2. Current retirees, their dependents, the survivors of workers or retirees who are currently eligible for retiree health benefits, and active employees ages 65 or older can decide whether to sign up for Medicare coverage or stick with the Postal Service Health Benefits Program plan that’s the most similar to their current plan.
Current “annuitants” who have not signed up for Medicare Part B will get a one-time chance to enroll in Part B without paying a late-enrollment penalty.
3. Most employees who are active today and who retire on or after Jan. 1, 2023, will flow into Medicare A plans. They can choose whether to sign up for Medicare Part B.
4. Some employees who are active today and who retire on or after Jan. 1, 2023, can decline to enroll in Medicare, and can use the Postal Service Health Benefits Program as a backup source of coverage, if they have coverage from another program, or if they live in a location, such as a foreign country, without Medicare providers.
What This Means
For insurers, other financial services companies, and financial professionals, identifying and understanding all of the implications of H.R. 3076 could take decades.
Here are some of the immediate effects.
1. The Postal Service can still handle correspondence between financial services players and customers. Retiree health benefits obligations will not force the service into liquidation this year.
2. The changes could create opportunities for some health insurers to lure Postal Service employees away from existing federal employee health program coverage providers. The new program could create one especially big health insurance sales opportunity: for a default plan, for participants who do not choose a plan and cannot easily be mapped from their current plan into a similar one.
The default plan must be the “lowest-cost nationwide plan option within the program that is not a high deductible health plan and does not charge an association or membership fee,” according to the H.R. 3076 text.
3. More than 1.1 million Postal Service employees, retirees and survivors need help understanding what just happened. H.R. 3076 requires the U.S. Office of Personnel Management to set up a navigator program to raise employee and annuitant awareness of the changes. The navigators cannot receive compensation from any of the insurers involved in providing the Postal Service program coverage.
But life insurance agents, financial planners, and insurance and planning firms that aren’t selling health insurance might be able to get contracts to supply Postal Service health benefits navigator services.
4. Some of the people who need help understanding the Postal Service retiree health benefits changes might need help with other financial and retirement planning matters. Active employees who know they will have to pay for Medicare Part B coverage and, possibly, Medicare supplement insurance might want to set aside more savings to cover those additional premium costs. Some might realize that they need more life insurance, critical illness insurance or ideas about long-term care planning.
5. Worries about Medicare will grow. The GAO estimated in the 2018 report that the Postal Service had about $75 billion in unfunded retirement health benefits obligations. Robert Moffit, a government health program watcher at the Heritage Foundation, has argued that H.R. 3076 will pass those unfunded obligations on to Medicare, at a time when Medicare is facing a total of $48 trillion in unfunded benefits obligations over the next 75 years.
(Photo: Raychel Lean/ALM)