Changes in Legislation Requiring Mandatory Medicare is an Improvement But Not the Solution Says NARFE

By on June 16, 2016 in Pay & Benefits, Retirement with 43 Comments

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The latest version of the postal reform bill making its way through the House of Representatives is better than the Senate bill but needs work, according to National Active and Retired Federal Employees Association Legislative Director Jessica Klement, who noted that the House committee is currently accepting comments on the proposed legislation.

“This version of the legislation is an improvement over the original plan but still contains a requirement that postal retirees must enroll in Medicare to maintain their eligibility in the Federal Employees Health Benefits Program. This requirement is still unacceptable to NARFE,” stated Ms. Klement.

The Senate’s version requires postal retirees to enroll in Medicare Parts A, B, and D to maintain their eligibility in FEHB. The requirement to enroll in Medicare Part D may not affect most postal retirees, as FEHB plans usually include prescription drug coverage, which would fulfill the Part D requirement in the proposed legislation.

The draft bill in the House would automatically enroll postal retirees in Medicare when they became eligible. The Senate bill gives retirees a six-month enrollment window after they become eligible for Medicare and puts the enrollment burden on the retiree.

Under the Senate version of the bill, if a postal retiree missed the six-month deadline to enroll, their FEHB enrollment would be cancelled.

While NARFE continues to oppose mandatory Medicare enrollment for any retirees, it feels that mandatory enrollment is preferable to putting the burden on the retirees and who might suddenly lose their health benefits if they failed to make the deadline for any reason.

It is estimated that 76,000 current postal retirees would be forced to take Medicare or lose their current health insurance plan under the proposed legislation. Not only would this group of retirees be required to sign up for Medicare, they would also be ineligible for the lower “hold harmless” Part B premium since they had not been enrolled in Medicare Part B long enough to qualify and so would have to pay the same premiums as other non-Social Security Part B participants, currently $121.80 per month or higher for those in the higher income brackets.

To help offset these new mandatory cost, the House legislation provides a transition fund with the Postal Service paying 75 percent of the enrollee’s share of their premium for the first year of Medicare enrollment, 50 percent the second year, and 25 percent the third year. In the fourth year and thereafter, postal retirees would have to pay the full amount of their share of Medicare premiums like most other Part B participants.

Another 11,600 postal retirees are not eligible for Medicare Parts A or B because they retired prior to 1983 and had not paid Medicare taxes when they were working. This group would not be required to join Medicare under the proposed legislation but could remain in FEHB without penalty.

The proposed legislation only affects postal retirees, which accounts for approximately 30 percent of NARFE’s 220,000 members, but NARFE is concerned that, if passed, this legislation might set a precedent for all Federal retirees. Approximately 75 percent of eligible Federal retirees currently choose to participate in Medicare.

Ms. Klement believes the House bill could go to markup before July 15. It is possible that the House version could receive a floor vote after Congress returns from its August recess, setting up a final vote in the House and Senate during their final session of the year after the November elections.

The House Oversight Committee is accepting comments on the proposed legislation through June 29, 2016. Comments may be submitted electronically at https://oversight.house.gov/postalreform/.

© 2016 Michael Wald. All rights reserved. This article may not be reproduced without express written consent from Michael Wald.

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About the Author

Michael Wald is an independent economics analyst and writer based in the Atlanta area. He specializes in topics related to business, labor, and human resources. Prior to his retirement from the U.S. Department of Labor, he served as the agency’s Southeast Regional Director of Public Affairs and Southeast Regional Economist.

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