal version of such plans, depending on whether they want to enroll in Medicare Part B, which currently carries a premium of $148.50 per month. The reason most annuitants already choose to enroll in Medicare Parts A & B when they turn 65 is because enrolling virtually eliminates any out-of-pocket costs such as deductibles and co-payments. However, under the proposed law, current annuitants (as of January 1, 2023) would decide whether to enroll. Those who do not want to enroll in Medicare would remain in the non-postal version of their FEHBP health plan – and the Postal Service would continue to pay the government’s share of their premiums.
The postal-only plans in FEHBP will be regulated and operated in the same way current FEHBP plans are regulated and operated today. There will be an annual Open Season that will allow participants to choose among a range of plans with separate rates for postal and non-postal participants.
NALC lobbied aggressively for the inclusion of special exceptions that are contained in the legislation. Future postal annuitants who do not need Medicare because of coverage by the Veterans Administration or by another non-FEHBP program or who cannot use Medicare because they live in a place (for example, overseas) without Medicare providers would be allowed to enroll in the non-postal version of their FEHBP plan. We also worked to include a provision to give current annuitants who did not enroll in Medicare Part B at age 65, but who now wish to do so, a one-time opportunity to enroll in Part B without the late enrollment penalty that currently applies. That penalty, which raises Part B premiums by 10% for each year after age 65 that a retiree delays enrollment, is very expensive.
The reason it makes sense to create postal-only plans within FEHBP and to maximize Medicare participation is that it will reduce health care costs for both the Postal Service and participants. FEHBP premiums would be reduced for active and retired postal employees alike. Because Medicare is the first-payer insurer for its enrollees, the costs covered by postal-only FEHBP plans will be reduced, thereby reducing the premiums for postal employees. This would reduce the Postal Service’s health care expenses by hundreds of millions of dollars annually and reduce its future liability for retiree health benefits by approximately $50 billion.
Since the introduction of these bills, misinformation about the Medicare provisions included in the legislation have circulated through other outlets. Most noticeably, the National Active and Retired Federal Employees (NARFE) association has distributed inaccurate information about the bills. NARFE has falsely claimed that these bills would cause the premiums of non-postal federal employees and annuitants to increase, allow the Postal Service to “cherry-pick” individuals who are less costly to insure, and allow the Postal Service to avoid its full financial obligation to those retirees who choose not to enroll in Medicare.
None of this is true. In fact, non-postal FEHBP premiums would decline somewhat (about 1.0%) since the non-postal workforce is younger and less expensive to insure than the postal workforce. A recent professional actuarial analysis of the proposed FEHBP reforms conducted by PRM Consulting Group for the Postal Service demonstrates this clearly. That analysis mirrors the findings of the Congressional Budget Office (CBO) review of S. 1486 (the Postal Reform Act of 2014), which also included FEHBP and Medicare integration reforms. The CBO Cost Estimate for S. 1486 (July 14, 2014) states on page 14:
The effect of the legislation on federal on-budget payments for health insurance premiums in the FEHB program would partially offset the increase in Medicare spending. Premiums charged to non-postal enrollees in the FEHB program would be based on expected health costs of the employees, annuitants, and dependents remaining in the FEHB program after the health care costs of USPS workers, annuitants, and their dependents are shifted to the PSHB program. Because non-postal enrollees cost FEHB plans slightly less than postal enrollees, on average, CBO estimates that premiums in the FEHB program would be lower than under current law. Thus, the amount the federal government would contribute toward its share of annuitant premiums would be lower.
CBO estimates that federal payments for health insurance premiums for non-postal annuitants enrolled in the FEHB program would be reduced by about $1.6 billion over the 2015-2024 period.
Finally, the USPS would not be able to cherry-pick who to insure – it will pay the full cost of all postal participant premiums, whether participants are in the postal or non-postal version of their FEHBP plans.
NALC, along with other postal unions, addressed these false claims in-depth in a letter to the President of NARFE. Read the letter here.
The Senate approved the nomination of Anton Hajjar to serve on the U.S. Postal Service Board of Governors (BOG) today.
Hajjar holds a term that is effective immediately and expires on December 8, 2023. Hajjar’s confirmation comes one month after the Senate confirmed Amber McReynolds and Ronald Stroman and fills the final vacant BOG seat. The Postal Service now has a full BOG for the first time in more than a decade.
“NALC congratulates Anton Hajjar on this important confirmation,” said NALC President Fredric Rolando. “We look forward to working with a complete BOG for the first time in years, and we appreciate the Senate’s swift action in these confirmations.”
Today, Senate Committee Homeland Security and Governmental Affairs (HSGAC) Chairman Gary Peters (D-MI) and Ranking Member Rob Portman (R-OH) introduced the bipartisan Postal Service Reform Act of 2021 (S. 1720), a bill that aims to provide financial and operational stability to the Postal Service. The bill mirrors H.R. 3076, which was introduced by House Committee on Oversight and Reform Chairwoman Carolyn Maloney (D-NY) and Ranking Member James Comer (R-KY) and advanced out of committee last week.
Including Peters and Portman, original cosponsors of the bill include 10 Democrats and 10 Republicans including: Tom Carper (D-DE), Maggie Hassan (D-NH), Joe Manchin (D-WV), Alex Padilla (D-CA), Jacky Rosen (D-NV), Brian Schatz (D-HI), Krysten Sinema (D-AZ), Tina Smith (D-MN), Ron Wyden (D-OR), Roy Blunt (R-MO), Richard Burr (R-NC), Shelley Capito (R-WV), Susan Collins (R-ME), Steve Daines (R-MT), Josh Hawley (R-MO), Mike Rounds (R-SD), Dan Sullivan (R-AK), and Thomas Tillis (R-NC).
With the makeup of the Senate being evenly split 50-50 and legislation needing 60 votes to pass, having 10 original Republican cosponsors is an important accomplishment. If all remaining Democrats support this important legislation, this bill could be signed into law.
Just like the House bill, S. 1720 would repeal the mandate that the Postal Service pre-fund decades’ worth of health benefits for its future retirees, which was enacted through the Postal Accountability and Enhancement Act (PAEA) of 2006, embracing the bipartisan USPS Fairness Act (H.R. 695 and S. 145). In addition, the legislation maximizes participation in Medicare once active postal employees (as of January 1, 2023) retire and reach age 65. Annuitants as of January 1, 2023 will be given the choice of whether to remain in the existing FEHBP system or participate in the postal version of the program that requires enrollment in Medicare Parts A and B – and retirees over the age of 65 who have chosen not to enroll in Medicare Part B will be given a one-time opportunity to do so with no late-enrollment penalty. Annuitants who elect to remain in the existing FEHBP will not be required to enroll in Medicare. NALC also successfully lobbied to ensure exceptions to the requirement to enroll in Medicare for those covered under other insurance arrangements (such as the VA) and for those who live in a place where there are not Medicare-participating providers.
S. 1720 also includes language that requires the Postal Service to maintain “integrated” delivery of both mail and packages six days a week. If this bill becomes law, the six-day requirement would be a statutory mandate. Since 1983, the policy mandate to deliver mail six days a week has had to be renewed annually in the appropriations process. This bill would eliminate the need for the annual fight to maintain this mandate.
In addition, the bill: requires the Postal Service to provide semi-annual reports to Congress on the implementation of its 10-year strategic plan; provides for a public dashboard using nationwide delivery metrics to track delivery performance; directs the Postal Service to use the most efficient means to transport mail, likely moving from air to ground; mandates a Postal Regulatory Commission (PRC) review of competitive and non-competitive products and a study of nationwide processing efficiency of flats (magazines and catalogs); provides the PRC with independent budget authority through the Postal Fund, preventing it from being directly impacted by sequestration/shutdowns; provides a special postage discount for newspapers; and consolidates the Postal Service’s and the PRC’s Inspectors General into a single office.
“Millions of Americans and Michiganders, including seniors, veterans, and small business owners, rely on the Postal Service to deliver. For decades, the Postal Service has struggled to overcome unfair and burdensome financial requirements that risk its ability to continue providing reliable service in the long run," said Chairman Peters. “This commonsense, bipartisan legislation would help put the Postal Service on a sustainable financial footing, ensure it is more transparent and accountable to the American people, and support hardworking postal workers who deliver rain or shine to communities all across the country."
“While its role in American life has changed over the years, the United States Postal Service remains a key part of American life, serving Americans through its delivery of vital medicines, important packages, and other mail,” said Ranking Member Portman. “For that reason, I am proud to join Senator Peters in introducing the Postal Service Reform Act of 2021, which will, when coupled with the Postal Service’s transformative 10-year plan, help turn around the substantial losses at the Postal Service over the last decade and ensure self-sustaining, high-quality postal service for all Americans."
“NALC appreciates Chairman Peters and Ranking Member Portman’s introduction of this important legislation in the Senate,” said NALC President Fredric Rolando. “NALC recognizes the Senators who have put partisan tensions aside to show strong support for this bipartisan legislation that is crucial to help restore financial and operational stability to the Postal Service.”
Please contact your representatives and Senators and ask them to support this important legislation by becoming a cosponsor and urging immediate House and Senate passage.
To see if your member of Congress is a cosponsor of H.R. 3076, click here.
To see if your Senator is a cosponsor of S. 1720, click here.
The Postal Service Reform Act of 2021 (H.R. 3076), a bipartisan bill that aims to provide financial and operational stability to the Postal Service, was introduced by the House Committee on Oversight and Reform Chairwoman Carolyn Maloney (D-NY) and Ranking Member James Comer (R-KY) on May 11.
Today, H.R. 3076 advanced out of committee on a voice vote with no amendments. The legislation addresses two of NALC’s top priorities:
The Senate approved the nominations of Amber McReynolds and Ronald Stroman to serve on the U.S. Postal Service Board of Governors (BOG).
McReynolds will hold a term that expires on December 8, 2026, and Stroman’s term will expire on December 8, 2028. These confirmations are effective immediately and will fill two of three vacant BOG seats.
The Senate vote on Anton Hajjar’s BOG nomination remains pending.
“NALC congratulates McReynolds and Stroman on their important confirmations,” said NALC President Fredric Rolando. “We look forward to working with them and the rest of the BOG to ensure that letter carriers have a voice when decisions affecting their interests are made.”