NARFE Responds To Proposed Postal Reform Legislation Requiring Mandatory Medicare

By on June 29, 2016 in Current Events, Retirement with 29 Comments

The National Active and Retired Federal Employees Association has sharply criticized plans by the House of Representatives Committee on Oversight and Reform to require postal retirees, their spouses and survivors to enroll in Medicare Part B or forfeit their coverage in the Federal Employees Health Benefits Program (FEHBP).

“This draft bill sends a very powerful message to retirees: Congress can change your benefits at any time, when you’re on a fixed income and possibly struggling to make ends meet,” writes NARFE National President Richard Thissen in a letter submitted on June 29 to the committee.

“Because the draft bill reneges on the bargain struck with postal retirees and removes the choice they now have with regard to their health benefits, NARFE opposes the draft bill in its current form. We propose a simple solution that would maintain choice, while still accruing significant savings for the Postal Service – automatically enroll postal retirees in Medicare, as the draft already does, but also provide them a brief window of time to opt out of that enrollment.”

In his letter, Thissen points out that the 76,000 individuals now being forced into Medicare Part B would have to pay the higher Part B premiums of $121.80 or more, because they do not fall under the “hold harmless” clause.

The letter does praise the House Committee for making two improvements over the proposed Senate bill. The House bill would require automatic enrollment in Medicare thus avoiding “complete loss of health insurance coverage for individuals who fail to enroll affirmatively.” The House bill also requires the Postal Service to pick up part of part of the cost of Medicare Part B premiums during the first three years of coverage for those retirees forced into Medicare.

Another part of the proposal involves splitting postal employees, retirees, and their family members out of FEHBP and into a new Postal Service Health Benefits Program (PSHBP) that would run parallel to FEHBP but whose premiums would be based on a separate, postal-only risk pool. About 11,600 postal retirees and family members who retired prior to 1983 and are not eligible for Medicare would remain in the FEHBP risk pool.

“While NARFE is wary of splitting the FEHBP risk pool and the precedent it may set for the future, the manner in which the draft bill does so adequately preserves current employee and retiree health insurance plans,” writes Mr. Thissen.

“The impetus for mandatory Medicare enrollment is to reduce the prefunding liability, and thereby improve the Postal Service’s finances. But there are other options for doing this without forcing postal retirees to solve these financial problems.”

NARFE suggests these include making it easier for the Postal Service to raise postal rates; allow USPS to provide financial services such as check cashing and savings accounts; and loosen restrictions on generating revenue, such as allowing the shipment of alcoholic beverages by mail, a practice now prohibited by Congress.

The House Committee on Oversight and Government Reform will consider all the comments received through June 29, 2016, and then report out a bill to be considered by the entire House of Representatives later in the year.

© 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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