Understanding PSHB Program

The Postal Service Reform Act of 2022 (PSRA) created a new group-sponsored health insurance plan, the Postal Service Health Benefits (PSHB) program. The PSHB is a new and separate program within the Federal Employees Health Benefits (FEHB) program, administered by the Office of Personnel Management (OPM). The PSHB program will provide health insurance to eligible Postal Service employees, Postal Service annuitants, and their eligible family members starting in January 2025. The PSHB program coverage will replace the FEHB program coverage for these groups.

This column discusses what Postal Services employees, annuitants and eligible family members need to know about the new and coming PSHB program.

The PSHB will become effective January 1, 2025. According to the provisions of the PSRA, Postal Service employees, Postal Service annuitants, and their eligible family members who are currently eligible for coverage under the FEHB program will be automatically eligible for coverage under the PSHB program. The first opportunity to select a PSHB health insurance plan will be during the next OPM-sponsored “open season” which will take place in early November 2024 through early December. Postal service employees and annuitants who are currently enrolled in FEHB program plans and who do not enroll in a new PSHB plan during the 2024 “open season” will be automatically enrolled in a PSHB plan.  Coverage under the PSHB health benefits program coverage will take effect in January 2025.

Enrollment in a PSHB plan will not disrupt enrollment in other federal government-sponsored insurance and benefits programs, including:

• Federal Employees Dental and Vision Insurance Program (FEDVIP),
• Federal Flexible Spending Account Program (FSAFEDS),
• Federal Employees Group Life Insurance (FEGLI), and
• Federal Long-Term Care Insurance Program (FLTCIP).

If a family member of a Postal Service employee or annuitant meets the requirements for enrollment in an FEHB program plan (for example, qualifying employment with the federal government), the PSRA will not affect their eligibility to continue enrollment in an FEHB program health plan or affect their ability to cover their eligible family members.

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PSRA and Medicare

Those Postal Service annuitants who are age 65 or older and eligible to enroll in Medicare but who have not enrolled in Medicare Part B (Medical Insurance), have an opportunity to enroll in Medicare Part B and not be subject to a late enrollment penalty during the six-month period April 1,2024 through September 30, 2024. They will not be subject to a late enrollment penalty no matter how long it has been since their first opportunity to enroll in Medicare Part B. The Medicare Part B late enrollment penalty is normally imposed on individuals eligible to enroll but who choose not to enroll when they are first eligible and enroll at a later time. 

Understanding the New Postal Service Health Benefits Program

If a Postal Service annuitant over age 65 does decide to enroll in Medicare Part B during this six-month special enrollment period, then their Medicare Part B coverage will become effective January 1, 2025. Individuals who qualify for this Medicare Part B Special Enrollment Period  should have received a separate notification from OPM prior to April 1,2024 in accordance with the PSRA.

Postal annuitants who are currently eligible for Medicare and who choose not to enroll in Medicare Part B are not required to enroll in Medicare Part B and their current FEHB enrollment will continue under the PSHB program starting in January 2025. However, if these Postal annuitants choose to enroll in Medicare Part B once the PSHB program becomes effective, then they will be subject to a late Medicare Part B enrollment penalty, starting when these annuitants were initially eligible to enroll.

Under PSRA rules, when current Postal Service employees retire from the Postal Service, they will be required to enroll in Medicare Part A and Medicare Part B when they become eligible for Medicare at the later of age 65 or when they retire from the Postal Service. Current Postal Service annuitants who are younger than age 65 will be required to enroll in Medicare Part A and Medicare Part B when they become age 65.

Edward A. Zurndorfer is a CERTIFIED FINANCIAL PLANNER™ professional, Chartered Life Underwriter, Chartered Financial Consultant, Chartered Federal Employee Benefits Consultant, Certified Employees Benefits Specialist and IRS Enrolled Agent in Silver Spring, MD. Tax planning, Federal employee benefits, retirement and insurance consulting services offered through EZ Accounting and Financial Services, and EZ Federal Benefits Seminars, located at 833 Bromley Street – Suite A, Silver Spring, MD 20902-3019 and telephone number 301-681-1652. Raymond James is not affiliated with and does not endorse the opinions or services of Edward A. Zurndorfer or EZ Accounting and Financial Services. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.

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