Update on Postal Service Reform Act

August 27, 2021

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(This article first appeared in the September-October issue of the American Postal Worker magazine)

The Postal Service Reform Act of 2021 is critical to providing the Postal Service with much-needed financial relief. It is slowly moving its way through Congress. In May, the bill received bipartisan approval by the House of Representatives Oversight on Government Reform Committee, the main committee that addresses postal issues. It was also introduced with bipartisan support in the Senate.

As it is currently written, the APWU supports the legislation. The legislation’s language is currently in flux as it is reviewed by the other House committees of jurisdiction (Energy and Commerce and Ways and Means). Members of Congress can offer amendments as the legislation moves forward through Congress. The APWU is closely monitoring any potential changes that would weaken the legislation and cause it to be unacceptable to our union.

The key components of the currently proposed legislation include eliminating the 2006 pre-funding mandate (PAEA) for retiree health benefits that has financially crippled the USPS, maintaining 6-day delivery, more frequent reporting on service performance and Medicare integration. Additional information on this legislation can be found on the Legislative and Political Department page.

Medicare Integration Q&A

Any postal reform legislation that passes into law will likely include “Medicare integration.” There has been much misinformation spread through social media on the issue. What follows are clarifying questions and answers.

Q | What is “Medicare Integration”?

A | Medicare Integration means that future USPS retirees will be enrolled in both Medicare and FEHBP once they become eligible for Medicare at age 65. Medicare will become the primary provider and FEHBP will be the secondary provider. Only future retirees, upon becoming Medicare eligible, will have to join Medicare Parts A and B and purchase Part B in order to remain in FEHBP.

Q | Will current retirees have to join Medicare to maintain their FEHBP health insurance?

A | No, the language only applies to future retirees. In addition, there is a provision that allows for current retirees who did not voluntarily choose to join Medicare B when they were eligible to do so and have the late enrollment penalty waived.

Q | Does Medicare integration mean that active postal workers and postal retirees will no longer be part of the Federal Employees Health Benefit Program?

A | Absolutely not, and the APWU will not support any legislation that attempts to remove us from FEHBP. The legislation will establish a separate “postal pool” within FEHBP so that postal workers and the Postal Service receive the savings created by Medicare integration.

Q | How will such savings be generated and who will benefit?

A | Medicare will become the primary provider. What Medicare does not cover, FEHBP will then provide as the secondary insurance. This will reduce the cost of the FEHBP plans. By reducing, or slowing the increase in FEHBP health premiums, both the USPS and postal workers will save money on their respective share of the premiums.

Q | If all future retirees must pay the premium for Medicare, how is Medicare integration a positive development?

A | There is no cost associated with Medicare Part A. Currently Medicare Part B has a required premium of approximately $150.00/ month. With Medicare integration, retirees receive 100% coverage with elimination of co-pays, deductibles and catastrophic limits. In addition, healthcare premiums will increase more slowly over time than they would otherwise.

Q | Are there any exceptions to requiring future retirees to enroll in Medicare A and B in order to keep their FEHBP?

A | Yes. The legislation includes exceptions for veterans who receive their benefits through the VA, for retirees in areas where Medicare services are unavailable, and for those who have retired and moved outside the United States.

Q | Do most of our retirees already belong to Medicare?

A | Yes. Almost 80% of our current retirees voluntarily join and pay for Medicare B because it saves them money and provides 100% full coverage when it comes to health insurance.

Q | Would I lose health coverage in the unlikely event that Medicare becomes insolvent?

A | No, if such an event occurred, health coverage reverts to the secondary plan under FEHBP.

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