Postal Service Reform Act; Establishment of the Postal Service Health Benefits Program
Interim final rule; request for comments.
CFR Part: "5 CFR Part 890"; "48 CFR Parts 1602 and 1609"
RIN Number: "RIN 3206-AO43"
Citation: "88 FR 20383"
Page Number: "20383"
"Rules and Regulations"
Agency: "
SUMMARY:
DATES:
Effective date: This rule is effective on
Comment date: OPM must receive comments on the rule on or before
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SUPPLEMENTARY INFORMATION:
Executive Summary This interim final rule establishes the Postal Service Health Benefits (PSHB) Program within the Federal Employees Health Benefits (FEHB) Program as required by the Postal Service Reform Act of 2022 (PSRA), Public Law 117-108. The PSHB Program will include health benefits plans available only to
With the enactment of the PSRA and these implementing regulations, the
Background
Section 101 of the PSRA adds new section 8903c to chapter 89 of title 5, United States Code, and directs OPM to establish the PSHB Program within the
The PSHB Program was authorized under the Title I Postal Service Financial Reforms provisions in the PSRA in furtherance of
FOOTNOTE 1 H. Rept. 117-89--POSTAL SERVICE REFORM ACT OF 2021, H. Rept. 117-89, 117th Cong. (2023), https://www.congress.gov/congressional-report/117th-congress/house-report/89/1. END FOOTNOTE
Section 102 of the PSRA ("The USPS Fairness Act") amends 5 U.S.C. 8909a which was established in the Postal Accountability and Enhancement Act of 2006 (Pub. L. 109-435) and which required the
A. Legislative Requirements for Establishing the PSHB Program
Section 101 of Title I of the PSRA directs OPM to "establish the Postal Service Health Benefits Program within the Federal Employees Health Benefits Program" under chapter 89 of title 5 of the United States Code. The PSRA specifies that "[e]xcept as otherwise provided . . . any [PSHB] contract . . . shall be consistent with the requirements of this chapter for contracts under section 8902 with carriers to offer health benefits plans." Therefore, generally, the requirements of the FEHB Program will apply to the PSHB Program, unless otherwise set forth in the PSRA or in 5 CFR part 890.
B. PSHB Program Background Information
The PSRA establishes the PSHB Program within the FEHB Program. The FEHB Program was established in 1960 and provides a choice of health plans, including fee-for-service plans and health maintenance organizations, to approximately 8.2 million covered individuals including employees of the Federal Government, Federal retirees (referred to as annuitants due to their eligibility for an annuity), members of their families, former spouses, and other groups statutorily eligible as enumerated in 5 U.S.C. 8901 or set forth in other authorizing legislation. Currently,
FEHB plans cover a wide range of health services including routine physical exams, primary and specialist doctor's visits, inpatient hospital care, surgery, laboratory and diagnostic tests, prescription drugs, and mental health services. Required benefits are listed in broad categories in the FEHB statute at 5 U.S.C. 8904 and include hospital benefits, surgical benefits, medical care and treatment, and obstetrical benefits, among others. The benefits, coverage, and premium details of each plan in the FEHB Program are negotiated with OPM each year. Eligible individuals can purchase additional dental and vision coverage through the Federal Employees Dental and Vision Insurance Program.
Each year, OPM issues guidance for health benefits carriers preparing FEHB plan benefits proposals. This guidance references OPM's commitment to ensuring that the Federal Government offers competitive, comprehensive health insurance benefits and includes OPM's policy goals and initiatives for the year. For 2023, these goals included advancing health equity, providing gender affirming care and services, and addressing obesity. This guidance outlines technical requirements for each proposal, including benefit package details such as actuarial value, benefit changes from the previous year, and the drug formulary. Carriers offering PSHB plans, as part of the FEHB Program, will be subject to the same or similar guidance. The PSRA requires that carriers offering PSHB plans will, to the greatest extent practicable, offer benefits and cost-sharing (e.g., deductibles, copayments and coinsurance) equivalent to the benefits and cost-sharing for FEHB plans for that carrier in the initial contract year.
Generally, Federal employees can continue FEHB enrollment into retirement if they have been enrolled in FEHB for five years before retiring or, if less than five years, for all periods in which they were eligible to enroll. FEHB enrollees can also enroll in Medicare when they become eligible for Medicare regardless of whether they are retired or still actively employed. Annuitants who are enrolled in FEHB and covered by Medicare have Medicare as their primary coverage.
C. PSHB Program Eligibility
Under the PSRA,
A "covered Medicare individual" under section 8903c(a)(1) generally means an individual who is entitled to Medicare Part A, but the term excludes an individual who is eligible to enroll under section 1818 or 1818A of the Social Security Act (42 U.S.C. 1395i-2, 1395i-2a). Individuals eligible to enroll in Medicare Part A under 1818 are individuals age 65 or older who are not otherwise eligible for premium-free Medicare Part A, typically due to not having the required work history for premium-free Part A. Individuals eligible to enroll under 1818A are disabled individuals who lose Medicare coverage solely because of substantial gainful work. These individuals are exempt from the Medicare Part B enrollment requirement that applies to most other
For purposes of the FEHB Program, 5 U.S.C. 8901(5) defines a "member of family" of employees and annuitants to include spouses and children under 22 years of age, subject to exception, including natural children, adopted children, stepchildren, and foster children. The enactment of the Affordable Care Act in 2010 required health insurers to cover dependents until age 26. At that time OPM issued updates to its regulations to reflect that change and codified 5 CFR 890.302(b) and (c) which defines FEHB covered family members to include such children until they reach the age of 26, subject to exception. The PSHB Program will align with 5 CFR part 890 regarding the definition of family members for all purposes, including the Medicare special enrollment period (SEP) opportunity.
The PSRA adds new definitions to chapter 89. Section 8903c(a)(9) defines a
The PSRA does not establish a distinct category for
FOOTNOTE 2 5 U.S.C. 8901(3)(C). END FOOTNOTE
Section 8906(g)(2) authorizes Government contributions for health benefits for individuals who become
The definition of
Primary and Secondary Payers
The
Impact on Other Benefits
Eligibility for the PSHB Program does not affect eligibility for other Federal benefits.
Consultation With the
The PSRA includes the following requirements for consultation between OPM and several other Federal agencies:
* 5 U.S.C. 8903c(e)(3)(B) requires that OPM, in consultation with the Secretary of
* 5 U.S.C. 8903c(e)(4) requires OPM and the
* 5 U.S.C. 8903c(g)(2) requires OPM to consult with the
* 5 U.S.C. 8903c(l)(4)(B) requires the
* 5 U.S.C. 8903c(l)(6) requires the
* Section 101(c) of the PSRA requires OPM to establish a process by regulation to provide information to SSA regarding
* 5 U.S.C. 8909a(f) requires that OPM, after consultation with the
Provisions of Interim Final Rule
This interim final rule amends subparts A,
This regulation establishes rules for the operation of the PSHB Program within the parameters of the PSRA. To the greatest extent possible, OPM is aligning these rules with the FEHB Program's treatment of FEHB plans. Where there is no existing rule applicable to FEHB plans, OPM is implementing the greatest flexibility for
5 CFR Part 890: Federal Employees Health Benefits Program
Subpart A: Administration and General Provisions
OPM is amending
Section 8903c(a) of the PSRA includes definitions for the new PSHB Program. A Postal Service Medicare covered annuitant is defined as an individual who is both a
FOOTNOTE 3 Section 8903(a)(1) defines the term 'covered Medicare individual' as "an individual who is entitled to benefits under Medicare part A but excluding an individual who is eligible to enroll under such part under section 1818 or 1818A of the Social Security Act." END FOOTNOTE
OPM is adding a new
Subpart C: Enrollment
OPM is amending
OPM is adding a new paragraph (l) to
Likewise, an employee who moves from a Federal agency to a PSHB-eligible Postal position, without a break in service of more than three days, may change to PSHB plan enrollment in the new job but otherwise may not maintain FEHB plan enrollment.
Enrollees in the PSHB Program will be subject to the FEHB Program requirement of maintaining enrollment for 5 years of service before retirement in order to carry that coverage into retirement. A
FOOTNOTE 4 The definition at 5 U.S.C. 8901(1) includes Federal employees and other categories of statutorily eligible individuals. END FOOTNOTE
OPM's existing regulation at 5 CFR 890.303(d)(2), regarding employees who become survivor annuitants, continues to apply, as amended. The rule is expanded and now applies to an employee who is a survivor annuitant of a
In
In a case where OPM, the PSHB Carrier, or the
In any case where a Postal Service Medicare covered annuitant is disenrolled from a PSHB plan for non-enrollment in Medicare Part B, OPM will treat this removal as a termination. A termination, in contrast with a cancellation, confers rights to a 31-day temporary extension of coverage and rights to conversion for the enrollee and covered family members. Per existing FEHB regulation at 5 CFR 890.401, an enrollee or family member whose enrollment is terminated other than by a cancellation or discontinuance of plan is entitled to a 31-day temporary extension of coverage for self only, self plus one, or self and family without contributions by the enrollee or the Government. During that 31-day period, OPM requires carriers to either offer the individual a guaranteed-issue conversion policy or provide assistance enrolling in such a policy on or off the
New Subpart P: Postal Service Health Benefits Program
This new subpart P implements section 101 of the PSRA establishing the
In
The term "cancel" carries the same meaning as in FEHB, applying when an individual elects not to continue coverage, despite remaining eligible. The PSRA uses the term "cancel" in section 8903c(g) to describe when an individual loses PSHB coverage because of a decision not to enroll in Medicare Part B, or to disenroll from Medicare Part B. OPM is using its administrative authority to classify this circumstance as a termination in order to provide the individual with a 31-day temporary extension of coverage and rights to conversion. This classification of certain cancellations as terminations is delineated in
In
Eligibility
As directed by the PSRA,
* Postal Service Medicare covered annuitants without Medicare Part B coverage who are not covered by an exception in
* Postal Service Medicare covered members of family who do not enroll in Medicare Part B and who are not covered by an exception in
* Any individual covered by another health benefits plan under chapter 89 of title 5, U.S.C. except as permitted under dual enrollment rules at
OPM is adding
OPM is adding
Medicare Enrollment Requirement for Certain Annuitants
Section 890.1604(a) requires that certain
As described above, all
Disenrollment for Non-Enrollment in Medicare Part B
OPM is amending
Postal Service Medicare covered annuitants and their Medicare covered members of family will be required to enroll in Medicare Part B at their first opportunity, usually within the 7-month IEP around their 65th birthday or during an SEP if they are over the age of 65 and still in active employment. An individual can be removed or disenrolled from a PSHB plan if they do not enroll within those enrollment periods unless they qualify for an exception detailed in
A Postal Service Medicare covered annuitant or Medicare covered member of family could be determined ineligible for PSHB if not enrolled in Medicare Part B. An individual can be disenrolled or removed from a PSHB plan any time after OPM, the PSHB Carrier, or the
Exceptions to Medicare Part B Enrollment Requirement
Section 890.1604(c) describes the statutory exceptions to the Medicare Part B enrollment requirement for Postal Service Medicare covered annuitants and their Medicare covered members of family. Those exceptions are:
* Individuals who, as of
* Individuals who, as of
* Postal Service Medicare covered annuitants and family members residing outside
* Postal Service Medicare covered annuitants and their family members enrolled in certain
* Postal Service Medicare covered annuitants and family members eligible for health services provided by the
* A Medicare covered member of family of a Postal Service Medicare covered annuitant who is not required to enroll in Medicare Part B, based on a statutory exception, in order to be eligible for PSHB coverage.
Section 890.1604(c) satisfies the requirement in 5 U.S.C. 8903c(e)(3)(B) that OPM promulgate regulations to implement the
As required by the PSRA,
Suspending PSHB Enrollment for Other Forms of Coverage, Including Medicare Advantage
Under 5 CFR 890.304(d)(2), an annuitant or survivor annuitant may suspend FEHB enrollment if they choose to get certain alternative coverage, including Medicare Advantage (MA), Medicaid or a similar state-sponsored program of medical assistance for the needy,
PSHB Enrollment When an Individual Is Under a Court or Administrative Order To Provide Health Coverage
The Federal Employees Health Benefits Children's Equity Act of 2000 (Pub. L. 106-394) codified at 5 U.S.C. 8905(h) requires OPM to compel appropriate FEHB enrollment of an eligible employee in the presence of a court or administrative order for health insurance coverage of children and to prohibit the discontinuation of such enrollment by an annuitant who continued coverage into retirement. This law will be applied with respect to PSHB enrollment for those
A
PSHB Plan Year
The PSHB plan year will run from
OPM is making this change because a calendar year start date is easier for enrollees to track and follow their PSHB coverage. In addition, setting the PSHB plan year start date to
A standard
FOOTNOTE 5 https://www.federalregister.gov/d/98-23335 (63 FR 46180,
FOOTNOTE 6 https://www.federalregister.gov/d/03-31768 (68 FR 74513,
OPM believes the prior challenges are mitigated by the advancement of technology, including the establishment of a centralized enrollment system for the PSHB Program. OPM also believes that payroll offices and other stakeholders will have the necessary lead time to make all appropriate system changes to accommodate this effective date.
OPM invites comments on a
Enrollment
Section 890.1605 establishes enrollment in the initial contract year, including a transitional Open Season that coincides with the standard FEHB Program Open Season in 2024 for enrollment in health benefits plans offering coverage in 2025. Definitions are included in
Automatic enrollment into a PSHB plan for the initial contract year is described in
In the FEHB Program, employees in a nonpay status, such as leave without pay, are not generally able to enroll in an FEHB plan during Open Season. OPM is changing this policy for the PSHB Program for the transitional Open Season in 2024 only. FEHB enrollments and FEHB plan eligibility will terminate at the end of 2024 for all
Continuity of Enrollment
Continuity of enrollment for PSHB is detailed in
Retroactive Enrollment and Termination
Section 890.103 allows for OPM to correct administrative FEHB plan enrollment errors, including retroactive actions such as enrollments and correction of enrollment code errors. Such corrective actions are subject to appropriate withholding and contributions of premiums, which requires payment from the employee or annuitant for each pay period they are enrolled in a health benefits plan.
These correction of errors provisions will apply in the PSHB Program, as laid out in
Terminations are addressed in the FEHB Program according to rules in
Although 5 U.S.C. 8903c(d)(2) prohibits
Section 890.1610 outlines the minimum standards for PSHB Carriers and plans, including a requirement to provide Medicare prescription drug benefits to Medicare Part D-eligible annuitants and family members pursuant to 5 U.S.C. 8903c(h). Section 8903c(c)(1)(B) of title 5, U.S.C. requires that PSHB plan contracts under the PSHB Program are consistent with the requirements of chapter 89 for FEHB plan contracts under section 8902. The minimum standards for PSHB Carriers will be the same as for FEHB Carriers as described at 48 CFR 1609.70, with the addition of the new
As required by 8903c(c)(1)(C), the FEHB Program will offer, to the greatest extent practicable, a PSHB plan from each FEHB Carrier that has a plan with 1,500 or more
OPM has the authority to exempt comprehensive medical plans, as described in 5 U.S.C. 8903(4), from the requirement that the PSHB Program include, to the greatest extent practicable, a plan offered by any FEHB Carrier that has a plan with 1,500 or more
PSHB plans will offer the same enrollment types as FEHB plans, including self only, self plus one, and self and family coverage. Only
Medicare Part D Prescription Drug Coordination
The PSRA requires plans in the PSHB Program to provide prescription drug benefits through Medicare Part D for
A carrier offering employment-based retiree health coverage, defined in section 1860D-22(c)(1) of the Social Security Act and referred to in section 5 U.S.C. 8903c(h)(2) and a conforming amendment to 1860D-22(b), may provide prescription drug coverage through an employer group waiver plan or EGWP (for a discussion of EGWPs, see Prescription Drug Benefit Manual, Chapter 12, /7/ Application of
FOOTNOTE 7 CMS, Medicare Prescription Drug Benefit Manual, Chapter 12, "Employer/Union Sponsored Group Health Plans," Rev.
To ensure compliance with 5 U.S.C. 8903c(h)(2) of the PSRA, a carrier seeking to offer a Medicare Advantage Prescription Drug (MA-PD) plan to PSHB members must offer prescription drug coverage for
OPM Right To Withdraw or Non-Renew
Section 890.1611 describes OPM's right to withdraw approval of any PSHB plan or carrier, and to give notice of non-renewal of any health benefits plan contract for failure to meet applicable standards.
Separate PSHB Reserves
Section 890.1610(a)(4) implements the requirement at 5 U.S.C. 8903c(j) that OPM maintain separate reserves, including contingency reserves, for each PSHB plan. These reserves will include an account in OPM's administrative reserve and a contingency reserve for each plan, established under and governed by 5 CFR 890.503, 48 CFR chapter 16, and carrier contract.
Information Sharing
Section 890.1612 requires OPM to enter into agreements with other agencies for information exchange necessary to implement the PSHB Program. As required by section 101(c)(2) of the PSRA, OPM will exchange information to SSA as necessary regarding
These periodic agreements will specify the data elements that will be shared, the process for information sharing, the frequency of information sharing, and how that data can be used and disclosed. The purpose of these agreements is to determine (1) which
Premium Payment
The calculations for contributions and withholdings for PSHB will be made in the same manner as 5 U.S.C. 8906 and subpart E of 5 CFR part 890. The Postal Service Government contribution will be determined using the calculation at section 8903c(i) of title 5, United States Code. Section 8903c(i)(3) states that OPM, when computing the weighted average of the rates offered by carriers for the initial PSHB contract year, shall take into account the enrollment of
Some Postal Service Medicare covered annuitants and/or their Medicare covered members of family who enroll in Medicare during the SEP beginning
USPS Fairness Act
Section 102 of the PSRA ("USPS Fairness Act") directs OPM to annually calculate a payment to be made by the
The payment into the PSRHBF required under the PSRA is not an actuarially determined pre-funding payment, though OPM's actuaries are responsible for calculating the new formula driven payment into the fund starting in 2026. The PSRA provides the formula by which OPM is to calculate the payment, which is defined as the difference between the
Section 102 states that "[a]fter consultation with the
The PSRA revises the language under 5 U.S.C. 8909a to provide that any calculation required under 39 U.S.C. 3654(b) should be based on current
The term 'future net claims costs' as used in PSRA section 102(e)(1) does not have a definition in regulation or statute. Section 890.1613(e) clarifies that OPM interprets "future net claims costs" in section 102(e)(1) to be the same as "estimated net claims costs" as defined in section 102(g). OPM invites comment on this approach.
Centralized Enrollment
Since the inception of the FEHB Program in 1960, OPM has prescribed regulations over time that place responsibility for health benefits actions on to an "employing office," as defined at 5 CFR 890.101, an "employing agency," or an "agency." Consequently, the FEHB Program's enrollment functions are not handled by OPM but are dependent on decentralized processes that utilize independent systems at different Federal agencies. Therefore, the
FOOTNOTE 8 The
For purposes of the PSHB Program, OPM will shift certain responsibilities from the employing office to a centralized enrollment system which will be administered by OPM or its contractor. As envisioned, the centralized enrollment system will be an electronic enrollment solution for all PSHB stakeholder groups including enrollees, the
To support the establishment of centralized enrollment for the PSHB Program, OPM is adding several regulatory provisions. OPM may also issue guidance to further delineate responsibilities regarding PSHB enrollment.
Specific Regulatory Provisions
In addition to any future guidance, in [Sec.]
Reconsideration of Initial Decisions
An individual who has received an initial decision affecting their enrollment in the PSHB Program may request a reconsideration of that initial decision. Individuals will be made aware of their right to an independent review and the time, manner, and entity to which the reconsideration request must be made.
Administrative Provisions
As described above and included in
Section 890.1614(b) requires that carrier entitlement to pursue subrogation and reimbursement recoveries must follow the requirements of
Section 890.1614(c) requires reconciliation of PSHB enrollment between OPM and each PSHB Carrier in a form and manner to be determined by OPM. If a Medicare covered annuitant or member of family is found not to be enrolled in Medicare Part B in violation of the requirements of
C. Structure of the Interim Final Rule
The regulations outlined in this interim final rule are codified in subparts A,
Interim Final Rule With Request for Comments
OPM commonly publishes notices of proposed rulemaking in the
Specifically, 5 U.S.C. 553 and 1103(b) require the agency to publish a notice of certain proposed rules in the
However, the APA also provides that traditional notice and comment procedures are not required when, as relevant here, the agency for good cause finds that following those procedures would be impracticable, 5 U.S.C. 553(b)(B), and the CSRA includes a "parallel exception,"
The deadlines that
To meet these statutory deadlines, this rule must go into effect immediately. That is so because until this rule is in place, OPM and the health insurance industry cannot engage in the complex process necessary to develop health insurance plans, make those plans available for enrollment during the 2024 Open Season, and effectuate coverage on
* For OPM to develop its enrollment plan strategy, and to determine the number, type, and location of FEHB plans committed to participating in the PSHB, OPM needs health insurance carriers seeking to participate in the PSHB Program to submit applications to OPM in
* OPM will then need to review such applications to ensure that the plans will satisfy requirements set forth in this rule by the Program start date. Review and vetting of carrier applications--including the financial fitness of the proposed PSHB plan, Postal-specific information system capabilities, and adherence to Medicare Part D coordination requirements such as plans arranging for prescription drug plan coverage--must occur during the Fall of 2023.
* In
* Throughout 2023 and 2024, OPM will, among other things, develop, test, and implement a
* In April of 2024, CMS will launch the six-month SEP, during which time
* By
* In
* Open Season for enrollee selection of PSHB plans will occur from
As this timeline makes clear, there are numerous operational interdependencies--beginning with carriers submitting applications to participate in the PSHB Program by
Additionally, OPM is obligated to provide
In short, given the complexities of establishing this Program, as discussed above, expeditious issuance of these rules is required because otherwise PSHB plans will not be established by
For these reasons, OPM finds good cause to issue this interim rule. But, again, this rule is temporary: OPM invites public comments and will promulgate a final rule as soon as practical after receiving and considering them.
Regulatory Impact Analysis
Need for Regulatory Action
This interim final rule implements sections 101 and 102 of the PSRA which direct OPM to establish the
The PSHB Program is contained within chapter 89, which governs the FEHB Program generally. The PSRA confirms that PSHB plans are subject to the same provisions as FEHB plans unless they are inconsistent with the statute. OPM is given the discretion to make such determinations.
Section 101 of the PSRA codified at 5 U.S.C. 8903c directs OPM to issue regulations establishing the PSHB Program and is given the discretion to include "any provisions necessary to implement this section." Section 8903c(g) addresses the topics for which
These regulatory provisions implement the statutory requirements, and without these provisions, it will be impossible for OPM to comply with its own obligations under the PSRA, and PSHB Carriers, other agencies, and
Executive Orders 12866 and 13563
Executive Order 12866 at section 3(f) defines a "significant regulatory action" as an action that is likely to result in a rule: (1) having an annual effect on the economy of
A regulatory impact analysis must be prepared for major rules with economically significant effects (annual effect of
Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributional impacts, and equity). This rule is a significant regulatory action under E.O. 12866. Therefore, OPM has provided an assessment of the potential costs, benefits, and transfers associated with this rule.
Summary of Impacts
Overall, the PSRA and the PSHB Program, through this regulation, will help to promote the financial stability and long-term viability of the
This societal benefit will result primarily from the removal of the prefunding obligation related to future retiree health benefits and the shifting of insurance coverage costs away from the
From a societal perspective, the primary costs associated with the implementation of the PSHB Program will be administrative and operational costs necessary to initiate and maintain the program, including development of information technology (IT) systems, education and outreach, and additional administrative staffing for the design, maintenance, and oversight of the increased quantity of health plans. These costs will be largest in the initial start-up phase and will be borne by Federal agencies, as well as carriers offering both FEHB plans and PSHB plans. The PSRA appropriated
Most of the impact from the PSRA and this regulation will occur via distributional effects. The principal transfer will be the shifting of premium costs from the
FOOTNOTE 9 H.R. 3076, Postal Service Reform Act of 2021--Cost Estimate,
Ultimately, the total costs and benefits associated with the PSRA, and this interim final rule are highly uncertain because enrollee and carrier reactions to the effects on Medicare, the FEHB Program, and the new PSHB Program are unknown. In accordance with OMB Circular A-4, the following sections outline the benefits, costs, and transfers associated with section 101 of the PSRA and this regulatory action in more detail. Where specific costs were quantifiable, they are included inTable 1.
Regulatory Baseline
The regulatory baseline for this rule is the FEHB Program as it is currently administered, as the eligible population under both programs will largely remain the same.
Beginning in the 2025 plan year, the PSHB Program will be the only health benefits program available through the
Currently,
Prior to the PSRA, the
Carriers that participate in the PSHB Program will generally be subject to the same minimum requirements for plan design that exist for FEHB plans under the FEHB Program, but PSHB plans will be required to integrate Part D prescription drug benefits for Medicare covered annuitants and Medicare covered members of family. In addition, carriers that are offering both PSHB plans and FEHB plans will need to offer equivalent benefits and cost sharing in the initial year, other than as needed to integrate Part D coverage.
Benefits of Regulatory Action and Implementation
This rule serves to implement the requirements of the PSRA. The regulatory action builds on the statute by offering clarity and efficient implementation. OPM anticipates that the timely promulgation of this rule will allow other Federal agencies, PSHB Carriers, and enrollees to begin necessary education and deliberation.
The
FOOTNOTE 10 The
Within these communities, the
FOOTNOTE 11 Audit Report Mail Service During the Early Stages of the COVID-19 Pandemic,
FOOTNOTE 12
With greater financial stability for the
Medicare covered annuitants may be eligible, depending on whether they meet statutory income and resource thresholds, for the low-income cost-sharing subsidies and premium subsidies that are part of the Medicare part D program, under section 1860D-14 of the Social Security Act.
Costs of Regulatory Action and Implementation
Implementation of the PSRA and this regulatory action necessitates the administration and oversight of new health benefits plans, including substantial member education and outreach efforts, additional interagency coordination and the creation of new IT processes to satisfy new statutory eligibility and enrollment requirements, creating startup and ongoing costs to agencies, enrollees, and carriers. Table 1 depicts an accounting statement summarizing the assessment of the administrative costs associated with this regulatory action. Table 2 depicts the expected allocation of total spending over the course of 10 years, beginning in fiscal year (FY) 2023.
Table 1-Estimated Administrative and Implementation Costs Associated With Regulatory Action Agency/category Startup costs Ongoing costs fn1 OPM$ 81,680,944 $ 49,315,703 Personnel - 24,434,476 IT and IT Contracts 68,307,195 20,961,759 Non-IT Contracts 3,600,000 1,735,695 General (Supplies, Equipment, Communications, Training) 9,773,749 2,183,773 Postal Service 11,500,000 1,425,000 Implementation costs (updating systems, developing training 11,500,000 - materials, etc.) Personnel (4 Program and 2 IT full-time employees (FTEs)) - 925,000 Communications - 500,000 Department of Labor 72,500 2,000 Training and Communication 72,500 - Additional support and communication for separate Open Season - 2,000 Department of Veterans Affairs 395,000 - IT Contracts 395,000 - Social Security Administration 7,327,764 407,881 Staffing and Overhead 5,161,138 407,881 System Updates 2,166,626 - Ongoing Data Exchange - TBD Indian Health Service - - Carriers Unknown Unknown Total Administrative Costs 100,976,208 51,150,584 fn1 Recurring costs represented as fully loaded annual costs beginning in FY2025 and remaining consistent through at least FY2032. Given that development and onboarding will occur during run-up period to PSHB implementation, recurring costs will likely cross multiple fiscal periods and gradually ramp up between FY22 and FY25, although all costs are expected to become fully realized beginning in FY25. For details on the expected allocation of total costs by year, see Table 2. All costs are represented based on 2022 dollars and pay scales and are subject to change based on PSHB enrollment and carrier participation following implementation.
Table 2-Expected Total Administration and Implementation Costs by Year FY2023 FY2024 FY2025 FY2026 FY2027 FY2028 FY2029 FY2030 FY2031 FY2032$ 66.47 $ 75.14 $ 52.53 $ 51.15 $ 51.15 $ 51.15 $ 51.15 $ 51.15 $ 51.15 $ 51.15 Total costs (all agencies) fn1 fn1 Annual cost projections are in terms of 2022 dollars and payscales and do not reflect any discounting, inflation, or other adjustments for Federal payroll increases, staff promotions, etc. This table is intended only to summarize the expected timing of the costs outlined in Table 1 and is not meant to reflect budgetary expectations.
Detailed Startup and Ongoing Cost Related to the PSRA
The following sections contain underlying details for the cost estimates presented in Table 1, including, where appropriate, the assumptions and methodology used by individual agencies in preparing them. For the purposes of this regulatory impact assessment (RIA), Startup Costs were defined as upfront, non-recurring costs associated with the PSRA implementation and are represented as aggregate total expenditures for the years leading up to and immediately following the PSHB implementation. Ongoing Costs were defined as recurring costs (e.g., salary costs) beginning in the years preceding or immediately following the PSRA implementation and expected to persist through at least FY2032. All ongoing costs are presented as fully loaded, annual totals. These estimates for ongoing costs are preliminary, and funding for ongoing costs would be subject to the annual budget process.
OPM
Startup Costs: OPM estimates a total of
The remaining
Ongoing Costs: As this is a new program, additional staffing and resources will be essential to establish and administer the PSHB. OPM estimates a total of
The above costs are represented as fully loaded annual projections based on 2022 dollars. Salaries and burden were based on 2022 pay tables and
Startup Costs: The
Ongoing Costs: In preparation for and following implementation of the PSHB, the
Department of Labor--
Startup Costs: OWCP estimates a total of
Ongoing Costs: Beginning in 2025, OWCP estimates an additional
Startup Costs: The
Startup Costs: SSA estimates
Ongoing Costs: SSA anticipates approximately 3 FTEs will be needed to support the PSHB following implementation, with estimated salary and overhead costs totaling
Carriers (Not Quantified)
Carriers will also have startup costs to participate in the PSHB Program, although the magnitude of these costs is unknown and will likely vary by carrier. Based on the 2021 FEHB headcount, OPM estimates that 41 FEHB Carriers provide coverage to
Postal Service Annuitants (Not Quantified)
Existing and future
As with the training and communications costs for the first year,
Transfers
The main impact of section 101 of the PSRA and these rules will be a transfer of costs from the
FOOTNOTE 13 FEHB Program Carrier Letter Number 2023-02, FEHB and Medicare Part D Prescription Drug Coordination (published
Table 3-Net Transfer Effects
Projected change in annual coverage costs due to PSRA ( $ billions)
Agency/outlay FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31 FY32 FY23-27 FY23-32
0.00 0.00 0.00 0.50 0.76 0.92 1.11 1.16 1.35 1.53 1.73 2.18 9.06
CMS fn1
0.00 0.00 0.00 0.09 0.18 0.24 0.31 0.39 0.47 0.57 0.68 0.51 2.93
Part B, net
of premium
fna
0.00 0.00 0.00 0.41 0.58 0.68 0.80 0.77 0.88 0.96 1.05 1.67 6.13
Part D, net
of premium
and
clawback
fnb
0.00 0.00 0.00 - 0.30 - 0.30 - 0.30 - 0.30 - 0.40 - 0.40 - 0.40 - 0.40 - 0.90 - 2.80
USPS fn2
USPS share of 0.00 0.00 0.00 - 0.30 - 0.30 - 0.30 - 0.30 - 0.40 - 0.40 - 0.40 - 0.40 - 0.90 - 2.80
employee
premiums
0.00 0.00 0.00 - 0.17 - 0.23 - 0.29 - 0.36 - 0.45 - 0.49 - 0.53 - 0.58 - 0.69 - 3.10
PSRHBF
Annuitant
Premiums
fn3
PSRHBF Share 0.00 0.00 0.00 - 0.17 - 0.23 - 0.29 - 0.36 - 0.45 - 0.49 - 0.53 - 0.58 - 0.69 - 3.10
of Annuitant
Premiums
0.00 0.00 0.00 - 0.09 - 0.09 - 0.10 - 0.10 - 0.10 - 0.11 - 0.11 - 0.12 - 0.28 - 0.83
FEHB and
Federal Share
USPS
Premiums
fn3
Payments for 0.00 0.00 0.00 - 0.06 - 0.07 - 0.07 - 0.07 - 0.08 - 0.08 - 0.09 - 0.09 - 0.20 - 0.61
NP annuitant
premiums
Federal Share 0.00 0.00 0.00 - 0.03 - 0.03 - 0.03 - 0.03 - 0.03 - 0.03 - 0.03 - 0.03 - 0.08 - 0.21
of USPS
Annuitant
Premiums
Employee and 0.00 0.00 0.00 - 0.26 - 0.26 - 0.25 - 0.25 - 0.25 - 0.25 - 0.24 - 0.23 - 0.76 - 1.98
Annuitant
Share of
Premiums
0.00 0.00 0.00 - 0.10 - 0.11 - 0.12 - 0.13 - 0.14 - 0.15 - 0.16 - 0.17 - 0.34 - 1.09
Postal
employee
share PSHB
premiums
fn2
0.00 0.00 0.00 - 0.11 - 0.12 - 0.14 - 0.15 - 0.16 - 0.17 - 0.18 - 0.19 - 0.37 - 1.22
Postal
annuitants
share PSHB
premiums
fn2
0.00 0.00 0.00 - 0.04 - 0.04 - 0.04 - 0.04 - 0.05 - 0.05 - 0.05 - 0.05 - 0.12 - 0.36
Non-Postal
employee
share FEHB
premiums
fn3
0.00 0.00 0.00 - 0.03 - 0.03 - 0.03 - 0.03 - 0.04 - 0.04 - 0.04 - 0.04 - 0.09 - 0.28
Non-Postal
annuitant
share FEHB
premiums
fn3
0.00 0.00 0.00 0.03 0.05 0.08 0.11 0.13 0.16 0.19 0.23 0.16 0.98
Postal
annuitant
premiums for
Medicare B
fn1a
Total [not equal] 0.00 0.00 0.00 - 0.32 - 0.12 - 0.01 0.11 - 0.05 0.10 0.24 0.41 - 0.45 0.35
[not equal] The estimated costs in this table were aggregated from multiple, independent analyses conducted by separate agencies, and are intended only to represent the directional flow of costs between various stakeholders. Due to the differences in assumptions and methodology employed by each agency (as detailed below), the cumulative impacts represented in this table do not directly align with the general expectation, as detailed in the narrative below, that aggregate premium payments will be lower post-PSRA due to the transfer of costs to drug manufacturers via mandatory Part D discounts. All estimates are based on coverage provisions as of 2023 and do not reflect expected changes to pharmaceutical coverage from the Inflation Reduction Act or Carrier Letter Number 2023-04, the 2023 FEHB Call Letter.
Sources and methodology:
1. Projected Medicare costs for additional Part B and Part D enrollment were provided by CMS.
a. Part B projections were based on an assumption that about 7,000 new retirees plus spouses would enroll in Part B in 2025, and growth would be consistent with aged enrollment. Additionally, CMS assumed that roughly 14,000 existing retirees would enroll in 2025, which would degrade over time due to deaths. Expected costs and premiums for additional enrollees were assumed to be consistent with current average Part B beneficiaries.
b. CMS estimated additional Part D costs based on projected annual headcounts of Postal Service annuitants. Annual headcounts were estimated using the 2021 Postal Service annuitant enrollment total (approximately 515,000) and applying an annual growth rate based on the number of new postal retirees in 2021. Growth estimates were trended by the projected annual growth in overall Part A and/or Part B enrollment and were decremented yearly by the annual mortality rates from SSA for ages 70-75. Using this methodology, CMS estimated that approximately 603,000 postal retirees would join Part D in 2025 and that this population would grow to 797,000 by 2032. To project annual Part D spending on Postal retirees, CMS assumed a 90/10 split between PDP-EGWP and MAPD-EGWP, and annual costs consistent with current beneficiaries in each of these enrollment categories.
2. Based on estimates provided by USPS actuaries and budget analysts. Projected savings on PSHB premiums are based on the expected reduction in the portion of retirees' medical costs that will be paid by PSHB plans, which is expected to lower overall costs in the combined pool of annuitants and employees and reduce premiums. USPS assumed that 30% of grandfathered annuitants would enroll in Part B during the SEP, resulting in 30,000 new enrollments in 2025. Annual projections for current and annuitant Postal enrollee populations were based on mortality and retirement projections for the postal population, which were developed by OPM.
3. Estimates from OPM Office of Administration (OA) Budget Summary as of January 2023 . Assumed 30% of grandfathered annuitants and family members would join during SEP and stable population of total annuitants from 2025-2032 (annual new retirees + family members [approximate] deaths in Postal annuitant population). Differential costs of FEHB and PSHB population was estimated using age distribution in the two populations, which skews slightly higher for Postal, and historical average costs by age band for the joint FEHB population. OA estimates a 5.8% reduction in average PSHB premiums beginning in 2025, which is attributed to the Part B and Part D requirements, and a 0.4% reduction in average FEHB premiums. Annual projections were discounted at a rate of 4% annually and assumed a 4.8% medical inflation rate.
Beginning in 2025, mandatory Medicare Part B enrollment for all future Postal Service Medicare covered annuitants enrolled in PSHB, as well as optional enrollment for all current Medicare-eligible annuitants, will transfer a portion of the costs for these individuals from the
The increase in Part B and Part D enrollment and the transfer of costs to Medicare will lower the aggregate costs among the PSHB population, as Medicare will cover a larger portion of the costs for
It is estimated that the cost of coverage for Postal employees and their eligible family members is slightly higher than for the other Federal employees. The creation of a separate risk pool for
As required in the PSRA, the
Additional transfers will likely occur among individual carriers and with third party vendors or contractors as part of the PSHB implementation. In particular, the requirements for integration of Part D coverage into PSHB plans will likely benefit larger carriers with more Medicare experience, who will be better positioned to seamlessly adjust plans to incorporate Part D coverage. Smaller carriers, in particular, are likely to lean on third-party vendors or contractors to assist with the PSHB implementation and/or Part D coverage integration, which will transfer a portion of carrier revenue into these markets.
Uncertainty and Directional Effects Related to Enrollment, Utilization, and Carrier Participation
All benefits, costs, and transfers summarized above are based on baseline assumptions that plan enrollment, carrier participation, and healthcare utilization will remain consistent following implementation of the PSHB Program. It is likely that implementation of the PSHB Program and the additional Medicare enrollment requirements will impact some or all of these baseline assumptions, which will have downstream effects for cost and utilization within both the PSHB and FEHB populations. The magnitude and directionality of these effects will depend on several factors that are presently uncertain.
Individual carriers will likely weigh the costs and benefits of offering FEHB plans and PSHB plans. Shifting enrollment numbers and additional implementation costs may lead some carriers to scale back or discontinue participation in one or both kinds of plans. This would impact the number of available plan options for both PSHB and FEHB enrollees, as well as the likelihood that they would be able to keep their current plans. However, as noted below, it is likely that the PSRA will increase the total number of plans covering both the
Similarly, PSHB enrollees required to enroll in Medicare Part B would be subject to additional premiums, which may impact the likelihood of their enrollment in PSHB plans. It is estimated that around 25% of
The additional Medicare Part B and Part D coverage may also induce a moral hazard effect due to the more robust coverage and lower cost-sharing. Moral hazard refers to the tendency of individuals to increase health care utilization and spending in response to greater coverage or lower out-of-pocket costs. If an individual is required to enroll in Medicare, they may feel more compelled to utilize the benefits, increasing overall health care consumption. This effect has been demonstrated in numerous studies, most notably the RAND and Oregon Health Insurance Experiments, which found that utilization of both necessary and unnecessary health services increased with increased coverage and lower cost sharing. /14/ /15/ // Increased utilization among these individuals would increase the overall per member costs within the PSHB plans which may result in higher premiums and potentially impact health outcomes.
FOOTNOTE 14 Brook, Robert H.,
FOOTNOTE 15 See
Any increases to premiums as a result of adverse selection or moral hazard would have future implications on PSHB enrollment and plan selection. If premiums increased, a greater percentage of enrollees may shift into alternative plans with less comprehensive benefits such as plans with reduced formularies and narrower provider networks, lower premiums and higher cost-sharing (e.g., standard option as opposed to high option health plans). This could potentially help to counter moral hazard effects and lower costs, although it could intensify adverse selection into the more robust plans, as high-cost individuals would be less likely to change plans.
Despite the assumption that not all carriers will offer both FEHB plans and PSHB plans, it is likely that the PSRA will increase the total number of plans covering both the Postal and greater FEHB population. This will result in smaller risk pools within each plan, which could lead to greater uncertainty with respect to costs. With smaller risk pools, each enrollee's health status has a larger impact on total costs. This can create greater variability in annual premiums. Smaller risk pools increase individual plans' exposure to high-cost outlier events, as there are fewer low or average-cost enrollees to offset these costs. Administrative costs would also be spread across smaller risk pools. To ensure financial solvency in such scenarios, plans may seek to price this additional risk exposure into premiums, resulting in an increase in the aggregate costs for all PSHB plan and FEHB plan enrollees compared to the baseline.
At present, there remains a great deal of uncertainty with respect to the longer-term impacts on plan enrollment, carrier participation, plan design, and plan premiums. It is possible that a number of current FEHB Carriers will elect not to participate in the PSHB Program or to drop their current FEHB plan offerings. Consolidation within the FEHB and PSHB markets would likely benefit larger carriers and may yield some efficiencies through greater economies of scale, although on aggregate, it is expected that PSHB implementation will result in a greater number of total plans and increased administrative costs and premiums. Fewer options may also simplify plan choice for employees and annuitants, saving time on plan comparisons.
Enrollment in the PSHB Program, particularly among individuals who are required to enroll in Medicare Part B, is also uncertain. For future
Alternatives
There are no feasible alternatives to this regulation as it implements section 8903c, as added by the PSRA, which establishes the PSHB Program and is mandated by the law. Therefore, OPM does not have the discretion to forego issuing regulations altogether. However, we considered alternatives to certain aspects of this regulation.
Initial Enrollment in the PSHB Program and Medicare Part B
OPM recognizes that, for a small portion of
We explored an opportunity for
Allowing individuals to pre-enroll in PSHB plans during the SEP means they would sign up for a plan without knowing their premium obligation. Similarly, because OPM will not have certified the future PSHB plans by the time the Medicare SEP occurs, there would be no way for an individual to know whether a given carrier will be participating in the PSHB Program for the next plan year, let alone what the final contract would look like. In general, while allowing those annuitants taking advantage of the Medicare SEP to simultaneously pre-enroll in a PSHB plan seems like it could reduce confusion and frustration from having two separate enrollment obligations, the timing of simultaneous PSHB pre-enrollment and the Medicare SEP would mean choosing a PSHB plan with unknown benefits and premiums and likely having to review the selection again during the PSHB Open Season period to ensure that the plan an individual pre-enrolled in actually makes sense for them once plan details are finalized and approved by OPM.
Much of the rationale for considering PSHB plan pre-enrollment can be achieved by providing information about automatic enrollment to
Despite these findings, we invite comments on this approach.
Centralized Enrollment
OPM is developing a centralized enrollment system simultaneously with the implementation of the PSHB Program. As explained above, the centralized enrollment system will shift certain responsibilities from the employing office to a new system which will function as an electronic enrollment solution for all PSHB stakeholder groups. With the advancement of technology over time, the existing decentralized processes related to FEHB enrollment may no longer be the most efficient methods for accomplishing enrollment functions. Developing a centralized enrollment system for the PSHB Program allows OPM to take advantage of IT solutions and create a modern enrollment system for
Reconsiderations
The standards for requesting reconsideration of an initial decision affecting enrollment in the PSHB Program will be the same as current FEHB standards at 5 CFR 890.104 and 890.308. Individuals will be made aware of their right to an independent review and generally, the time and manner for requesting reconsideration. OPM is considering establishing PSHB-specific processes and will closely track the implementation of the PSHB Program particularly as
Effective Date
OPM considered keeping the effective date of coverage for PSHB plans as the first day of the first pay period of the calendar year for
Regulatory Flexibility Act
OPM certifies this regulation will not have a significant economic impact on a substantial number of small entities.
Federalism
OPM has examined this rule in accordance with Executive Order 13132, Federalism, and have determined that this rule will not have any negative impact on the rights, roles and responsibilities of State, local, or Tribal governments.
Civil Justice Reform
This regulation meets the applicable standard set forth in Executive Order 12988, Civil Justice Reform.
Unfunded Mandates Reform Act of 1995
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also requires that agencies assess anticipated costs and benefits before issuing any rule whose mandates require spending by State, local, and Tribal governments in any 1 year of
Congressional Review Act
Subtitle E of the Small Business Regulatory Enforcement Fairness Act of 1996 (also known as the Congressional Review Act) (5 U.S.C.
Paperwork Reduction Act
Notwithstanding any other provision of law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with a collection of information subject to the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (PRA), unless that collection of information displays a currently valid
OPM is investigating whether to create a new information collection or revise an existing information collection for the PSHB Program and seeks public comment on this question. If an information collection is revised, it will be the SF-2809, Health Benefits Election Form, under OMB Control number 3206-0160. Information regarding the collection, including all current supporting materials, can be accessed at https://www.reginfo.gov/public/do/PRAMain. The systems of records notice for this collection is: OPM/Central-23, "FEHB Program Enrollment Records," available at https://www.federalregister.gov/d/2021-01259 (86 FR 6377,
List of Subjects
5 CFR Part 890
Administrative practice and procedure, Government employees, Health facilities, Health insurance, Health professions,
48 CFR Parts 1602 and 1609
Government employees, Government procurement, Health insurance,
Federal Register Liaison.
Accordingly, OPM amends 5 CFR part 890 and 48 CFR chapter 16 (FEHBAR) as follows:
Title 5--Administrative Personnel
PART 890--FEDERAL EMPLOYEES HEALTH BENEFITS PROGRAM
1. The authority citation for part 890 is revised to read as follows:
Authority:5 U.S.C. 8913; Sec. 890.102 also issued under sections 11202(f), 11232(e), and 11246 (b) of Pub. L. 105-33, 111 Stat. 251; Sec. 890.111 also issued under 36 U.S.C. 5522; Sec. 890.112 also issued under 2 U.S.C. 2051; Sec. 890.113 also issued under section 1110 of Pub. L. 116-92, 133 Stat. 1198 (5 U.S.C. 8702 note); Sec. 890.301 also issued under 26 U.S.C. 9801; Sec. 890.302(b) also issued under 42 U.S.C. 300gg-14; Sec. 890.803 also issued under 50 U.S.C. 3516 (formerly 50 U.S.C. 403p) and 22 U.S.C. 4069c and 4069c-1; subpart L also issued under section 599C of Pub. L. 101-513, 104 Stat. 2064 (5 U.S.C. 5561 note); subpart M also issued under 10 U.S.C. 1108 and 25 U.S.C. 1647b; and subpart P issued under 5 U.S.C. 8903c.
Subpart A--Administration and General Provisions
2. Amend
a. Revising the introductory text; and
b. Adding the definitions of "Federal Employees Health Benefits (FEHB) Program," "FEHB plan," "Medicare covered member of family," "Postal Service Health Benefits (PSHB) Program," "Postal Service Medicare covered annuitant," and "PSHB plan" in alphabetical order.
The revision and additions read as follows:
(a) In this part, the terms annuitant, carrier, employee, employee organization, former spouse, health benefits plan, member of family, and service have the meanings set forth in 5 U.S.C. 8901; the terms
*****
Federal Employees Health Benefits (FEHB) Program means the health insurance program administered by the
FEHB plan means a health benefits plan as defined in 5 U.S.C. 8901(6) and governed by this part, with the exception of a PSHB plan.
*****
Medicare covered member of family means an individual who is both a covered Medicare individual and a member of family of a Postal Service Medicare covered annuitant.
*****
Postal Service Health Benefits (PSHB) Program means the health insurance program established under 5 U.S.C. 8903c within the Federal Employees Health Benefits Program.
Postal Service Medicare covered annuitant means an individual who is both a covered Medicare individual and a
PSHB plan means a health benefits plan offered under the PSHB Program.
*****
3. Add
Special provisions for
Subpart C--Enrollment
4. Amend
SEC890.301Opportunities for employees to enroll or change enrollment; effective dates.
*****
(p)
5. Amend
(a)(1) Enrollment. An enrollment for self plus one includes the enrollee and one eligible family member. An enrollment for self and family includes all family members who are eligible to be covered by the enrollment except as provided in
(2) * * *
(i) Prohibition on dual enrollment. A dual enrollment exists when an individual is covered under more than one enrollment under this part. Dual enrollments are prohibited except when an eligible individual would otherwise not have access to coverage and the dual enrollment has been authorized by the employing office.
*****
6. Amend
*****
(j) On transfer to or from
7. Amend
*****
(i) Disenrollment and removal from enrollment: Medicare enrollment requirement for certain
Subpart E--Contributions and Withholdings
8. Amend
*****
(b) In accordance with the provisions of 5 U.S.C. 8906(a) which takes effect with the contract year that begins in
*****
Subpart O--[Added and Reserved]
9. Add reserved subpart O.
10. Add subpart P, consisting of [Sec.]
Subpart P--Postal Service Health Benefits Program
Sec.
890.1601Purpose.
890.1602Definitions and deemed references.
890.1603Eligibility for the Postal Service Health Benefits Program.
890.1604Medicare enrollment requirement for certain
890.1605Enrollment in the initial contract year.
890.1606Opportunities to enroll, change enrollment, or reenroll; effective dates.
890.1608Disenrollment, removal, termination, cancellation, and suspension.
890.1609Temporary extension of coverage, conversion, or temporary continuation of coverage.
890.1610Minimum standards for PSHB Program plans and Carriers.
890.1611Withdrawal of approval of health benefits plan or carrier.
890.1612Information sharing.
890.1613Contributions and withholdings.
890.1614Other administrative provisions.
This subpart sets forth the establishment, administration, and requirements of the Postal Service Health Benefits Program under 5 U.S.C. 8903c, within the FEHB Program under 5 U.S.C. chapter 89. This subpart incorporates provisions of this part to the extent generally applicable and not inconsistent with this subpart.
(a) In this subpart, the terms set out in
(b) In this subpart, the terms covered Medicare individual, initial contract year, initial participating carrier, Medicare Part A, Medicare Part B, and Postal Service Medicare covered annuitant have the meanings set forth in 5 U.S.C. 8903c.
(c) In this subpart--
Cancel means to submit to the employing office an appropriate request electing not to be enrolled in a PSHB plan, by an enrollee who is eligible to continue enrollment, including because the enrollee did not enroll in, or chose to disenroll from, Medicare Part B.
Election not to enroll means to submit an appropriate request electing not to be enrolled in a PSHB plan by an individual who is eligible to enroll, including because the individual chooses not to enroll in Medicare Part B.
Medicare coverage means coverage that meets the requirements of
(d) In this subpart, wherever reference is made to other subparts of this part--
(1) A reference to employee is deemed a reference to
(2) A reference to enrollee is deemed a reference to a
(3) A reference to annuitant, survivor annuitant, or an individual with entitlement to an annuity is deemed a reference to
(4) A reference to employer, employing agency, employing office, or agency for
(5) A reference to carrier is deemed a reference to a PSHB Carrier.
(a) Except as provided by paragraph (b) of this section, the following individuals are eligible to enroll, or to be covered under an enrollment, in a health benefits plan described at 5 U.S.C. 8903c and under this subpart:
(1)
(2)
(3) Member of family of an individual in paragraph (a)(1) or (2) of this section.
(b) For purposes of this subpart, a
(c) The following individuals may not enroll, or be covered under an enrollment, in this subpart:
(1) Any Postal Service Medicare covered annuitant who is not enrolled in Medicare Part B and is required to be enrolled in Medicare Part B, in accordance with
(2) Any Medicare covered member of family of a Postal Service Medicare covered annuitant who is not enrolled in Medicare Part B and is required to be enrolled in Medicare Part B, in accordance with
(3) Any individual covered by an FEHB plan under this part, except as permitted by
(d) Former spouses of
(e) Survivor annuitants have the same eligibility for reinstatement of enrollment as described in
(f) Individuals enrolled or covered under the PSHB Program are eligible to elect temporary continuation of coverage as provided under subpart K of this part.
(a) Except as provided by paragraph (c)(1) of this section, a Postal Service Medicare covered annuitant may not enroll or continue enrollment in a health benefits plan under this subpart unless the annuitant is entitled to benefits under Medicare Part A and enrolled in Medicare Part B.
(b) Except as provided by paragraph (c)(2) of this section, where a
(c) Pursuant to paragraph (d) of this section, the requirements under paragraphs (a) and (b) of this section, as applicable, shall not apply to the following individuals:
(1) A Postal Service Medicare covered annuitant who--
(i) As of
(ii) As of
(iii) Resides outside
(iv) Is enrolled in health care benefits provided by the
(v) Is eligible for health services from the
(2) A Medicare covered member of family who--
(i) Is eligible for PSHB coverage based on a Postal Service Medicare covered annuitant who is not required to enroll in Medicare Part B in order to be eligible for coverage under this subpart;
(ii) Resides outside
(iii) Is enrolled in health care benefits provided by the
(iv) Is eligible for health services from the
(d) To qualify for an exception under paragraph (c) of this section, a Postal Service Medicare covered annuitant or a Medicare covered member of family must meet one of the following documentation requirements:
(1) Demonstrating qualification to the
(2) Documentation from the
(3) Documentation from the
(e) A Postal Service Medicare covered annuitant or a Medicare covered member of family may notify the
(f) The process for disenrollment or removal from PSHB enrollment for non-enrollment in Medicare Part B is described in
(a) Definitions. In this section--
Current enrollment type means the type of coverage (self only, self plus one, or self and family) of the FEHB plan in which the individual is enrolled during the contract year immediately preceding the initial contract year;
Current option with respect to an individual, means the option under a FEHB plan in which the individual is enrolled during the contract year immediately preceding the initial contract year; and
Current plan means, with respect to an individual, the FEHB plan in which the individual is enrolled during the contract year immediately preceding the initial contract year.
(b) Transitional Open Season. (1) During the Open Season that immediately precedes the initial contract year (i.e., the transitional Open Season), a
(i) May elect to enroll or elect not to enroll in a PSHB plan; and
(ii) Will not be enrolled or continue enrollment in an FEHB plan under this part as a
(2) A
(3) During the transitional Open Season, a
(c) Automatic enrollment. Each
(1) In a PSHB plan by the carrier of the individual's current plan if the carrier offers only one plan under this subpart.
(2) If the carrier of the individual's current plan offers more than one health benefits plan or option under this subpart, in the plan and option offered by that carrier that provides coverage with equivalent benefits and cost sharing to the individual's current plan and option, as determined by OPM.
(3) If there is no such plan as identified by OPM in paragraph (c)(1) or (2) of this section, in the lowest-cost nationwide plan option offered under this subpart that is not a high deductible health plan and does not charge an association or membership fee as determined by OPM.
(4) All enrollments under paragraph (c)(1) of this section will be in the same enrollment type as the current enrollment type.
(d) Automatic enrollment--effect on family members. A
(1) A self plus one enrollment will cover the same eligible family member as in the current plan. Automatic enrollment does not verify eligibility of family members. The enrollee must make an affirmative enrollment change to remove an ineligible family member and may replace them with an eligible family member or change the enrollment to a self only or to a self and family enrollment type. Failure to affirmatively change an automatic enrollment to remove an ineligible family member from a self plus one enrollment will result in coverage only for the enrollee but premium withholding for a self plus one enrollment.
(2) A self and family enrollment will include all eligible members of family. Automatic enrollment does not verify identity of eligible family members. The enrollee must affirmatively notify the PSHB Carrier, employing office, or OPM of any changes to members of family.
(e) Belated enrollment and enrollment changes. Belated enrollments and enrollment changes will be permitted as follows:
(1) In general, belated enrollments or belated enrollment changes are permitted in accordance with
(2) Any individuals who should have been automatically enrolled pursuant to this section but were not, are deemed to have met the requirement to show that they were unable to enroll for cause beyond their control.
(3) OPM may, in its discretion, deem other individuals or groups of individuals to have met the requirement to show that they were unable to enroll for cause beyond their control.
(4) Unless required to be a prospective change by governing premium conversion under part 892 of this chapter, a belated Open Season enrollment or enrollment change, coverage, and premium obligation take effect on
(a) Except as otherwise provided in this subpart, a
(b) Except as otherwise provided in this subpart, a
(c) Except as otherwise provided in this subpart, reinstatement of enrollment in accordance with
(d) Except as otherwise provided in this subpart, initial decisions and reconsiderations on enrollment and eligibility under this subpart will be made pursuant to
(e) Under this subpart, an enrollment, change of enrollment, or reenrollment made during Open Season takes effect on the
(f) Under this subpart, OPM will effectuate the following health benefits actions: to enroll or change enrollment; to elect not to enroll; and to reenroll. The employing office makes determinations of eligibility under 5 U.S.C. chapter 89, pursuant to application of 39 U.S.C. 1005.
(a) Enrollment in FEHB plan terminates prior to the initial PSHB contract year. For individuals who are eligible to enroll under this subpart pursuant to
(b) Disenrollment and removal from enrollment: Postal Service Medicare covered annuitants and Medicare covered members of family not enrolled in Medicare Part B. (1) Unless the individual qualifies for an exception under
(i) By the end of their Medicare initial enrollment period or applicable Medicare special enrollment period; or,
(ii) Any time after
(2) A Postal Service Medicare covered annuitant will not be disenrolled and a Medicare covered member of family will not be removed from PSHB coverage in a case where that individual was not informed of their obligation to enroll in Medicare Part B, or it would be against equity and good conscience to remove the individual. In such a case, that individual will be permitted to stay enrolled in or covered by PSHB if they enroll in Medicare during their next enrollment opportunity, such as the next Medicare general enrollment period.
(3) A Postal Service Medicare covered annuitant will not be disenrolled and a Medicare covered member of family will not be removed from PSHB coverage due to not being enrolled in Medicare Part B if such individual qualifies for one of the exceptions in
(4) A Postal Service Medicare covered annuitant may not be disenrolled if they have suspended PSHB enrollment while enrolled in a Medicare-sponsored plan under section 1833, 1876, or 1851 of the Social Security Act as described in
(5) Disenrollment of a Postal Service Medicare covered annuitant from a PSHB plan under this section shall be considered a termination with entitlement of the enrollee and PSHB covered family members to a 31-day temporary extension of coverage and the right of conversion under
(c) Ineligibility under this subpart. The PSHB Carrier,
(d) Removal due to fraud or misrepresentation. Pursuant to
(e) Cancellation of PSHB in writing to the
(1) The cancellation of a Postal Service Medicare covered annuitant's PSHB plan enrollment--
(i) Is effective as of the last day of the last pay period in which the Postal Service Medicare covered annuitant was enrolled in Medicare Part B, or the last day of the last pay period before the individual became a Postal Service Medicare covered annuitant; and
(ii) Cancels the PSHB plan coverage of any family members covered under a self plus one or self and family enrollment, subject to applicable provisions at
(2) The cancellation of a Medicare covered member of family's PSHB plan coverage is effective the last day in which the Medicare covered family member was enrolled in Medicare Part B, or the last day before the individual became eligible for Medicare but did not enroll.
(3) When writing to notify the
(4) Cancellation of PSHB enrollment or coverage under this paragraph (e) shall be treated as a termination and an enrollee or covered family member whose enrollment or coverage is canceled is entitled to a 31-day temporary extension of coverage and right of conversion in accordance with
(f) Temporary extension of coverage and conversion. A
(a) A 31-day temporary extension of coverage and right of conversion under subpart D of this part is available from the health benefits plan under 5 U.S.C. chapter 89 in which the enrollee or covered family member was most recently enrolled or covered.
(b) If an individual was enrolled in or covered by a PSHB plan until becoming eligible for temporary continuation of coverage under subpart K of this part, the individual may elect coverage under subpart K by a PSHB plan offered under this subpart.
(a) Minimum standards for PSHB plans. To qualify for approval by OPM, a health benefits plan under this subpart shall--
(1) Meet the minimum standards for health benefits plans at
(2) Provide prescription drug benefits pursuant to 5 U.S.C. 8903c(h)(2);
(3) Provide equivalent benefits and cost-sharing in the initial contract year to the carrier's FEHB plan, as applicable, pursuant to section 8903c(c)(2);
(4) Maintain separate reserves, including contingency reserves, with respect to enrollees in each PSHB plan as directed by OPM; and
(5) Begin coverage on
(b) Minimum standards for PSHB Carriers. The minimum standards for health benefits carriers under this subpart shall be those contained in 48 CFR 1609.70.
(c) Approval of plans with 1,500 or more Postal enrollees. To the greatest extent practicable, in the initial contract year, OPM shall approve a health benefits plan offered by a carrier under this subpart that has equivalent benefits and cost-sharing to the FEHB plan offered by that carrier in which the total enrollment of
(d) Withdrawal of plan approval. Failure on the part of the PSHB Carrier's plan to meet the standards in this section is cause for OPM's withdrawal of approval of the plan in accordance with
(a) OPM may withdraw approval of a health benefits plan or carrier under this subpart and may give notice of non-renewal of a contract pursuant to
(b) Contracts to offer health benefits plans in the PSHB Program pursuant to 5 U.S.C. 8903c(c)(1)(A) are subject to nonrenewal in accordance with
(a) OPM shall establish periodic agreements with the
(1) Determining whether Postal Service Medicare covered annuitants and Medicare covered members of family of those annuitants satisfy the Medicare enrollment requirements at
(2) Determining which
(b) OPM shall identify
(c) OPM shall establish periodic agreements with the
(d) These agreements shall specify, at a minimum, the purpose and legal authorities that govern the elements of information or data to be shared, the process that will be used for sharing the information or data, the frequency of sharing the information and data, and the permitted uses and redisclosure of the information and data.
(e) The agreements established under paragraph (c) of this section shall, to the greatest extent practicable, ensure that data is shared for the following purposes:
(1) To determine which
(2) To determine which Postal Service Medicare covered annuitants and their Medicare covered members of family may be subject to the enrollment requirements described in
(3) To create a system for data sharing as needed for carrying out 5 U.S.C. 8903c and this subpart.
(a) In general. The calculations for contributions and withholdings for coverage under this subpart will be made in the same manner as 5 U.S.C. 8906 and subpart E of this part.
(b)
(c) Medicare late enrollment penalty. Upon request by the
(d) Calculations for the
(e) Clarification of statutory terms. OPM has determined that "future net claims costs" in the calculation in 5 U.S.C. 8909a(e)(1) is equivalent to "estimated net claims costs" as defined in 5 U.S.C. 8909a(g).
(a) Correction of errors. Correction of errors under this subpart may be made according to
(b) Carrier entitlement to pursue subrogation and reimbursement recoveries. Carrier entitlement to pursue subrogation and reimbursement recoveries must follow the requirements of
(c) Enrollment reconciliation. (1) OPM and each PSHB Carrier must, at OPM's direction and in the manner requested by OPM, reconcile PSHB plan enrollment records, including with a list of the Postal Service Medicare covered annuitants and their Medicare covered members of family that satisfy the Medicare enrollment requirements at
(2) Any Postal Service Medicare covered annuitant or a Medicare covered member of family of such annuitant that is found to be enrolled or covered under a PSHB plan without satisfying the Medicare enrollment requirements at
(d) Information about PSHB Program enrollment requirements. OPM shall provide timely information about PSHB Program enrollment requirements to the
(e) All other provisions. Other requirements of this part not referenced within this subpart shall be interpreted to apply to the PSHB Program consistent with definitions and deemed references, unless it conflicts with this subpart, as determined by the Director.
(f) Conflicts. In the event of a conflict between a provision of this subpart and a provision in this part, as determined by the Director, this subpart will supersede.
Title 48--Federal Acquisition Regulations System
CHAPTER 16--OFFICE OF PERSONNEL MANAGEMENT FEDERAL EMPLOYEES HEALTH BENEFITS ACQUISITION REGULATION
PART 1602--DEFINITIONS OF WORDS AND TERMS
11. The authority citation for part 1602 is revised to read as follows:
Authority:5 U.S.C. 8903c and 8913; 40 U.S.C. 486(c); 48 CFR 1.301.
12. Add sections 1602.170-17 through 1602.170-22 to read as follows:
Sec.
*****
1602.170-17Postal Service.
1602.170-18Postal Service annuitant.
1602.170-19Postal Service employee.
1602.170-20PSHB Carrier.
1602.170-21PSHB plan.
1602.170-22PSHB Program.
*****
1602.170-17Postal Service.
1602.170-18Postal Service annuitant.
1602.170-19Postal Service employee.
1602.170-20PSHB Carrier.
PSHB Carrier means a carrier that enters into a contract with OPM under 5 U.S.C. 8902 to offer a health benefits plan in the PSHB Program.
1602.170-21PSHB plan.
PSHB plan means a health benefits plan offered under the PSHB Program.
1602.170-22PSHB Program.
Postal Service Health Benefits (PSHB) Program means the Program established under 5 U.S.C. 8903c within the Federal Employees Health Benefits Program.
PART 1609--CONTRACTOR QUALIFICATIONS
13. The authority citation for part 1609 is revised to read as follows:
Authority:5 U.S.C. 8903c and 8913; 40 U.S.C. 486(c); 48 CFR 1.301.
14. Add section 1609.7002 to read as follows:
1609.7002Minimum standards for Postal Service Health Benefits Carriers.
(a) The carrier of a PSHB plan shall meet the minimum standards as described in 1609.7001.
(b) To the greatest extent practicable, an FEHB Carrier (defined in 1602.170-1) that offers an FEHB plan (defined in 1602.170-9) in which the total enrollment includes 1,500 or more
[FR Doc. 2023-07080 Filed 4-4-23;
BILLING CODE 6325-63-P
Agency Information Collection Activity: Servicemembers' Group Life Insurance–Traumatic Injury Protection Program (TSGLI) Application for TSGLI and Traumatic Injury Protection Program (TSGLI) Appeal Request Form; Withdrawn
HHS Reminds States of Legal Obligations to Federal Civil Rights Protections as States Transition From Medicaid Continuous Coverage Changes as the Public Health Emergency Ends
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