On March 8, 2022, by a vote of 79-19, the U.S. Senate passed the Postal Service Reform Act (PSRA). This legislation has been more than a decade in the making, delayed on numerous occasions to ensure that lawmakers, unions, management, and stakeholders came to a consensus on the language. This resulted in a narrow bill that only addresses the prefunding mandate, retiree healthcare costs, six-day delivery, non-postal services, and transparency. The House of Representatives voted on the bill a month earlier, passing the bill in a vote of 342-92.  It is expected to be signed into law by President Biden.

In order to achieve significant savings, as well as align with best practices concerning retiree healthcare costs in the private sector, changes will be made to the Federal Employee Health Benefits Program and future USPS retirees will be required to enroll in Medicare. 

Current postal employees would be placed in a postal-only risk pool within the FEHBP, called the Postal Service Health Benefits Program. The postal-only plans in FEHBP will be regulated and run in the same way current FEHBP plans are. Major plans now available will still be offered in this postal-only version of FEHBP plans. While the benefits would remain the same, the premiums would be significantly reduced because postal participants would be placed in a separate risk pool with new rules related to Medicare enrollment.

Active employees under the age of 64 as of January 1, 2025, when both retired and at least age 65, are required to enroll in Medicare Parts B and D, apart from a few exceptions (those enrolled in TRICARE or Indian Health Services, or those living abroad). Currently, around 80% of postal annuitants enroll in Medicare and postal employees have contributed over $34 billion into Medicare since 1983.

Current postal annuitants, and those who retire before January 1, 2025, would not be forced into Medicare if they do not want it. Additionally, active postal employees over the age of 65 can elect to stay in the postal-only FEHBP. Annuitants who had opted not to enroll in Medicare when eligible, but have since changed their mind, are able to enroll and will not be held to the late enrollment fee.

Along with these changes to retiree healthcare, the PSRA will also repeal the 2006 mandate for the Postal Service to prefund its retiree healthcare costs. As NPMHU members are aware, for the past sixteen years, the USPS has been required to pay these upfront costs that amount to $5 billion in annual losses over the last decade. By repealing this mandate, the Postal Service will return to a pay-as-you-go means of funding retiree healthcare costs.

Upon passage of the PSRA in the Senate, NPMHU National President Paul V. Hogrogian stated, “This bill does not fix every problem with the Postal Service. But it shows the dedicated work of elected officials, recognizing the value of the Postal Service and its workforce, and the need to provide financial stability.”