An employee group is miffed by the new Postal Service insurance program’s Medicare Part D coverage

The first open season for the new employer-sponsored health insurance program for U.S. postal workers is just around the corner, but already the new system is causing controversy.

The Postal Service Health Benefits Program, established as part of the 2022 Postal Service Reform Act, will create a new USPS-only health insurance program, akin to the Federal Employees Health Benefits Program that provides coverage to federal workers, retirees and their families. The first Open Season in which postal workers can elect their coverage for next year runs from Nov. 11 to Dec. 9.

In a last-minute tweak to regulations governing the program and its implementation this fall, the Office of Personnel Management published a final rule in the Federal Register last week clarifying provisions governing reconsideration of eligibility decisions, the law’s Medicare Part B enrollment requirement and integrating the Medicare Part D prescription drug program into PSHBP.

That last provision is the source of this week’s controversy. OPM’s rule states that, unlike in FEHBP, Congress intentionally funneled Medicare-eligible postal workers and retirees into insurance coverage that includes a Medicare Part D employer group waiver plan, or EGWP.

“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,” OPM wrote. “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.”

William Shackelford, national president of the National Active and Retired Federal Employees Association, disagreed with OPM’s legal analysis in comments to the agency. And while he said in a statement Monday that some provisions have been adjusted in response to his and other employee groups’ critiques, there are still scenarios in which postal retirees will see their prescription drug costs increase, as a result of penalties and other restrictions associated with enrolling in Medicare Part D.

“To mitigate the consequences, the final rule added clarifications urged by NARFE to ensure that MPDP coverage is ‘equal to or better than’ the PSHB plan drug coverage by requiring all PSHB plan drugs to be covered at the same or lower cost share, and added an exception to MPDP coverage for those living overseas,” Shackelford said. “But there are still some circumstances that could make PSHB plan coverage a better alternative. If the drug-cost-lowering benefits of the MPDP coverage for the individual are outweighed by income-based Medicare premium surcharges or the inability to combine drug company discounts with insurance coverage, some postal retirees could be better off retaining their PSHB plan drug coverage. Yet OPM’s final rule forces these postal retirees to accept the costlier option or lose drug coverage through the PSHB altogether.”

Once again, OPM said in its regulations that its hands were tied by the law and congressional intent.

“While the 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," the agency wrote. "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.”