Congress is considering a bill that would require postal retirees to enroll in Medicare Parts B and D or lose their Federal health insurance. Is this the future for all Federal retirees?
Medicare is facing years of higher costs. Costs for Medicare’s Supplementary Health Insurance (SHI), otherwise known as Medicare Parts B and D, are increasing faster than the general economy. Medicare Trustees estimate that Part B costs, which cover physician, outpatient hospital, and home health, will increase 6.7% annually until at least 2019. They estimate that the per capita growth rate of drug costs for Part D will exceed the growth rate of all other medical spending, despite the use of generic drugs.
These higher expenditures are coming while fewer newly Medicare-eligible Federal retirees are choosing to enroll in SHI. In a letter to health insurers this past March, the Office of Personnel Management wrote that “In the past 15 years, the participation rate in Part B for newly eligible annuitants has declined by twenty percent among fee for service plans and by ten percent for HMOs.”
This decline in participation is occurring before the recent announcement that Medicare Trustees are considering a 52% increase in Part B premiums for non-Social Security recipients, which includes most CSRS retirees.
Higher costs combined with fewer new enrollees are causing government officials to consider other ways of increasing revenue for Parts B and D, which are legally required to capture part of their costs from premiums paid by plan participants.
On Sep. 17, Sen. Tom Carper (D-Delaware), introduced the Improving Postal Operations, Service, and Transparency Act of 2015 (iPOST) (S. 2051). The bill requires postal retirees and their eligible family members to enroll in Medicare Parts B and D in order to continue coverage through the Postal Service Health Benefits Program:
A Postal Service Medicare eligible annuitant subject to this section may not continue coverage under the Postal Service Health Benefits Program unless the Postal Service Medicare eligible annuitant enrolls in Medicare part A, Medicare part B, and Medicare part D.
If a family member of a Postal Service annuitant who is subject to this section is a Medicare eligible individual, the family member may not be covered under the Postal Service Health Benefits Program as a family member of the Postal Service annuitant unless the family member enrolls in Medicare part A, Medicare part B, and Medicare part D.
There is concern in the Federal community that if this bill becomes law, it will be expanded to include all Federal retirees.
The National Active and Retired Federal Employees Association (NARFE) has already spoken out against this provision of iPOST. NARFE President Richard G. Thissen has stated, “Postal retirees earned their health benefits throughout long careers of service. They should not be required to pay for additional health insurance coverage as a condition of continuing to receive those benefits.”
For 2016, the Office of Personnel Management is taking a different approach and is trying to entice Medicare-eligible Federal retirees to join voluntarily. OPM has specifically requested health insurers participating in the Federal Employees Health Benefits Program (FEHBP) to tailor their 2016 plans to encourage Part B enrollments:
Plans should propose benefit changes that allow members to maximize their benefits under FEHB and Medicare, such as reduced cost sharing under hospital, medical or pharmacy benefits for members with Part B. We also encourage plans to improve their coordination activities for pharmacy benefits covered under Part B and FEHB. As noted earlier, enhancements to benefits that encourage Medicare participation will not need to be offset by decreases in other benefits.
At present, OPM has indicated no plans to force non-postal retirees into Medicare Part B, but officials will certainly be watching the progress of iPOST, while monitoring participation rates to see if incentives increase the number of voluntary enrollments in SHI for 2016. Depending on both outcomes, government officials will need decide what course of action to pursue in future years.