The landmark Postal Service Reform Act (H.R. 3076) Congress handed this week ends the mandate that the Postal Service pre-fund its retiree well being profit prices and requires postal employees to enroll in Medicare Components A and B after they flip 65. The latter provision might find yourself affecting all federal workers.
All present federal retirees, together with present postal retirees, can select whether or not or to not enroll in Medicare Half B. Plans within the Federal Worker Well being Advantages program cowl retirees whether or not they enroll in Medicare or select to keep up protection beneath FEHB solely.
Within the non-public sector, only a few Individuals have a selection of whether or not or to not enroll in unique Medicare (Components A and B) at age 65 in the event that they wish to preserve their employer-sponsored medical health insurance in retirement. Some firms provide retiree well being advantages solely by Medicare Benefit plans.
After all, many workers lose their employer-sponsored medical health insurance fully after they retire. They will enroll in both a Medicare complement plan (also referred to as Medigap) or a Medicare Benefit plan. Each can be found to individuals who have Medicare Half A and Half B. Most non-public sector retiree well being plans are designed to complement Medicare, and won’t pay your medical prices throughout any interval you have been eligible for Medicare however didn’t join protection. Army retirees additionally should show they’re enrolled in Medicare Components A and B in the event that they wish to proceed protection beneath TRICARE, which is then known as TRICARE for Life.
The choice of whether or not or to not enroll in Medicare, particularly Half B, is without doubt one of the most vexing federal retirees face. It’s because including Half B comes with a regular premium in 2022 of $170 per particular person per 30 days. However many FEHB plans will waive plan deductibles, copayments and coinsurance when companies are coated by Medicare as the first payer. Some additionally provide a partial rebate to offset the Half B premium. As well as, the FEHB plans that cater to retirees with Medicare as main protection typically have decrease premiums than people who don’t provide such incentives.
About 75% of present Medicare-eligible retirees are enrolled in Components A and B and in accordance with the American Postal Staff Union, 80% of eligible postal retirees are, too.
Underneath the postal reform measure, present USPS retirees may have a particular interval throughout which they’ll select to enroll in Medicare with no late enrollment penalty or proceed with FEHB protection alone. An earlier model of the invoice might have unintentionally elevated medical health insurance premiums for all non-postal federal workers and retirees and postal retirees with out Medicare by shifting some, however not all, postal workers and retirees into separate danger swimming pools in a brand new Postal Service Well being Advantages program.
FEHB premiums are based mostly on how a lot its contributors use well being companies and the common prices for these companies throughout a given yr. Older workers with extra well being circumstances and with out Medicare protection are inclined to drive costs up, whereas youthful, more healthy members maintain prices down. The model of the postal invoice that finally handed balances the chance swimming pools, and the Workplace of Personnel Administration now estimates premiums ought to go down for postal and non-postal workers and retirees alike.
The brand new regulation retains all postal employees in FEHB, in their very own group. All employees will be capable to maintain their present plans and avail themselves of the annual open season to decide on different choices inside FEHB.
Future postal retirees shall be required to enroll in Medicare A and B at 65. Retiree well being protection will then develop into a mixture of Medicare and FEHB.
The query now could be whether or not that requirement will finally be prolonged to all federal workers, and what impact that might have on the premiums retirees pay. If that occurs, no less than federal workers will face one much less powerful determination on the time of retirement.