Postal Service Reform Act; Establishment of the Postal Service Health Benefits Program, 20383-20408 [2023-07080]

Agencies

• Office of Personnel Management

[Federal Register Volume 88, Number 66 (Thursday, April 6, 2023)]
[Rules and Regulations]
[Pages 20383-20408]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-07080]



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Rules and Regulations
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains regulatory documents 
having general applicability and legal effect, most of which are keyed 
to and codified in the Code of Federal Regulations, which is published 
under 50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by the Superintendent of Documents. 

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Federal Register / Vol. 88, No. 66 / Thursday, April 6, 2023 / Rules 
and Regulations

[[Page 20383]]



OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 890

48 CFR Parts 1602 and 1609

RIN 3206-AO43


Postal Service Reform Act; Establishment of the Postal Service 
Health Benefits Program

AGENCY: Office of Personnel Management.

ACTION: Interim final rule; request for comments.

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SUMMARY: The Office of Personnel Management (OPM) is issuing an interim 
final rule with comment period to establish and administer the Postal 
Service Health Benefits (PSHB) Program pursuant to the Postal Service 
Reform Act of 2022 (PSRA). Under the statute, OPM must establish a PSHB 
Program for Postal Service employees, Postal Service annuitants, and 
their eligible family members, and not later than one year after the 
date of enactment, the OPM Director must issue regulations to carry out 
the statute.

DATES: 
    Effective date: This rule is effective on June 5, 2023.
    Comment date: OPM must receive comments on the rule on or before 
June 5, 2023.

ADDRESSES: You may submit comments, identified by docket number or 
Regulatory Information Number (RIN) and title, by the following method:
    [ssquf] Federal Rulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments. All submissions 
received must include the agency name and docket number or RIN for this 
document. The general policy for comments and other submissions from 
members of the public is to make these submissions available for public 
viewing at https://www.regulations.gov as they are received without 
change, including any personal identifiers or contact information.

FOR FURTHER INFORMATION CONTACT: Louise Dyer Yinug, Senior Policy 
Analyst, at (202) 972-0913 and Rina Shah, Senior Policy Analyst, at 
(202) 631-4910.

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 United States Postal Service (Postal 
Service or USPS) employees, Postal Service annuitants, and their 
eligible family members starting January 1, 2025. For these 
individuals, eligibility for enrollment or coverage in FEHB plans based 
on Postal Service employment will end on December 31, 2024, and they 
will be able to enroll in or be covered only by PSHB plans after that 
time. Subject to limited exceptions, Postal Service annuitants who 
retire and become Medicare-eligible after December 31, 2024, and their 
Medicare-eligible family members will be required to enroll in Medicare 
Part B as a condition of eligibility to enroll in the PSHB Program.
    With the enactment of the PSRA and these implementing regulations, 
the Office of Personnel Management (OPM) may now contract with carriers 
to offer two categories of health benefits plans through the broad 
umbrella of the FEHB Program, established under 5 U.S.C. 8901 et seq. 
First, pursuant to 5 U.S.C. 8902, OPM may contract with carriers to 
offer FEHB plans. Second, pursuant to 5 U.S.C. 8903c, OPM may now 
contract with carriers to offer PSHB plans through the PSHB Program 
within the FEHB Program. The broad umbrella of the FEHB Program 
comprises both FEHB plans and PSHB plans.

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 FEHB Program for Postal Service employees, Postal 
Service annuitants, and their eligible family members. OPM will 
administer the PSHB Program in accordance with chapter 89 of title 5, 
United States Code, and implementing regulations (5 CFR parts 890 and 
892 and 48 CFR chapter 16), including these amended regulations. Under 
5 U.S.C. 8903c(c)(3), except as otherwise set forth in 5 U.S.C. 8903c, 
the provisions of chapter 89 ``applicable to health benefits plans 
offered by carriers under section 8903 or 8903a shall apply to plans 
offered under the ``[PSHB] Program.''
    The PSHB Program was authorized under the Title I Postal Service 
Financial Reforms provisions in the PSRA in furtherance of Congress's 
objective to ``improve the financial position of the Postal Service 
while increasing transparency and accountability of the Postal 
Service's operations, finances, and performance.'' \1\ OPM is issuing 
this interim final rule to set forth standards to implement section 101 
of the PSRA to establish the PSHB Program. The first Open Season for 
the PSHB Program will begin on November 11, 2024, and run through 
December 9, 2024, and the first contract year will begin January 2025.
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    \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.
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    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 Postal 
Service to pre-fund health benefits costs for its retirees. Section 102 
of the PSRA repeals the requirement to pay actuarially determined 
normal cost and amortization payments into the Postal Service Retiree 
Health Benefits Fund (PSRHBF) established at 5 U.S.C. 8909a, and 
cancels any unpaid amounts previously required to be paid under section 
8909a. Section 102(b) requires OPM to calculate an amount that the 
Postal Service will pay annually into the PSRHBF using a formula set 
forth at 8909a(d)(1). This amount will be calculated by June 30 of each 
year beginning in 2026.

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

[[Page 20384]]

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, Postal Service employees, Postal 
Service annuitants, and their family members are also eligible for FEHB 
pursuant to 39 U.S.C. 1005.
    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, Postal Service employees whose Government 
contribution under chapter 89 is paid by the Postal Service, Postal 
Service annuitants whose Government contribution under chapter 89 is 
required to be paid under 5 U.S.C. 8906(g)(2), and eligible family 
members of those Postal Service employees and Postal Service annuitants 
are eligible for coverage under the PSHB Program. Starting January 
2025, these Postal Service employees and Postal Service annuitants may 
not enroll in an FEHB plan. The major difference in eligibility between 
PSHB plans and FEHB plans is that, generally, as a new condition of 
eligibility to enroll in the PSHB Program, the PSRA requires that 
Postal Service annuitants and their eligible family members who are 
entitled to Medicare Part A (also referred to as ``covered Medicare 
individuals''), must enroll in Medicare Part B, unless an exception 
applies.
    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 
Postal Service annuitants and their PSHB-eligible family members.
    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 Postal Service employee as ``an employee of the Postal 
Service enrolled in a health benefits plan under this chapter whose 
Government contribution is paid by the Postal Service.'' Under section 
8903c(a)(8), a Postal Service annuitant ``means an annuitant enrolled 
in a health benefits plan under this chapter whose Government 
contribution is required to be paid under section 8906(g)(2).'' 
Therefore, individuals not meeting the statutory definition of a Postal 
Service annuitant or Postal Service employee are not eligible to enroll 
in a PSHB plan. If such individuals are eligible for enrollment in an 
FEHB plan, they may enroll or continue enrollment in such plan.
    The PSRA does not establish a distinct category for Postal Service 
compensationers, those employees who sustain workplace-related illness 
or injury, receive workers' compensation payments through the 
Department of Labor's Office of Workers' Compensation Programs (OWCP) 
because of that illness or injury, and who are determined by the 
Secretary of Labor to be unable to return to duty. Section 8901 of 
title 5, U.S.C. includes ``an employee who receives monthly 
compensation under subchapter I of chapter 81 of this title and who is 
determined by the Secretary of Labor to be unable to return to duty'' 
in the definition of annuitant.\2\ However, the PSRA definition of 
Postal Service annuitant is limited to those who are enrolled in a 
health benefits plan under

[[Page 20385]]

5 U.S.C. chapter 89, whose Government contribution is required to be 
paid under section 8906(g)(2).
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    \2\ 5 U.S.C. 8901(3)(C).
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    Section 8906(g)(2) authorizes Government contributions for health 
benefits for individuals who become Postal Service annuitants ``by 
reason of retirement'' and their survivors. These contributions are 
paid first by the Postal Service Retiree Health Benefits Fund with any 
remaining amount paid by the Postal Service. The description in 
8906(g)(2) does not include Postal Service compensationers, as they 
have not become annuitants by reason of retirement. Postal Service 
compensationers are more closely aligned with the 8903c(a) definition 
of Postal Service employee, whose Government contribution is paid by 
the Postal Service.
    The definition of Postal Service employee, rather than Postal 
Service annuitant, will include Postal Service compensationers. Postal 
Service compensationers will not be subject to the Medicare Part B 
enrollment requirement, regardless of Medicare Part A entitlement.

Primary and Secondary Payers

    The Centers for Medicare & Medicaid Services (CMS) generally 
considers those receiving worker's compensation payments to be 
employees. As described above, compensationers are considered to be 
employees within the meaning of 42 CFR 411.40, 411.43, and 411.45. 
Medicare is the secondary payer for all compensationers enrolled in an 
FEHB plan or a PSHB plan. Even if a compensationer is entitled to or 
eligible for Medicare benefits, enrolled in Medicare, and enrolled in 
an FEHB plan, Medicare is still the secondary payer, notwithstanding 
the statutory annuitant status for purposes of FEHB enrollment, with 
respect to those compensationers determined unable to return to duty. 
Should a Postal Service compensationer who is enrolled in a PSHB plan 
and entitled to or eligible for Medicare benefits choose to enroll in 
Medicare, that compensationers' Medicare coverage would be secondary to 
the PSHB plan coverage. Postal Service annuitants enrolled in Medicare 
and enrolled in a PSHB plan would have Medicare as primary coverage and 
PSHB plan coverage as secondary.

Impact on Other Benefits

    Eligibility for the PSHB Program does not affect eligibility for 
other Federal benefits. Postal Service employees and Postal Service 
annuitants may continue to enroll and cover their eligible family 
members in the Federal Employees Dental and Vision Insurance Program 
(FEDVIP), Federal Employees' Group Life Insurance (FEGLI), Federal Long 
Term Care Insurance Program (FLTCIP), and, for Postal Service employees 
and their family members, participate in the Federal Flexible Spending 
Account Program (FSAFEDS).

Consultation With the Postal Service and Other Federal Agencies

    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 Veterans Affairs, Secretary of Health and Human 
Services, and the Postmaster General, promulgate regulations 
implementing the Department of Veterans Affairs (VA) and Indian Health 
Service (IHS) coverage exceptions to the Medicare enrollment 
requirements for certain Postal Service Medicare covered annuitants and 
family members enrolled in certain health care benefits provided by the 
VA, or eligible for IHS health services, within a year of enactment. 
OPM has engaged in this consultation since the PSRA was enacted.
     5 U.S.C. 8903c(e)(4) requires OPM and the Postal Service, 
in consultation with the Social Security Administration (SSA) and CMS, 
to establish a process that will enable the Postal Service to timely 
inform Postal Service employees, Postal Service annuitants and the 
family members of Postal Service employees and annuitants of the 
Medicare enrollment requirements. OPM has engaged in this consultation 
since the PSRA was enacted.
     5 U.S.C. 8903c(g)(2) requires OPM to consult with the 
Department of Health and Human Services (HHS) Secretary, VA Secretary, 
SSA Commissioner, and the Postmaster General in issuing regulations 
carrying out section 101 of the PSRA to include (1) a process to timely 
inform individuals of the enrollment requirements and how to request 
additional enrollment information in writing; (2) how an individual 
enrolled in PSHB can request a belated change of plan and be 
prospectively enrolled in a plan of the Postal Service employee's or 
Postal Service annuitant's choice; and (3) how individuals can cancel 
PSHB coverage in writing to the Postal Service because the individuals 
choose not to enroll in, or to disenroll from, Medicare Part B; and (4) 
any provisions necessary to implement the section. OPM has engaged in 
this consultation since the PSRA was enacted.
     5 U.S.C. 8903c(l)(4)(B) requires the Postal Service to 
coordinate with OPM, and in consultation with CMS and SSA, to obtain 
and confirm accuracy of information as the Postal Service determines to 
be necessary to conduct the Health Benefits Education Program. 5 U.S.C. 
8903c(l)(5)(C) requires the Postal Service, in consultation as 
necessary with OPM and CMS, to develop standards to ensure that 
information made available by navigators is fair, accurate, and 
impartial.
     5 U.S.C. 8903c(l)(6) requires the Postal Service, as part 
of the regulations for the Health Benefits Education Program, to 
develop a process in consultation with OPM, SSA, and CMS for addressing 
inquiries from Postal Service employees and Postal Service annuitants 
about PSHB or Medicare enrollment.
     Section 101(c) of the PSRA requires OPM to establish a 
process by regulation to provide information to SSA regarding Postal 
Service annuitants and their family members who may be eligible to 
enroll in Medicare Part B during the special enrollment period (SEP) 
established by the PSRA under the Social Security Act. The section also 
requires SSA to provide information to OPM and the Postal Service 
regarding whether Postal Service annuitants and their family members 
are entitled to benefits under Medicare Part A and enrolled under 
Medicare Part B to assist OPM and the Postal Service in determining who 
may be eligible to enroll in Medicare Part B during the SEP, or who may 
be subject to the Part B enrollment requirements for PSHB eligibility. 
This interim final rule includes a process for OPM to provide 
information to SSA for these purposes.
     5 U.S.C. 8909a(f) requires that OPM, after consultation 
with the Postal Service, promulgate any regulations determined 
necessary under section 102 of the PSRA with respect to the Postal 
Service Retiree Health Benefits Fund. OPM has addressed this provision 
in this regulation.

Provisions of Interim Final Rule

    This interim final rule amends subparts A, C, and E of 5 CFR part 
890 related to the FEHB Program and 48 CFR chapter 16, the Federal 
Employees Health Benefits Program Acquisition Regulation (FEHBAR). This 
interim final rule also adds a new subpart P to 5 CFR part 890 
regulating the new PSHB Program within the FEHB Program.
    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

[[Page 20386]]

applicable to FEHB plans, OPM is implementing the greatest flexibility 
for Postal Service employees, Postal Service annuitants, and their 
eligible family members.

5 CFR Part 890: Federal Employees Health Benefits Program

Subpart A: Administration and General Provisions

    OPM is amending Sec.  890.101 to add definitions specific to the 
PSHB Program, including Postal Service, Postal Service employee, Postal 
Service annuitant, PSHB plan, and PSHB Program. OPM is also adding 
definitions for FEHB plan and FEHB Program. These definitions explain 
the relationship between the FEHB Program and the PSHB Program. In 
short, the FEHB Program offers FEHB plans, and the PSHB Program within 
the FEHB Program offers PSHB plans. As a result, the FEHB Program 
offers both FEHB plans and PSHB plans.
    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 Postal Service annuitant and a covered 
Medicare individual (i.e., an individual entitled to benefits under 
Medicare Part A).\3\ Section 8903c(e) requires that Postal Service 
Medicare covered annuitants and eligible family members who are covered 
Medicare individuals enroll in Medicare Part B to enroll or maintain 
enrollment in a PSHB plan unless an exception described in section 
8903c(e)(3) applies. Section 8903c(a) excludes those who are eligible 
to enroll in Medicare under section 1818 or 1818A of the Social 
Security Act from the definition of covered Medicare individual.
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    \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.''
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    OPM is adding a new Sec.  890.115 to apply provisions of part 890 
to Postal Service employees, Postal Service annuitants, and eligible 
family members unless the provision is inconsistent with PSRA law at 5 
U.S.C. 8903c or the PSHB regulation in subpart P of part 890.

Subpart C: Enrollment

    Postal Service employees and Postal Service annuitants will be 
eligible for enrollment in PSHB plans, not FEHB plans, starting with 
the initial PSHB contract year of 2025. Under 5 U.S.C. 8903c(d)(2), 
Postal Service employees and Postal Service annuitants may not enroll 
in FEHB plans for plan year 2025 or thereafter. OPM is adding a new 
Sec.  890.301(p) to implement that prohibition, which will begin after 
December 31, 2024. There are no statutory exceptions to this 
prohibition on FEHB plan enrollment.
    OPM is amending Sec.  890.302 to apply to the whole of part 890, 
removing specific references to the FEHB Program to cover both FEHB 
plans and PSHB plans.
    OPM is adding a new paragraph (l) to Sec.  890.303 to indicate that 
a Postal Service employee eligible to enroll in a PSHB plan who moves 
to a Federal agency, without a break in service of more than three 
days, cannot continue in PSHB plan enrollment but may be eligible for 
FEHB plan enrollment if their position conveys eligibility. This is 
similar to the current FEHB rules that allow an employee to continue 
FEHB enrollment if they have a break in service of no more than three 
days.
    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 Postal 
Service annuitant who (at the time the individual becomes an annuitant) 
was enrolled in a health benefits plan under chapter 89, including 
under 8903c, can meet that 5-year requirement if they were so enrolled 
as a Postal Service employee, as an employee defined at 5 U.S.C. 
8901(1),\4\ or a mix of both in order to maintain health benefits after 
retirement. That individual would maintain eligibility to continue 
enrollment in the FEHB plan or PSHB plan in which they were enrolled 
immediately before retirement. Subsequent changes in enrollment may be 
made, as permitted under chapter 89, from one FEHB plan to another FEHB 
plan, or from one PSHB plan to another PSHB plan under section 8903c, 
as applicable to the service from which the individual retired.
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    \4\ The definition at 5 U.S.C. 8901(1) includes Federal 
employees and other categories of statutorily eligible individuals.
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    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 Postal Service employee or Postal Service 
annuitant and to a Postal Service employee or Postal Service annuitant 
who is a survivor annuitant of an employee. In either case, if an 
employee enrolled in a FEHB plan or a Postal Service employee enrolled 
in a PSHB plan separates with insufficient service to continue 
enrollment into retirement, but the separated individual is a survivor 
annuitant of an employee or annuitant, or of a Postal Service employee 
or Postal Service annuitant, and the separated individual is entitled 
to enroll as a survivor annuitant, the enrollment may be reinstated 
under the FEHB Program or PSHB Program as applicable to the service 
that gives rise to the survivor annuitant status.
    In Sec.  890.308, OPM is adding a new paragraph (i) that may 
require disenrollment from PSHB plans for Postal Service Medicare 
covered annuitants or removal from coverage of Medicare covered members 
of family who are not enrolled in Medicare Part B, unless an exception 
applies. Generally, unless an individual qualifies for an exception 
from the Medicare enrollment requirement, the individual will be 
disenrolled or removed from coverage from a PSHB plan if they have not 
enrolled in Medicare Part B (for example, during their seven-month 
Medicare Initial Enrollment Period (IEP), or applicable Medicare SEP). 
Pursuant to Sec.  890.1612 in the new subpart P, OPM will share 
information regularly with SSA and CMS to confirm an individual's 
entitlement to Medicare Part A as well as enrollment or non-enrollment 
in Medicare Part B.
    In a case where OPM, the PSHB Carrier, or the Postal Service 
belatedly learns that a Postal Service Medicare covered annuitant or 
eligible family member who is a covered Medicare individual who is 
enrolled or covered in a PSHB plan is not enrolled in Medicare Part B 
and does not qualify for an exception to the Medicare enrollment 
requirement, that individual will be permitted to stay enrolled in or 
covered by PSHB if they enroll in Medicare during their next enrollment 
opportunity, which may be the next Medicare General Enrollment Period. 
This opportunity to stay enrolled in PSHB despite lacking Medicare Part 
B coverage is not intended to allow a covered Medicare individual to 
maintain PSHB coverage without a good faith effort to remain 
continuously enrolled in Medicare Part B. The individual must enroll in 
Medicare Part B during that next available enrollment period (in this 
example, the next General Enrollment Period) and pay for any applicable 
late enrollment penalty assessed by CMS in order to remain in the PSHB 
plan. Such late enrollment

[[Page 20387]]

penalty will increase the Medicare Part B premium as long as the 
individual is enrolled in Medicare Part B. If the Postal Service 
Medicare covered annuitant or eligible Medicare covered family member 
does not enroll in Medicare Part B at the next opportunity such as a 
Medicare General Enrollment Period, they will be disenrolled or removed 
from a PSHB plan and, in the case of a Postal Service annuitant, will 
have no further opportunity to re-enroll in a PSHB plan. Disenrollment 
of a Postal Service annuitant will also result in the removal of 
covered family members from PSHB coverage.
    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 Health Care Marketplace or 
Exchange. OPM requests public comment on this approach.

New Subpart P: Postal Service Health Benefits Program

    This new subpart P implements section 101 of the PSRA establishing 
the PSHB Program for Postal Service employees, Postal Service 
annuitants, and their eligible family members. The PSHB Program set 
forth at 5 U.S.C. 8903c will be the only health benefits program 
available to these individuals through 5 U.S.C. chapter 89, and PSHB 
plans will be offered in lieu of FEHB plans for these individuals 
beginning with the first contract year in January 2025.
    In Sec.  890.1602(c), OPM defines terms specific to the PSHB 
Program. Statutorily defined terms have the same meaning as in the 
PSRA. Several other terms are defined to account for the Medicare 
enrollment requirements for Postal Service Medicare covered annuitants 
and their Medicare covered members of family in the PSHB.
    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 Sec.  890.1608(b)(5).
    In Sec.  890.1602(d), OPM deems references made to other subparts 
of part 890 to mean definitions established in subpart P. References 
incorporated in subpart P that do not apply to Postal Service employees 
or Postal Service annuitants or their eligible family members are not 
applicable and do not have meaning in subpart P.

Eligibility

    As directed by the PSRA, Sec.  890.1603, ``Eligibility for the 
Postal Service Health Benefits Program,'' allows that Postal Service 
employees, Postal Service annuitants, and family members will be 
eligible for coverage in the PSHB starting with the first contract year 
beginning January 2025. Under the PSRA, certain individuals are 
ineligible to enroll or be covered; they include:
     Postal Service Medicare covered annuitants without 
Medicare Part B coverage who are not covered by an exception in Sec.  
890.1604(c);
     Postal Service Medicare covered members of family who do 
not enroll in Medicare Part B and who are not covered by an exception 
in Sec.  890.1604(c); and
     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 Sec.  890.302.
    OPM is adding Sec.  890.1603(d) to allow former spouses of Postal 
Service employees and Postal Service annuitants to enroll in an FEHB 
plan as described in subpart H (``Benefits for Former Spouses''). A 
former spouse of a Postal Service employee or Postal Service annuitant 
who is enrolled in an FEHB plan on or before December 31, 2024, may 
continue enrollment in an FEHB plan and is not required to change to a 
PSHB plan. Former spouses are not included in the PSRA as eligible for 
PSHB enrollment. Therefore, an individual who was covered under their 
spouse's PSHB plan would not continue eligibility if they became a 
former spouse. Those former spouses could enroll in an FEHB plan. Such 
former spouses will not be subject to the Medicare Part B enrollment 
requirement, regardless of Medicare eligibility or enrollment status. 
OPM invites comment on this approach.
    OPM is adding Sec.  890.1603(e) to allow survivor annuitants to be 
enrolled in PSHB plans in the same way they would have been enrolled in 
FEHB plans, with the addition of the Medicare enrollment requirement in 
Sec.  890.1604.

Medicare Enrollment Requirement for Certain Annuitants

    Section 890.1604(a) requires that certain Postal Service annuitants 
who are entitled to Medicare Part A, and their eligible family members 
who are entitled to Medicare Part A, enroll in Medicare Part B as a 
condition of eligibility to enroll in or continue enrollment in the 
PSHB Program. This implements section 8903c(e) of the PSRA and is a 
unique requirement as a condition of participation in a health benefits 
program under chapter 89 of title 5, U.S.C. This requirement applies 
regardless of whether the Postal Service annuitant becomes entitled to 
Medicare Part A due to age, disability status, or other eligibility 
pathway.
    As described above, all Postal Service compensationers will be 
considered employees for the purposes of the PSHB Program and will not 
be subject to the Medicare Part B coverage requirement. PSHB enrollees 
and covered members of family who are entitled to Medicare Part A and 
enrolled in Medicare Part B are able to receive their Medicare Part A 
and B benefits through Original Medicare or by enrolling in an 
available Medicare Advantage plan. Individuals entitled to Part A and 
enrolled in Part B may be able to buy Medigap policies, subject to 
certain requirements.

Disenrollment for Non-Enrollment in Medicare Part B

    OPM is amending Sec.  890.308, ``Disenrollment and removal from 
enrollment,'' to add a new paragraph (i) to insert cross reference to 
new Sec.  890.1608(b), which describes the circumstances under which an 
individual can be disenrolled from a PSHB plan for non-enrollment in 
Medicare Part B.
    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

[[Page 20388]]

periods unless they qualify for an exception detailed in Sec.  
890.1604(c).
    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 
Postal Service determines that a Medicare covered annuitant or Medicare 
covered member of family required to be enrolled in Medicare Part B is 
not so enrolled. The process for disenrollment or removal from a PSHB 
plan for non-enrollment in Medicare Part B is detailed in Sec.  
890.1608(b).

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 January 1, 2025, are Postal Service 
annuitants who are not both entitled to benefits under Medicare Part A 
and enrolled in Medicare Part B;
     Individuals who, as of January 1, 2025, are Postal Service 
employees who are aged 64 and over;
     Postal Service Medicare covered annuitants and family 
members residing outside the United States and its territories who 
demonstrate their residency in accordance with Postal Service 
regulations;
     Postal Service Medicare covered annuitants and their 
family members enrolled in certain VA health care benefits. This 
exemption is derived from 5 U.S.C. 8903c(e)(3)(A)(iv)(II), which refers 
to individuals ``enrolled in health care benefits provided by the 
Department of Veterans Affairs under subchapter II of chapter 17 of 
title 38, United States Code.'' Subchapter II of chapter 17 of title 
38, U.S.C. governs who is eligible for various VA health care benefits, 
including eligibility for VA hospital care and medical services. There 
is a limited class of veterans who are not required to enroll in the 
system of patient enrollment referred to in 38 U.S.C. 1705(a) in order 
to receive VA benefits described in subchapter II of chapter 17 of 
title 38, United States Code. As such, this regulation is drafted to 
include all veterans described in 38 U.S.C. 1710, including those who 
are not required to enroll in the VA's system of patient enrollment 
referred to in 38 U.S.C. 1705(a);
     Postal Service Medicare covered annuitants and family 
members eligible for health services provided by the Indian Health 
Service; and
     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 VA and 
IHS coverage exceptions. OPM consulted with VA and IHS beginning in the 
Spring of 2022 to draft these policies. IHS strongly recommends that 
Medicare covered Postal Service annuitants and their family members be 
permitted to use self-attestation as proof of eligibility for IHS 
health services for purposes of an exception to the Medicare Part B 
requirement. There are various acceptable documents or evidence that 
IHS uses as proof of eligibility for IHS health services, and OPM 
recommends accepting these as proof for the Medicare Part B exception. 
OPM seeks comment on this approach. Section 890.1604(d) describes how 
Medicare covered annuitants and Medicare covered members of family can 
demonstrate that they qualify for an exception to the Medicare 
enrollment requirement.
    As required by the PSRA, Sec.  890.1604(e) allows a Medicare 
covered annuitant or Medicare covered family member to notify the 
Postal Service in writing that they choose not to enroll or to 
disenroll from Medicare Part B. Per the PSRA statute, this would have 
the effect of cancelling PSHB enrollment. OPM will treat this 
circumstance as a termination, conferring rights to a 31-day temporary 
extension of coverage and conversion. OPM invites comment on this 
approach, which is intended to implement a member-centric approach to 
the transition to the PSHB Program.

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, Peace 
Corps, CHAMPVA, TRICARE (including coverage provided by the Uniformed 
Services Family Health Plan), or TRICARE-for-Life. These rules will 
apply to the PSHB Program. While PSHB enrollment is suspended, no PSHB 
premiums would be required. These individuals can re-enroll in a PSHB 
plan, subject to subpart P requirements, for instance, during the next 
Open Season, when they involuntarily lose coverage, or move out of an 
MA Plan's service area.

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 Postal Service 
employees who are under a court or administrative order to provide 
health insurance coverage and with respect to those Postal Service 
annuitants for whom a court order continues from when they were an 
employee, to the extent the Postal Service annuitant remains enrolled 
in a PSHB plan.
    A Postal Service employee or Postal Service annuitant would be 
subject to the rules concerning court and administrative orders in the 
same way as employees and annuitants enrolled in an FEHB plan; however, 
the provisions of 5 U.S.C. 8905(h) cannot be fully and properly applied 
with respect to Postal Service annuitants for whom a court order 
continues from when they were an employee. While OPM has authority to 
compel enrollment in a PSHB plan and withhold the appropriate share of 
contribution toward premiums, the PSRA includes no authority for OPM to 
compel enrollment in Medicare Part B by Postal Service Medicare covered 
annuitants on the grounds of a court order for coverage of children. 
Further, a Postal Service annuitant who is subject to a court or 
administrative order to provide health insurance coverage could be 
disenrolled from PSHB coverage because of non-enrollment in Medicare 
Part B. In such a circumstance, the child would be without PSHB 
coverage despite the court or administrative order, and OPM would be 
without authority to compel continued enrollment in PSHB by a Postal 
Service annuitant who is required to be enrolled in Medicare Part B as 
a condition of PSHB enrollment but is not so enrolled.

PSHB Plan Year

    The PSHB plan year will run from January 1 to December 31 each year

[[Page 20389]]

starting in 2025. Any Open Season enrollment, change of enrollment, or 
reenrollment will take effect on January 1 of each year starting in 
2025. The PSHB plan year is in contrast to the effective date of new 
FEHB enrollments by employees during the annual Federal Benefits Open 
Season, which is the first day of the first pay period that begins in 
the next year, and which follows a pay period during any part of which 
the employee is in a pay status. See Sec.  890.301(f)(4)(i). For Open 
Season changes in FEHB enrollment for Postal Service employees, the 
effective date is the first day of the first pay period that begins in 
January of the next year. See Sec.  890.301(f)(4)(ii). Under the 
current regulations, the effective date for FEHB enrollments and 
changes in enrollment may be different each year based on which day in 
January is the first day of the pay period.
    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 January 1 would be 
consistent with the industry standard; the cutoff date for Postal 
Service Medicare covered annuitants who are listed as exceptions to the 
Medicare enrollment requirement; the effective date of benefit changes 
under OPM's contracts with carriers; health savings accounts for high 
deductible health plans; flexible spending accounts; coverage under the 
FEDVIP; and payments to compensationers.
    A standard January 1 start date to the plan year may present 
certain challenges, which became apparent when OPM proposed such a 
change for the FEHB Program in 1998.\5\ Such challenges include an 
effective way to collect and pro-rate FEHB premiums when one switches 
plans, given that January 1 is in the middle of a pay period for most 
Federal and Postal Service employees. Because of these challenges, OPM 
eventually withdrew the 1998 proposed rule in 2003.\6\
---------------------------------------------------------------------------

    \5\ https://www.federalregister.gov/d/98-23335 (63 FR 46180, 
August 31, 1998).
    \6\ https://www.federalregister.gov/d/03-31768 (68 FR 74513, 
December 24, 2003).
---------------------------------------------------------------------------

    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 January 1 plan year start date for the 
PSHB Program. OPM invites comments on the operational feasibility of 
implementing a standard January 1 effective date for Open Season PSHB 
enrollment actions, including any challenges relating to premium 
allocation and whether it makes a difference if the centralized 
enrollment system calculates and requests the partial premium versus 
the Federal payroll provider.

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 
Sec.  890.1605(a), and the transitional Open Season is defined in Sec.  
890.1605(b). Consistent with 5 U.S.C. 8903c(f), the PSHB transitional 
Open Season will run at the same time as the standard FEHB Open Season 
outlined at Sec.  890.301(f), starting the Monday of the second full 
workweek in November, going through the Monday of the second full 
workweek in December. This is the time period for Postal Service 
employees and Postal Service annuitants to select and enroll or 
continue enrollment, or choose not to enroll or continue enrollment, in 
a PSHB plan. Starting with the 2024 Open Season, Postal Service 
employees and Postal Service annuitants are ineligible to enroll or 
continue enrollment in FEHB plans for the 2025 plan year and 
thereafter.
    Automatic enrollment into a PSHB plan for the initial contract year 
is described in Sec.  890.1605(c). The PSRA requires that FEHB-enrolled 
Postal Service employees and Postal Service annuitants that do not make 
an election to enroll in a PSHB plan during the transitional Open 
Season will be automatically enrolled in a PSHB plan offered by their 
current FEHB Carrier to begin January 2025. If the carrier offers 
multiple PSHB plans or options, the individual will be automatically 
enrolled in the carrier's plan and option with equivalent or most 
similar benefits and cost-sharing to the individual's current FEHB 
plan. In a case where the carrier is not offering PSHB plans, those 
individuals will be automatically enrolled in the lowest-cost 
nationwide PSHB plan option that is not a high deductible health plan 
and does not charge an association or membership fee. All automatic 
enrollments will be into a PSHB plan of the same enrollment type (self 
only, self and family, or self plus one) as the 2024 FEHB plan.
    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 Postal Service 
employees. Since these individuals can't continue their FEHB plan 
enrollment into 2025, OPM will permit Open Season elections for 
eligible Postal Service employees, regardless of pay status with the 
exception of Sec.  890.303(e) individuals whose enrollment is 
terminated due to 365 days of nonpay status, for the 2024 Open Season 
only. OPM invites comment on this approach, which is intended to 
implement a member-centric approach to the transition to PSHB coverage.

Continuity of Enrollment

    Continuity of enrollment for PSHB is detailed in Sec.  890.303 
(``Continuation of enrollment''). As described above, OPM is updating 
the list of exclusions from the continuation of enrollment 
requirements.

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 Sec.  890.1614. This new section adds a clause 
to state ``except that retroactive corrections to an enrollment under 
this subpart may not go further back than the initial contract year.'' 
This is to establish that there cannot be a retroactive correction to a 
PSHB enrollment before the initial contract year of the PSHB Program.
    Terminations are addressed in the FEHB Program according to rules 
in Sec.  890.304. Section 890.304(b)(2) allows an annuitant whose 
coverage was terminated due to insufficient annuity to pay withholdings 
for the health benefits plan in which the annuitant was enrolled, to 
request reinstatement of coverage from the retirement systems when they 
failed, due to circumstances beyond their control, to directly pay 
premiums or to make an election to change enrollment to a health 
benefits plan so that their annuity was sufficient for the new 
withholdings. In this

[[Page 20390]]

circumstance, the retirement system may reinstate coverage 
retroactively to the termination date.
    Although 5 U.S.C. 8903c(d)(2) prohibits Postal Service employees 
and Postal Service annuitants who are covered in PSHB plans from 
enrolling or continuing enrollment in FEHB plans after 2024, the 
statute does not prohibit retroactive enrollment into a FEHB plan for 
an effective date beginning on or before December 31, 2024, before the 
start of the PSHB Program. Such retroactive enrollments may occur, for 
instance, due to an enrollment processing error that pre-dated the 
first contract year of the PSHB Program.

Plan Contracting

    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 Sec.  1609.7002 outlining the minimum standards for 
PSHB Carriers. A PSHB plan must meet the minimum standards at 5 CFR 
890.201. All PSHB plans must have coverage effective on January 1 of 
each contract year.
    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 Postal Service employees or Postal 
Service annuitants enrolled in the 2023 contract year. In the initial 
contract year, PSHB Carriers must offer PSHB plans that have coverage 
with equivalent benefits and cost-sharing to the FEHB plans offered by 
that carrier, except to the extent needed to integrate Medicare Part D 
prescription drug benefits. If the FEHB plans offered by a carrier do 
not meet the requirements under Medicare Part D, then the carrier will 
need to adjust its corresponding PSHB plan accordingly. A carrier's 
prescription drug coverage may be different in its PSHB plan than in 
its FEHB plan.
    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 Postal Service 
enrollees. Comprehensive medical plans are defined in FEHB statute as 
one of four health plan categories that OPM is authorized to contract 
for. The term ``comprehensive medical plans'' refers to health 
maintenance organizations (HMOs). Many of these HMOs are regional 
rather than nationally available plans.
    PSHB plans will offer the same enrollment types as FEHB plans, 
including self only, self plus one, and self and family coverage. Only 
Postal Service employees and Postal Service annuitants, including 
survivor annuitants, and those eligible for temporary continuation of 
coverage (TCC), may enroll in PSHB plans established under new subpart 
P of part 890. Those eligible to enroll may add eligible family members 
to their enrollment.

Medicare Part D Prescription Drug Coordination

    The PSRA requires plans in the PSHB Program to provide prescription 
drug benefits through Medicare Part D for Part D-eligible Postal 
Service annuitants and their Part D-eligible family members. Under 5 
U.S.C. 8903c(h), PSHB plans are required to provide prescription drug 
benefits to these individuals through ``employment-based retiree health 
coverage'' either through a ``prescription drug plan (PDP)'' or a 
contract with a ``PDP sponsor'' of a prescription drug plan, as terms 
are defined in section 1860D-22(b), 1860D-41(a)(14), and 1860D-
41(a)(13) of the Social Security Act, respectively.
    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 CMS 
Employer Group Waiver Authority).
---------------------------------------------------------------------------

    \7\ CMS, Medicare Prescription Drug Benefit Manual, Chapter 12, 
``Employer/Union Sponsored Group Health Plans,'' Rev. November 7, 
2008, at https://www.cms.gov/regulations-and-guidance/guidance/transmittals/downloads/dwnlds/r6pdbpdf.
---------------------------------------------------------------------------

    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 Part D-
eligible Postal Service annuitants and their Part D-eligible family 
members through a PDP or through a contract with a PDP Sponsor and may, 
subject to OPM's approval, offer MA-PD coverage as an alternative for 
these individuals to elect, should they so choose. Consistent with FEHB 
Program policy and current FEHB contract provisions, OPM will consider 
carrier applications for PSHB plans that coordinate with EGWP MA-PDs, 
subject to the requirements in 8903c(h)(2) and negotiation with OPM.

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 Postal Service 
annuitants and their family members who may be subject to the Medicare 
enrollment requirements described in Sec.  890.1604 or who may be 
eligible to enroll in Medicare Part B during the new Part B six-month 
SEP (beginning April 1, 2024) which was created by the PSRA as 
available to certain Postal Service annuitants and family members who 
are entitled to Medicare Part A and is described in section 1837(o) of 
the Social Security Act. In addition, OPM will establish periodic 
agreements with HHS, the Postal Service, VA, and other Federal agencies 
as needed to share data and information as is necessary to implement 
the PSHB Program.
    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 Postal Service 
employees, Postal Service annuitants, and family members may be 
eligible to enroll in or be covered by in PSHB plans, (2) which Postal 
Service

[[Page 20391]]

Medicare covered annuitants and Medicare covered members of family may 
be subject to the enrollment requirements described in Sec.  890.1604, 
(3) whether Postal Service Medicare covered annuitants and Medicare 
covered members of family satisfy the Medicare enrollment requirements 
at Sec.  890.1604, (4) which Postal Service annuitants and family 
members may be eligible to enroll in Medicare Part B during the six-
month SEP beginning April 1, 2024 under a new section 1837(o) of the 
Social Security Act, and (5) a system for data sharing as needed for 
carrying out section 8903c of title 5, United States Code, and this 
subpart.

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 Postal Service 
employees and Postal Service annuitants in those carriers' plans as of 
March 31, 2023. Nonetheless, because OPM expects to have significantly 
more current Postal Service enrollment data available, OPM intends to 
use all available 2024 Postal Service enrollment information when 
determining the 2025 weighted average of the rates for the initial 
contract year, taking into account 2023 data as a comparison point and 
for validation purposes, or in the event 2024 data is not available. 
For all subsequent years, the PSHB plans and FEHB plans will each have 
the Government contributions calculated in accordance with Sec.  
890.501.
    Some Postal Service Medicare covered annuitants and/or their 
Medicare covered members of family who enroll in Medicare during the 
SEP beginning April 1, 2024, may be subject to a Medicare Part B late 
enrollment penalty. This penalty is added to the monthly Medicare Part 
B premium and is usually charged for as long as the individual is 
enrolled in Medicare. The amount of the Part B late enrollment penalty 
depends on how long the individual waited to enroll after their initial 
period of Medicare eligibility. The PSRA requires that the Secretary of 
HHS enter into an agreement with the Postal Service under which the 
Postal Service agrees to pay on a quarterly or other periodic basis to 
the Secretary the amount of the Part B late enrollment premium 
increases for eligible individuals who enrolled during the SEP. In 
addition, the PSRA states that the Postal Service may direct OPM to pay 
such Part B late enrollment penalties for Postal Service Medicare 
covered annuitants or Medicare covered members of family who enroll in 
Part B during the 2024 SEP subject to the agreement between the Postal 
Service and HHS from the PSRHBF established under 5 U.S.C. 8909a until 
those funds are depleted. Thereafter, those payments will be paid from 
the Postal Service Fund established under 39 U.S.C. 2003.

USPS Fairness Act

    Section 102 of the PSRA (``USPS Fairness Act'') directs OPM to 
annually calculate a payment to be made by the Postal Service into the 
PSRHBF beginning in June of 2026. This payment replaces the previously 
required actuarially determined pre-funding payments (normal cost and 
amortization) calculated annually by OPM from 2017 through 2021.
    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 
Postal Service share of Postal Service annuitant premiums less 
estimated net claims costs. The PSRA defines estimated net claims costs 
as the difference between the sum of the costs incurred by the carrier 
for health services provided to Postal Service annuitants and 
reasonable administrative expenses less the Postal Service annuitants' 
share of premium.
    Section 102 states that ``[a]fter consultation with the United 
States Postal Service, [OPM] shall promulgate any regulations the 
Office determines necessary under this subsection.'' OPM has determined 
that the formula is sufficiently defined in the law and defining it 
further in regulation is unnecessary. OPM invites comment on this 
approach.
    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 Postal Service annuitants and current Postal Service employees 
who would be eligible to retire under 5 U.S.C. 8901(3)(A)(i) or (ii) 
and who have the required years of health coverage to continue health 
benefits in retirement. Pursuant to 39 U.S.C. 3654(b), OPM is required 
to calculate and provide certain information for the Postal Service 
financial reporting on both health benefits and pension obligations as 
provided under chapters 83 and 84 of title 5. However, the requirements 
in the PSRA involving 39 U.S.C. 3654(b) apply only to health benefits 
and the CSRS and FERS statutes do not provide any similar requirement 
pertaining to section 3654(b). It would not be appropriate to calculate 
any pension obligations in the manner now required under 5 U.S.C. 8909a 
for post-retirement health benefits. As a result, OPM is interpreting 
the new PSRA provision in section 8909a as applying only to the ``post-
retirement health requirements'' in 39 U.S.C. 3654(b). OPM invites 
comment on this approach.
    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 Postal Service or other 
employing office \8\ is responsible for processing appropriate requests 
for FEHB enrollment or changes in enrollment. See, e.g., 5 CFR 
890.301(b). An employing office is also responsible for verifying the 
eligibility of family members. See 5 CFR 890.302.
---------------------------------------------------------------------------

    \8\ The Postal Service is the employing office for Postal 
Service employees. OPM Retirement Services is the employing office 
for Postal Service annuitants. The Department of Labor's Office of 
Workers' Compensation Programs is the employing office for 
compensationers. The Department of Agriculture's National Finance 
Center is currently the employing office for individuals enrolled 
under Temporary Continuation of Coverage, Spouse Equity, and for 
annuitants whose annuity is insufficient to withhold the cost of 
health benefits premiums.
---------------------------------------------------------------------------

    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

[[Page 20392]]

enrollees, the Postal Service and other employing offices, and PSHB 
Carriers. The centralized enrollment system will include an online 
portal to enter and process enrollment transactions, robust decision 
support tools, and a customer support center to assist enrollees via 
phone, email, or online chat. Persons who are unable to access the 
online portal will be able to enroll through other means such as phone, 
fax, or mail.
    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. Sec.  890.1605, 
890.1606, 890.1608, and 890.1614, OPM is specifying that OPM will 
assume responsibility for the following health benefits actions for the 
PSHB Program: enrollment, changes of enrollment, correction of errors, 
election not to enroll, and disenrollment of enrollees and removal of 
family members. OPM will work with the Postal Service and other 
employing offices to determine additional details about these health 
benefit actions.

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 Sec.  890.1614(a), correction of 
errors for PSHB enrollments will follow the rules for FEHB correction 
of errors, except that a PSHB enrollment cannot be corrected to be 
effective before the first PSHB contract year.
    Section 890.1614(b) requires that carrier entitlement to pursue 
subrogation and reimbursement recoveries must follow the requirements 
of Sec.  890.106.
    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 Sec.  890.1604, that individual may be disenrolled or removed from 
PSHB enrollment or coverage.

C. Structure of the Interim Final Rule

    The regulations outlined in this interim final rule are codified in 
subparts A, C, E, and the new subpart P of 5 CFR part 890 and 48 CFR 
chapter 16.

Interim Final Rule With Request for Comments

    OPM commonly publishes notices of proposed rulemaking in the 
Federal Register and invites public comment on rules before the 
provisions of the rules are finalized, either as proposed or as amended 
in response to public comments, and take effect, in accordance with the 
Administrative Procedure Act (APA) at 5 U.S.C. 551 et seq. and, where 
applicable, the Civil Service Reform Act of 1978 (CSRA) at 5 U.S.C. 
1103(b).
    Specifically, 5 U.S.C. 553 and 1103(b) require the agency to 
publish a notice of certain proposed rules in the Federal Register that 
includes a reference to the legal authority under which the rule is 
proposed, and the terms and substance of the proposed rule or a 
description of the subjects and issues involved. Further, the APA at 5 
U.S.C. 553(c) requires agencies to give interested parties the 
opportunity to participate in the rulemaking through public comment 
before the provisions of a rule take effect.
    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,'' 
National Federation of Federal Employees v. Devine, 671 F.2d 607, 610 
(D.C. Cir. 1982); see 5 U.S.C. 1103(b)(3). ``[A] situation is 
impracticable when an agency finds that due and timely execution of its 
functions would be impeded by the notice otherwise required . . . as 
when a safety investigation shows that a new safety rule must be put in 
place immediately.'' Util. Solid Waste Activities Group v. E.P.A, 236 
F.3d 749, 754 (D.C. Cir. 2001) (quotation marks and alterations 
omitted); see Mack Trucks, Inc. v. E.P.A., 682 F.3d 87, 93 (D.C. Cir. 
2012). OPM finds that following typical notice and comment procedures 
would be impracticable here because doing so would not allow sufficient 
time for the PSHB to be in effect by January 2025, as required by the 
PSRA. As explained further below, failure to meet this deadline would 
not only violate the PSRA but would also result in a potential gap in 
health insurance coverage for Postal Service employees, Postal Service 
annuitants, and their families. OPM is therefore issuing this interim 
final rule with request for comment--a temporary measure before OPM 
issues a final rule in response to comments received.
    The deadlines that Congress has specified in the PSRA require this 
rule to become effective expeditiously. The PSRA provides in part that 
the Director of OPM shall issue regulations to carry out the PSHB 
provisions no later than April 6, 2023--just one year after statutory 
enactment--in consultation with the Secretary of Health and Human 
Services, the Secretary of Veterans Affairs, the Commissioner of Social 
Security, and the Postmaster General. See Devine, 671 F.2d at 611 
(``This is not a case in which the agency received substantial prior 
notice of a statutory deadline[.]''). The law also requires that health 
coverage through a PSHB plan must begin in January 2025 and that Postal 
Service employees and Postal Service annuitants enroll for coverage 
during an annual Open Season period beginning in 2024.
    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 
January 1, 2025. And that complex process must begin now; specifically:
     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 
August 2023--just four months from issuance of this interim final rule. 
To prepare those applications, health insurance carriers will need to 
understand the requirements of the PSHB Program, including how they may 
differ from FEHB plans in a number of key areas. These areas include 
the Medicare Part D coverage integration requirements for PSHB plans, 
Medicare benefit coordination, and data exchange capabilities for PSHB 
enrollment eligibility which include data regarding an individual's 
entitlement for Medicare Part A and enrollment in Part B, their VA 
benefit enrollment status, and/or IHS eligibility. Carriers will need 
to know the implications of the requirements and capabilities outlined 
in this rule--and will need them to have effect--in order to (1) make a 
business

[[Page 20393]]

decision about whether to participate in the Program and (2) put 
together a proposed plan that aligns with the requirements of this 
rule.
     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 October 2023, the Postal Service is required by the 
PSRA to launch a Health Benefits Education Program to raise employee 
and annuitant awareness of the PSHB Program and its requirements 
through the distribution of information and facilitation of enrollment 
in available plans. While specific information such as rates and 
benefits will not be available until later in 2024, the Postal Service 
will structure this Education Program based on the requirements for the 
PSHB Program as set forth in this rule. Knowledge of the Program's 
requirements and the health insurance carriers that have applied to 
participate in the Program starting in 2023 will assist enrollees in 
understanding the decisions they will need to make.
     Throughout 2023 and 2024, OPM will, among other things, 
develop, test, and implement a Postal Service centralized enrollment 
system, which will be used by PSHB enrollees to select health plans for 
the 2025 plan year. OPM must integrate Medicare Part A entitlement and 
Medicare Part B enrollment data in accordance with existing FEHB 
regulations and the new PSHB requirements, as set forth in this rule 
that implements the PSRA. Enrollment data processed by the centralized 
enrollment system will be transmitted to PSHB Carriers, who will begin 
serving these enrollees starting January 1, 2025.
     In April of 2024, CMS will launch the six-month SEP, 
during which time Postal Service annuitants and their family members 
will have the opportunity to enroll in Medicare Part B, without a late 
enrollment penalty for the Part B enrollee. If Postal Service 
annuitants and their family members eligible for the SEP are not timely 
informed that they have this opportunity to enroll in Medicare Part B 
without having to pay a late enrollment penalty and how to do so, they 
may incur the standard late enrollment penalty if they subsequently 
wish to enroll in Part B, should they choose to do so, and such late 
enrollment penalty could remain in place for as long as they remain 
enrolled in Part B.
     By May 31, 2024, PSHB Program carriers will need to submit 
rates and benefits proposals to offer health plans for the 2025 plan 
year.
     In September 2024, OPM will publish the negotiated PSHB 
plan rates and benefits for the 2025 plan year.
     Open Season for enrollee selection of PSHB plans will 
occur from November 11 through December 9, 2024.
    As this timeline makes clear, there are numerous operational 
interdependencies--beginning with carriers submitting applications to 
participate in the PSHB Program by August 2023--that necessitate the 
immediate effectiveness of this regulation. The immediate effectiveness 
of this rule is necessary not only for OPM to meet the statutorily 
required January 1, 2025 deadline for providing benefits to enrollees, 
but also because a failure to do so could result in a loss of 
healthcare coverage for Postal Service employees, annuitants, and their 
families. After December 31, 2024, Postal Service employees or Postal 
Service annuitants will no longer be eligible to enroll in an FEHB plan 
based on status as a Postal Service employee or Postal Service 
annuitant, and their family members will no longer be covered by such 
plan. Accordingly, Sec.  890.1605 establishes that PSHB plans must be 
available to enroll individuals during the 2024 Open Season, starting 
on November 11, 2024. If PSHB plans are not available, those 
individuals may experience a gap in health insurance coverage, and 
people without insurance coverage have worse access to care and 
experience worse health outcomes than people who are insured. See 
Office of Disease Prevention and Health Promotion. (n.d.). Access to 
Health Services. Healthy People 2030. U.S. Department of Health and 
Human Services. https://health.gov/healthypeople/priority-areas/social-determinants-health/literature-summaries/access-health-services; see 
also 42 U.S.C. 18091(2)(E) (observing the ``poorer health and shorter 
lifespan of the uninsured''). Among the catalysts of poorer health is 
the decreased use of preventive services by individuals experiencing 
gaps in health insurance coverage, even if only for a relatively short 
period of time, and especially for individuals at or near retirement 
age. See Sudano, J.J. Jr., Baker, D.W. (2003). Intermittent Lack of 
Health Insurance Coverage and Use of Preventive Services. Am. J. Public 
Health, 93:130-37, available at: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1447707. These services include mammography, Pap tests, 
cholesterol checks, flu vaccination, and prostate and breast cancer 
screenings. Id.
    Additionally, OPM is obligated to provide Postal Service employees 
and Postal Service annuitants an opportunity to enroll in health 
insurance plans for which they are eligible under current statutory 
provisions, including provisions granting Postal Service employees and 
Postal Service annuitants eligibility under chapter 89. See 39 U.S.C. 
1005(f). The FEHB regulations currently in effect permit health 
insurance enrollment actions and changes to be made during Open Season 
periods, which are required to be held annually from mid-November 
through the mid-December. 5 CFR 890.301(d). Failure to hold a PSHB Open 
Season period prior to December 31, 2024, when Postal Service employees 
and Postal Service annuitants lose eligibility for FEHB plan 
enrollment, may conflict with OPM regulations
    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 January 2025, 
potentially resulting in the loss of health insurance coverage for 
millions of Postal Service employees, Postal Service annuitants, and 
their family members. An interim final rule is therefore necessary so 
as to avoid the ``possible imminent hazard'' that individuals would 
face from a gap in coverage, Mack Trucks, Inc., 682 F.3d at 93.
    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 PSHB Program for Postal Service 
employees, annuitants, and their eligible family members. These 
sections of the PSRA amend chapter 89 of title 5, United States Code, 
which identifies the individuals who, starting in 2025, will be 
eligible to enroll in a PSHB plan and may not remain in an FEHB plan 
under their Postal Service employment or retirement; those who must 
enroll in Medicare Part B to maintain enrollment

[[Page 20394]]

in PSHB; the health benefits plans that should be offered to the 
greatest extent practicable; some plan requirements; the need for 
automatic enrollment in certain circumstances; contributions by the 
Postal Service; how reserves for PSHB plans are to be structured; 
requirements for information sharing; and other requirements necessary 
for PSHB Program implementation.
    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 Congress 
specifically instructed OPM to promulgate rules, clarifies how existing 
rules for the FEHB Program will apply to the PSHB Program, as well as 
new requirements regarding eligibility and enrollment, information 
sharing with other agencies, PSHB Carrier requirements, and other rules 
that will govern the PSHB Program. OPM's interim final rule is 
necessary to provide transparency into how it is implementing the PSRA, 
memorialize processes and procedures that will apply, allow carriers to 
begin preparations to enter the PSHB Program, and give individuals who 
will be impacted as much information about the PSHB Program as early as 
possible.
    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 Postal Service employees and annuitants will be uncertain 
about how the PSHB Program will operate.

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 $100 million or more, or 
adversely and materially affecting a sector of the economy, 
productivity, competition, jobs, the environment, public health or 
safety, or state, local or tribal governments or communities (also 
referred to as ``economically significant''); (2) creating a serious 
inconsistency or otherwise interfering with an action taken or planned 
by another agency; (3) materially altering the budgetary impacts of 
entitlement grants, user fees, or loan programs or the rights and 
obligations of recipients thereof; or (4) raising novel legal or policy 
issues arising out of legal mandates, the President's priorities, or 
the principles set forth in the Executive Order.
    A regulatory impact analysis must be prepared for major rules with 
economically significant effects (annual effect of $100 million or 
more), and a ``significant'' regulatory action is subject to review by 
the Office of Management and Budget (OMB). OPM anticipates that this 
rule is likely to have economic impacts of $100 million or more in at 
least 1 year, meeting the definition of a ``significant rule'' under 
Executive Order 12866.
    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 Postal Service, which provides a crucial role for society with 
respect to communication, commerce, and political participation. The 
Postal Service was established with the intent to benefit the public 
and provide reliable, affordable nationwide mail, package delivery, and 
other services. With the Postal Service's wide reach in providing 
essential services to nearly everyone in the U.S. in some form, its 
long-term stability is crucial. The PSRA improves the Postal Service's 
financial position, and a financially sustainable Postal Service 
ensures that the Postal Service can continue to fulfill its universal 
service mission, and make the investments needed to support service 
excellence, network efficiency, and introduce enhanced products and 
services for its customers.
    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 Postal Service to 
Medicare, and ultimately to taxpayers, who together with beneficiaries, 
fund Medicare. The Postal Service is required by law to be self-
sufficient, and the Postal Service, along with its employees, pay taxes 
to fund Medicare each year, but many of its employees do not enroll in 
Medicare after they retire. Therefore, and unlike other employers who 
offer retiree health benefits and pay Medicare taxes, the Postal 
Service has not been able to ensure that its retiree health care 
program fully utilizes Medicare. Enabling the Postal Service to 
generally require its Medicare-eligible annuitants to enroll in 
Medicare when eligible ensures that the Postal Service can utilize 
Medicare in a similar manner as other employers, which strengthens its 
financial position and therefore its ability to continue its critical 
public service mission.
    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 $94 million in implementation 
funding for OPM and other Federal agencies for these administrative and 
operational costs. Pursuant to section 101(d)(4) of the PSRA, the 
Postal Service deposited the appropriated funds into the Treasury as a 
miscellaneous receipt from the Postal Service Fund in fiscal year 2022.
    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 Postal Service and PSHB members to Medicare as a 
result of the Medicare Part B enrollment requirements and the 
integration of Medicare Part D coverage into PSHB plans. This Part D 
integration could also result in a portion of costs being transferred 
to the pharmaceutical industry via the statutory manufacturer discounts 
provided to Part D, in conjunction with discounts negotiated with 
individual FEHB plans. Further, integrating Part D coverage into PSHB 
plans may result in a transfer of costs to carriers, particularly those 
with little Medicare experience, who may need to contract with third-
party vendors to assist with integration, increasing administrative 
costs. The segmentation

[[Page 20395]]

of the current FEHB risk pool will result in premiums reflective of 
each separate risk pool's health care utilization and costs, which are 
estimated to be higher for Postal Service enrollees compared with non-
postal.\9\ This may result in a slight reduction in FEHB premiums 
following implementation.
---------------------------------------------------------------------------

    \9\ H.R. 3076, Postal Service Reform Act of 2021--Cost Estimate, 
Congressional Budget Office (CBO) (2021). https://www.cbo.gov/system/files/2021-07/hr3076.pdf.
---------------------------------------------------------------------------

    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 
in Table 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. Postal Service employees, Postal Service 
annuitants, and their eligible family members are currently eligible 
for FEHB coverage. In 2021, this population totaled approximately 
915,000 enrollees and 1.7 million total covered lives. There are nearly 
700,000 Postal Service annuitants, including about 123,000 survivor 
annuitants. Of the Postal Service annuitants, about 500,000 are 
currently enrolled in the FEHB Program. A majority of these are Self-
Only enrollments while 200,000 are Self Plus One or Self and Family 
enrollments.
    Beginning in the 2025 plan year, the PSHB Program will be the only 
health benefits program available through the Postal Service to Postal 
Service employees, Postal Service annuitants, and their eligible family 
members. Unless they meet a specified exception, as previously 
outlined, Postal Service Medicare covered annuitants and their Medicare 
covered members of family will be required to enroll in Part B or will 
lose their eligibility to continue enrollment in the PSHB Program. Once 
this eligibility is lost, it cannot be reinstated. As with the 
regulatory baseline, those covered by a PSHB plan will also be 
responsible for Medicare premiums.
    Currently, Postal Service annuitants and their family members that 
are participating in FEHB are not required to enroll in Medicare Part 
B, regardless of Medicare status. Based on 2021 data, OPM estimates 
that 75% of Postal Service annuitants aged 65 and over have enrolled in 
Medicare Part B. There will be approximately 100,000 Postal Service 
annuitants and their eligible family members who will be eligible to 
enroll in Part B during the six-month SEP beginning April 1, 2024.
    Prior to the PSRA, the Postal Service paid the Government 
contribution for all Postal Service employees and annuitants enrolled 
in FEHB. The Government contribution was paid directly by the Postal 
Service for employees and from the PSRHBF for annuitants. In addition, 
the Postal Service was required under the Postal Accountability and 
Enhancement Act of 2006 to fully prefund retiree health benefits. 
Section 102 of the PSRA (``The USPS Fairness Act'') amended 5 U.S.C. 
8909a to remove this prefunding requirement and replace it with a new 
calculation for annual payments into the PSRHBF. The law maintains the 
requirement that the Postal Service continue to pay the Government 
contribution; directly for employees or through the PSRHBF for 
annuitants. The Postal Service is also required to pay the Medicare 
Part B late enrollment penalty for any Medicare covered annuitants and 
members of family who enroll in Part B during the 2024 SEP. As with the 
regulatory baseline, there is no Government contribution towards Part B 
premiums.
    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 Postal Service will benefit from increased financial stability 
because of the removal of the past-due pre-funding payments and future 
pre-funding obligations related to the retiree health benefits costs 
and from having a retiree health benefits program in which more 
annuitants are enrolled in Medicare. With fewer costs for retiree 
health benefits, the Postal Service will have more financial stability. 
Better, more stable Postal Service operations would benefit the country 
overall. The Postal Service plays a critical role in the nation's 
communications, commerce, and voting infrastructure. In rural and 
remote communities especially, many of which lack adequate broadband 
access and rely heavily on mail service, the Postal Service's universal 
service mandate ensures crucial access to essentials including medicine 
and food.\10\
---------------------------------------------------------------------------

    \10\ The USPS and Rural America, Institute for Policy Studies 
(2020), https://inequality.org/wp-content/uploads/2020/04/IPS-policy-brief-USPS-Rural-America2.pdf.
---------------------------------------------------------------------------

    Within these communities, the Postal Service is often the only 
delivery service carrier with a door-to-door network and is heavily 
relied on by other delivery service carriers to provide ``last mile'' 
deliveries. According to the Postal Service Office of Inspector 
General, the Postal Service provided vital services during the COVID-19 
pandemic, including the delivery of critical items such as medications, 
stimulus payments, election ballots, and record levels of home package 
deliveries.\11\ A Government Accountability Office Report found that 
the Postal Service experienced a 9 percent decline in total mail volume 
in 2020 when compared to 2019, but package volume rose by 32 percent 
over the same period.\12\ This underscores the importance of a stable 
Postal Service to the Nation.
---------------------------------------------------------------------------

    \11\ Audit Report Mail Service During the Early Stages of the 
COVID-19 Pandemic, USPS Office of Inspector General (Jan. 2021), 
https://www.uspsoig.gov/document/mail-service-during-early-stages-covid-19-pandemic.
    \12\ U.S. Postal Service: Volume, Performance, and Financial 
Changes since the Onset of the COVID-19 Pandemic, Government 
Accountability Office Publication 21-261 (2021), https://www.gao.gov/products/gao-21-261.
---------------------------------------------------------------------------

    With greater financial stability for the Postal Service, current 
Postal Service employees, Postal Service annuitants, and their family 
members will also see greater stability in their future health 
insurance coverage and other benefits.
    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.

[[Page 20396]]

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
----------------------------------------------------------------------------------------------------------------
                                                                                                  Ongoing costs
                               Agency/category                                  Startup costs          \1\
----------------------------------------------------------------------------------------------------------------
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 materials,          11,500,000                --
     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
----------------------------------------------------------------------------------------------------------------
\1\ 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
                                                                      [$ Millions]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                              FY2023     FY2024     FY2025     FY2026     FY2027     FY2028     FY2029     FY2030     FY2031     FY2032
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total costs (all agencies) \1\............    $66.47     $75.14     $52.53     $51.15     $51.15     $51.15     $51.15     $51.15     $51.15     $51.15
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ 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 $81.6 million in start-up 
costs for the development and administration of the PSHB Program. This 
estimate includes $68.3 million of IT and IT contract costs for system 
development and updates, including the creation of the centralized 
enrollment system. The centralized enrollment system will consolidate 
data from multiple agencies, including USPS, SSA, CMS, IHS, and VA, to 
create a centralized platform for verifying eligibility and processing 
enrollments. While a centralized enrollment system was not mandated by 
the PSRA, it will create efficiencies through the elimination of 
decentralized duplicative and manual processes and improve interagency 
communication. It is expected to yield long term cost-savings that will 
help offset significant upfront costs of development. Additional IT and 
IT contract costs are anticipated for updating existing systems, 
including Benefits Plus and the audit resolution tracking system, and 
developing new resources to improve customer experience, including the

[[Page 20397]]

creation of an enrollment Decision Support Tool.
    The remaining $13.4 million in estimated startup costs include $3.6 
million for non-IT contractor support throughout implementation and 
$9.8 million for additional supplies, equipment, training, and 
communication related to the PSRA. All costs were estimated based on 
2022 dollars and contract rates.
    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 $49.3 million in annual, ongoing costs related to 
the PSRA. This estimate consists of $24.4 million in annual salary 
costs for 153.5 additional full-time employees (FTEs) necessary for 
contract oversight, program operations, systems maintenance, customer 
service, policy support, and general support. Additionally, OPM 
anticipates $21 million in annual IT and IT contract costs for ongoing 
system development and maintenance support, and an additional $1.7 
million in annual, non-IT contract costs related to oversight and 
management of the increased number of health benefits plans within the 
PSHB and FEHB populations. Finally, OPM estimates an additional $2.2 
million in annual costs for training, communications and overhead 
related to the PSHB program and the annual Open Season period.
    The above costs are represented as fully loaded annual projections 
based on 2022 dollars. Salaries and burden were based on 2022 pay 
tables and Washington, DC metro area locality adjustment, a burden 
percentage of 34%, and award and transit subsidies. This adjustment 
factor was used in lieu of a standard wage rate to more accurately 
reflect the historical trends in benefit costs for OPM employees, based 
on the anticipated locations and experience-levels of the 
aforementioned positions. Additionally, the wage rate is meant to 
capture overhead costs which were already represented in separate 
categories. All recurring costs are projected to be fully loaded 
beginning in FY2025 and to persist through at least FY2032. Given that 
development and onboarding will occur in the run-up to the PSHB 
implementation, OPM anticipates that annual costs related to the PSRA 
will increase steadily between FY2022 and FY2024.
Postal Service
    Startup Costs: The Postal Service estimates $11.5 million in start-
up costs for updating systems, development of training materials, and 
the development and maintenance of the Health Benefits Education 
Program. These estimates were calculated based on anticipated system 
configuration and assumed effort level and are subject to change based 
on additional requirements that may be required of the Postal Service.
    Ongoing Costs: In preparation for and following implementation of 
the PSHB, the Postal Service estimates an additional $1.4 million in 
annual costs for increased staffing and communication needs. 
Specifically, the Postal Service estimates $0.9 million in salary costs 
for 6 additional FTEs, including 4 Program and 2 IT FTEs, and an 
additional $0.5 million towards increased outreach, education, and 
communication. Given the general retirement eligibility ages in 
comparison to the Medicare eligibility age, there will be a 3- to-5-
year gap between the time of retirement until Medicare enrollment. It 
will be critical during the initial implementation of the Program and 
for the subsequent 5-10 years to send constant communications regarding 
plan options and healthcare costs, along with information about 
Medicare Part B eligibility periods and how and when to enroll. 
Additional resources will also be needed to monitor enrollee compliance 
for the Medicare Part B enrollment exceptions requirements on an 
ongoing basis. Although recruitment, onboarding, and development costs 
will gradually ramp up preceding implementation, the ongoing costs are 
expected to become fully realized beginning in FY25 and will likely 
persist for a period of 5-10 years following implementation, at which 
point the Postal Service will reevaluate resourcing needs. All costs 
were estimated in terms of 2022 dollars and pay scales.
Department of Labor--Office of Workers' Compensation Programs (OWCP)
    Startup Costs: OWCP estimates a total of $72,500 in startup costs 
related to the PSRA. These include an estimated $50,000 in staff time 
for training on the PSRA changes and implementation, and $22,500 for 
pre- and post-implementation mailings to approximately 12,500 claimants 
and beneficiaries regarding changes to health benefit coverage. All 
costs were estimated based on 2022 dollars and pay scales.
    Ongoing Costs: Beginning in 2025, OWCP estimates an additional 
$2,000 of annual, recurring costs for the creation and distribution of 
mailing announcements and customer service response letters related to 
the PSHB Open Season.
Department of Veterans Affairs (VA)
    Startup Costs: The VA anticipates startup costs for system updates 
and development to meet the information sharing requirements outlined 
in Sec.  890.1612 of the regulation. In total, the VA estimates 
$395,000 worth of IT contractor development work will be needed to 
integrate the existing Veteran Verification process with the 
centralized Enrollment and Eligibility System. The estimated costs are 
based on the anticipated number of scrum teams and sprints required to 
build this functionality and the projected firm-fixed-price contract 
rates. All costs were estimated in 2022 dollars.
Social Security Administration (SSA)
    Startup Costs: SSA estimates $7.3 million in startup costs for 
staffing support and system updates related to the PSHB implementation. 
These include an estimated $5.16 million in staffing costs for project 
management, policy and business process development, and additional 
technician support for the initial SEP. Additionally, SSA anticipates 
$2.17 million in up-front costs for system enhancements that will be 
necessary to support data exchanges and the initial SEP.
    Ongoing Costs: SSA anticipates approximately 3 FTEs will be needed 
to support the PSHB following implementation, with estimated salary and 
overhead costs totaling $408,000 annually. These costs are based on the 
anticipated workload for processing annual enrollments and exceptions 
related to the Medicare coverage requirements for postal annuitants and 
family members. Additionally, SSA anticipates a small cost for the 
ongoing data exchange with OPM, although this cost cannot be determined 
until the data exchange is completed and will ultimately be reimbursed 
by OPM.
Indian Health Service
    Indian Health Service (IHS) estimates de minimis costs for PSHB 
implementation. This is based upon the assumption that self-attestation 
will be utilized for Postal Service annuitants and family members to 
provide proof of eligibility for IHS health services for purposes of an 
exception to the Medicare Part B requirement.
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

[[Page 20398]]

enrollees and they will therefore be impacted by implementation of the 
PSHB Program. Although OPM anticipates that not all carriers will elect 
to participate in the Program, at a minimum, assuming only plans with 
1,500 or more Postal Service enrollees choose to participate, 28 
carriers would be expected to incur additional costs associated with 
the creation and administration of separate PSHB plans. These costs 
will likely be incurred for internal training, updating enrollment 
processes and information systems, updating financial systems, and 
development of proposals specific to the PSHB Program. In developing 
plan options for the PSHB, carriers will not simply be able to 
duplicate FEHB plan designs as the requirement to integrate Part D 
coverage is substantively different. While large carriers may be able 
to leverage existing experience integrating Medicare Part D coverage in 
their other books of business, the need to apply and submit a different 
PSHB proposal will be a cost to carriers. PSHB Carriers will continue 
to incur annual costs to offer plans as there will need to be two sets 
of proposals, contract negotiations, and enrollment processing for 
carriers offering both PSHB and FEHB plans. This will likely create 
additional staffing costs on an ongoing basis.
Postal Service Annuitants (Not Quantified)
    Existing and future Postal Service annuitants may incur additional 
costs in navigating both Medicare and PSHB enrollment decisions, 
particularly in the initial years following implementation. Prior to 
the PSHB Program Open Season, a six-month SEP will be offered to 
provide existing Medicare-eligible Postal Service annuitants and their 
Medicare-eligible family members with the opportunity to enroll in Part 
B. This enrollment window will take place before PSHB benefits and 
premiums are set, meaning participants will not know the details of the 
PSHB premiums when making their Medicare election during the SEP. This 
could create additional burden and confusion for participants and may 
result in suboptimal enrollment decisions.
    As with the training and communications costs for the first year, 
Postal Service employees may continue to need training as they approach 
retirement. They may generally experience new costs associated with 
interacting with a new set of options, especially if they have already 
planned to take certain actions upon retirement which are now 
infeasible under the PSRA. Additionally, as is true currently under 
FEHB, retirement will not be a PSHB qualifying life event. Postal 
Service annuitants will need to understand how their PSHB plan election 
will work with the Part B requirement upon retirement or wait for Open 
Season alignment in both Medicare and the PSHB to make a suitable 
choice for their health care insurance needs.

Transfers

    The main impact of section 101 of the PSRA and these rules will be 
a transfer of costs from the Postal Service to the Medicare Program, 
which is funded by taxpayers, including the Postal Service and 
beneficiaries. Additionally, a portion of these premium costs will 
likely be transferred to the pharmaceutical manufacturers due to 
reduced payments received from Medicare Part D enrollees. Table 3 
summarizes the projected changes in annual premium expenditures for 
each of the primary stakeholders. These projections were obtained from 
separate, independent analyses performed by CMS, the Postal Service, 
and OPM, which were produced at different points in time and with 
different underlying methods and assumptions and are therefore intended 
to summarize the directional transfer of costs among the different 
stakeholders, not the overall budgetary impacts of the PSRA. 
Additionally, all estimates were based on FEHB and Medicare coverage as 
of 2023, and do not incorporate any changes expected from the Inflation 
Reduction Act or Carrier Letter 2023-02.\13\ Details on the methods and 
assumptions utilized by each agency are provided in the Table 3 
footnotes.
---------------------------------------------------------------------------

    \13\ FEHB Program Carrier Letter Number 2023-02, FEHB and 
Medicare Part D Prescription Drug Coordination (published January 
25, 2023).

                                                              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
--------------------------------------------------------------------------------------------------------------------------------------------------------
CMS \1\...........................    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
    Part B, net of premium \a\....    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 D, net of premium and        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
     clawback \b\.................
USPS \2\..........................    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 share of employee            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
     premiums.....................
PSRHBF Annuitant Premiums \3\.....    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 Share of Annuitant         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
     Premiums.....................
FEHB and Federal Share USPS           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
 Premiums \3\.....................
    Payments for NP annuitant         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
     premiums.....................
    Federal Share of USPS             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
     Annuitant Premiums...........
Employee and Annuitant Share of       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
 Premiums.........................
    Postal employee share PSHB        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
     premiums \2\.................
    Postal annuitants share PSHB      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
     premiums \2\.................
    Non-Postal employee share FEHB    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
     premiums \3\.................

[[Page 20399]]

 
    Non-Postal annuitant share        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
     FEHB premiums \3\............
    Postal annuitant premiums for     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
     Medicare B \1a\..............
        Total [ne]................    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
--------------------------------------------------------------------------------------------------------------------------------------------------------
[ne] 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 [ap] 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 Postal Service to Medicare. Additionally, the requirement for 
all PSHB plans to offer Medicare Part D prescription drug benefits will 
result in a significant transfer of prescription drug costs for all 
current and future Medicare-eligible annuitants and family members from 
the Postal Service to Medicare, with a portion of these costs 
transferred to the pharmacy supply chain in the form of reduced 
payments. This is due to the Medicare Coverage Gap Discount Program at 
section 1860D-14A of the Social Security Act, which requires 
manufacturers to provide a substantial discount on brand name drugs 
dispensed to applicable beneficiaries in the coverage gap. These 
industry discounts are in addition to the discounts negotiated with 
individual FEHB plans, resulting in lower per-member payments for the 
subset of current and future Postal Service annuitants who would have 
otherwise elected not to enroll in Part D. It is important to note, 
however, that all estimates related to Part D savings were conducted 
prior to the enactment of the Inflation Reduction Act (Pub. L. 117-
169), which contained significant prescription drug provisions 
including, for example, a provision that sunsets the Coverage Gap 
Discount Program at the end of 2024, and establishes a new Manufacturer 
Discount Program, beginning Jan. 1, 2025, at section 1860D-14C of the 
Social Security Act.
    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 
Postal Service annuitants and family members that would have previously 
been covered by the PSHB plan. Given that premiums are based on average 
per member costs of the combined pool of annuitants and employees, this 
will likely result in lower premiums for PSHB plans compared with 
current FEHB premium amounts. While this will reduce costs for the 
Postal Service and current Postal Service employees, a portion of these 
costs will likely be transferred to the estimated 25% of current and 
future Medicare-eligible Postal Service annuitants and Medicare-
eligible family members who elect or are required to enroll in Part B 
and otherwise would not have. These individuals will ultimately be 
subject to premiums for both Medicare and PSHB plans which, on net, may 
be higher than the current FEHB premiums. At the same time, being 
covered by Medicare in conjunction with a PSHB plan may also reduce 
out-of-pocket expenses (e.g., co-payments and co-insurance) for 
annuitants than would otherwise have been incurred. Furthermore, we 
anticipate that some plans will reimburse all or part of Part B 
premiums, as is currently the case with some FEHB plans.
    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 Postal 
Service employees and annuitants will result in premiums that are more 
reflective of the resulting Postal and non-Postal populations. Removal 
of these individuals from the FEHB plan population will therefore 
result in slight reduction in average per member costs which will be 
directionally reflected in FEHB plan premiums following PSHB 
implementation. The expected decrease in FEHB plan premiums would be 
mirrored by a slight increase in PSHB premiums, although this increase 
would be minimal compared to the expected decrease in premium due to 
Medicare enrollments, meaning that the likely result will be lower 
premiums for PSHB plans compared with current FEHB plan premium 
amounts.
    As required in the PSRA, the Postal Service will need to pay to CMS 
the monthly late enrollment penalties for any Part B enrollments that 
occurred during the 2024 SEP. These late enrollment penalties are 
typically assessed to enrollees as a monthly

[[Page 20400]]

increase in premiums and are intended to transfer a portion of the 
increased age-related risk that a late enrollee represents, compared 
with an individual that was enrolled at age 65. We estimate that 
approximately 100,000 Postal Service annuitant subscribers aged 65+ 
currently enrolled in the FEHB Program are not enrolled in Medicare 
Part B and, thus, would be eligible for the SEP. Given that these 
individuals have previously elected not to enroll in Part B, it is 
estimated that around 30% of current Postal Service annuitants will 
choose to enroll during the SEP. For these individuals, the additional 
late enrollment penalties will be transferred to the Postal Service.
    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 Postal 
Service and greater FEHB population.
    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 Postal Service annuitants who are otherwise eligible for 
Part B are not currently enrolled. It is possible they actively 
declined Part B coverage because they were satisfied with their 
existing coverage or felt that the additional Medicare premium costs 
were too high, although it is also possible that they were not fully 
aware of the benefits of Medicare enrollment on their overall health 
care expenses over the course of their lifetimes. Assuming that a 
similar percentage of future Postal Service annuitants would have made 
a similar determination, these individuals will now be required to 
enroll as a condition of PSHB eligibility. This may result in some 
Postal Service annuitants dropping PSHB coverage altogether if they 
determine that PSHB and Part B coverage together is unaffordable or 
duplicative for their health care circumstances, though this number may 
be limited since it would require those annuitants to forgo PSHB 
coverage for the rest of their lifetimes unless individuals opt to 
participate in a Medicare Advantage plan. This could potentially result 
in adverse selection within the PSHB plans, referring to the tendency 
for individuals with higher health risks to disproportionately elect 
more generous coverage. Ultimately, this would increase the average 
risk and costs within the PSHB enrolled population, creating upward 
pressure on premiums. Additionally, some carriers may elect not to 
offer or discontinue PSHB plans if they anticipate or experience lower 
than expected enrollment.
    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.
---------------------------------------------------------------------------

    \14\ Brook, Robert H., Emmett B. Keeler, Kathleen N. Lohr, 
Joseph P. Newhouse, John E. Ware, William H. Rogers, Allyson Ross 
Davies, Cathy D. Sherbourne, George A. Goldberg, Patricia Camp, 
Caren Kamberg, Arleen Leibowitz, Joan Keesey, and David Reboussin, 
The Health Insurance Experiment: A Classic RAND Study Speaks to the 
Current Health Care Reform Debate (2006), https://www.rand.org/pubs/research_briefs/RB9174.html.
    \15\ See Heidi Allen & Katherine Baicker, The Effect of Medicaid 
on Care and Outcomes for Chronic Conditions: Evidence from the 
Oregon Health Insurance Experiment, NBER Working Paper No. 29373 
(October 2021), https://www.nber.org/papers/w29373.
---------------------------------------------------------------------------

    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

[[Page 20401]]

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 Postal Service annuitants, the requirement to enroll in Part B 
after retirement represents an additional cost. This will likely factor 
into individual retirement planning decisions and could potentially 
lead to employees remaining in the workforce longer to delay these 
additional costs. Likewise, lower-risk individuals may determine that 
their Medicare coverage, including Part B coverage is sufficient for 
their health care needs and opt out of PSHB enrollment. These aspects 
could impact PSHB Program risk pools and influence carriers' decisions 
on whether to continue operating in the PSHB market. Each of these 
scenarios could trigger potential downstream effects on utilization and 
premiums and will be important to monitor. OPM invites comment on all 
topics addressed in this section.

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 Postal Service 
annuitants and their family members who take advantage of the Medicare 
Part B SEP from April 1 to September 30, 2024, there may be confusion 
about having two consecutive separate health plan enrollment events 
given that the PSHB Program Open Season for plan year 2025 will occur 
from November 11 through December 9, 2024. As with current FEHB plans, 
however, OPM's rate review process for PSHB plans will not be completed 
until September 2024, which makes simultaneous enrollment in Medicare 
Part B and PSHB plans extremely problematic. Should OPM open PSHB plan 
enrollment at the same time as the Medicare SEP, without completing the 
rate review process, enrollees would be selecting PSHB plans for which 
the monthly cost is entirely unknown, leading to more confusion than 
leaving the Medicare SEP and PSHB Open Enrollment separate.
    We explored an opportunity for Postal Service annuitants to ``pre-
enroll'' in PSHB plans prior to OPM completing its PSHB rate review 
process. Combining the opportunity to pre-enroll in a PSHB plan with 
the Medicare SEP would allow Postal Service annuitants to complete both 
actions simultaneously. Alternatively, Postal Service annuitants could 
be automatically enrolled in a PSHB plan at the same time they enroll 
in Medicare Part B. Automatic pre-enrollment could relieve these Postal 
annuitants from making two separate enrollment decisions. However, we 
found both of these options would be undesirable for enrollees and 
their family members for several reasons.
    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 
Postal Service employees, Postal Service annuitants, and their family 
members. Postal Service annuitants who wish to keep their plan or take 
as little action as possible can have their needs met as easily with 
automatic enrollment after Open Season ends instead of OPM implementing 
a new pre-enrollment or automatic pre-enrollment. In addition, under 5 
CFR 890.301(f)(2), the OPM Director has the authority to modify the 
dates for Open Season or hold additional Open Seasons. These 
authorities and flexibilities exist under current regulations and may 
be exercised without needing to make any specific provisions under this 
rulemaking.
    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 
Postal Service employees, Postal Service annuitants, and their family 
members. OPM considered maintaining the existing enrollment processes 
that apply to enrollment in FEHB plans but ultimately determined that 
the establishment of the PSHB provided an ideal opportunity to utilize 
new technologies and centralization processes that will improve the 
experience of PSHB stakeholders.

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 Postal Service 
employees, Postal Service annuitants, family members, PSHB Carriers, 
employing agencies, and retirement systems become more familiar with 
the centralized enrollment system.

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 
Postal Service employees, as is currently done for

[[Page 20402]]

FEHB plans. Keeping this effective date for PSHB plans that Postal 
Service employees are familiar with will not result in implementation 
costs or risk confusing existing enrollees. However, the benefits of a 
January 1 effective date outweigh the costs of implementation and 
educating enrollees, as implementation costs are one-time and after 
several years there will be little to no ongoing enrollee education 
needs. Conversely, the benefits of the January 1 date will remain 
indefinitely. A calendar year start date is easier for enrollees to 
track and follow and is consistent with the industry standard and many 
similar programs, including health savings accounts, the Federal 
Employees Dental and Vision Insurance Program, and the cutoff date for 
Postal Service Medicare covered annuitants who qualify for an exception 
to the Medicare enrollment requirement.

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 $100 million in 1995 dollars, 
updated annually for inflation. In 2023, that threshold is 
approximately $177 million. This interim final rule does not mandate 
any requirements for State, local, or Tribal governments, or for the 
private sector.

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. 801 
et seq.) requires rules (as defined in 5 U.S.C. 804) to be submitted to 
Congress before taking effect. OPM will submit to Congress and the 
Comptroller General of the United States a report regarding the 
issuance of this action before its effective date, as required by 5 
U.S.C. 801. OMB's Office of Information and Regulatory Affairs has 
determined that this is a major rule as defined by the Congressional 
Review Act (5 U.S.C. 804(2)).

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 Office 
of Management and Budget (OMB) Control Number.
    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, January 21, 2021). Regardless of whether a revision to the 
SF-2809 is pursued or a new collection is proposed, OPM will publish a 
separate 60-day notice at a later date requesting comments.

List of Subjects

5 CFR Part 890

    Administrative practice and procedure, Government employees, Health 
facilities, Health insurance, Health professions, Postal Service 
employees, Reporting and recordkeeping requirements, Retirement.

48 CFR Parts 1602 and 1609

    Government employees, Government procurement, Health insurance, 
Postal Service employees, Reporting and recordkeeping requirements.

Office of Personnel Management.
Stephen Hickman,
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

0
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

0
2. Amend Sec.  890.101 in paragraph (a) by:
0
a. Revising the introductory text; and
0
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:


Sec.  890.101  Definitions; time computations.

    (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 
Postal Service, Postal Service annuitant, and Postal Service employee 
have the meanings set forth in 5 U.S.C. 8903c; and these terms 
supplement the following definitions:
* * * * *
    Federal Employees Health Benefits (FEHB) Program means the health 
insurance program administered by the Office of Personnel Management 
and established under 5 U.S.C. chapter 89.
    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.
* * * * *

[[Page 20403]]

    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 Postal Service annuitant.
    PSHB plan means a health benefits plan offered under the PSHB 
Program.
* * * * *

0
3. Add Sec.  890.115 to read as follows:


Sec.  890.115  Special provisions for Postal Service employees, Postal 
Service annuitants, and their eligible family members.

    Special provisions for Postal Service employees, Postal Service 
annuitants, and their eligible family members are set forth at subpart 
P of this part. Provisions of this part generally apply to Postal 
Service employees, Postal Service annuitants, and their eligible family 
members, except for provisions which are inconsistent with provisions 
of 5 U.S.C. 8903c or subpart P.

Subpart C--Enrollment

0
4. Amend Sec.  890.301 by adding paragraph (p) to read as follows:


Sec.  890.301  Opportunities for employees to enroll or change 
enrollment; effective dates.

* * * * *
    (p) Postal Service employees and Postal Service annuitants eligible 
to enroll only in PSHB plans. After December 31, 2024, a Postal Service 
employee or Postal Service annuitant is not eligible to be enrolled in 
an FEHB plan but may only enroll in a PSHB plan in accordance with 
subpart P of this part.

0
5. Amend Sec.  890.302 by revising paragraphs (a)(1) and (a)(2)(i) to 
read as follows:


Sec.  890.302  Coverage of family members.

    (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 Sec.  890.308(h). Proof of family 
member eligibility may be required, and must be provided upon request, 
to the carrier, the employing office, or OPM. Except as provided in 
paragraph (a)(2) of this section, no employee, former employee, 
annuitant, child, or former spouse may enroll or be covered as a family 
member if they are already covered under another person's self plus one 
or self and family enrollment.
    (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.
* * * * *

0
6. Amend Sec.  890.303 by adding paragraph (j) to read as follows:


Sec.  890.303  Continuation of enrollment.

* * * * *
    (j) On transfer to or from Postal Service. The eligibility of a 
Postal Service employee to continue enrollment under 5 U.S.C. chapter 
89 continues without change when they move from the Postal Service to 
another employing office, without a break in service of more than 3 
days, whether the personnel action is designated as a transfer or not. 
In such a circumstance they may no longer enroll in a PSHB plan under 
subpart P of this part, and they may only enroll in an FEHB plan. The 
eligibility of an employee or annuitant to continue enrollment under 5 
U.S.C. chapter 89 continues without change when they move from another 
employing office to the Postal Service, without a break in service of 
more than 3 days, whether the personnel action is designated as a 
transfer or not; however, they may no longer enroll in an FEHB plan, 
and they may only enroll in a PSHB plan under subpart P.

0
7. Amend Sec.  890.308 by adding paragraph (i) read as follows:


Sec.  890.308  Disenrollment and removal from enrollment.

* * * * *
    (i) Disenrollment and removal from enrollment: Medicare enrollment 
requirement for certain Postal Service annuitants and family members. 
Postal Service Medicare covered annuitants not enrolled in Medicare 
Part B may be disenrolled, and Medicare covered members of family not 
enrolled in Medicare Part B may be removed from coverage, pursuant to 
Sec.  890.1608(b).

Subpart E--Contributions and Withholdings

0
8. Amend Sec.  890.501 by revising paragraph (b) introductory text to 
read as follows:


Sec.  890.501  Government contributions.

* * * * *
    (b) In accordance with the provisions of 5 U.S.C. 8906(a) which 
takes effect with the contract year that begins in January 1999, OPM 
will determine the amounts representing the weighted average of 
subscription charges in effect for each contract year, for FEHB plans 
and for PSHB plans, respectively, for self only, self plus one, and 
self and family enrollments, as follows:
* * * * *

Subpart O--[Added and Reserved]

0
9. Add reserved subpart O.

0
10. Add subpart P, consisting of Sec. Sec.  890.1601 through 890.1614, 
to read as follows:

Subpart P--Postal Service Health Benefits Program

Sec.
890.1601 Purpose.
890.1602 Definitions and deemed references.
890.1603 Eligibility for the Postal Service Health Benefits Program.
890.1604 Medicare enrollment requirement for certain Postal Service 
annuitants and eligible family members.
890.1605 Enrollment in the initial contract year.
890.1606 Opportunities to enroll, change enrollment, or reenroll; 
effective dates.
890.1608 Disenrollment, removal, termination, cancellation, and 
suspension.
890.1609 Temporary extension of coverage, conversion, or temporary 
continuation of coverage.
890.1610 Minimum standards for PSHB Program plans and Carriers.
890.1611 Withdrawal of approval of health benefits plan or carrier.
890.1612 Information sharing.
890.1613 Contributions and withholdings.
890.1614 Other administrative provisions.


Sec.  890.1601  Purpose.

    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.


Sec.  890.1602  Definitions and deemed references.

    (a) In this subpart, the terms set out in Sec.  890.101 apply 
unless stated otherwise.
    (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

[[Page 20404]]

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 
Sec.  890.1604.
    (d) In this subpart, wherever reference is made to other subparts 
of this part--
    (1) A reference to employee is deemed a reference to Postal Service 
employee;
    (2) A reference to enrollee is deemed a reference to a Postal 
Service employee or Postal Service annuitant in whose name the 
enrollment is carried;
    (3) A reference to annuitant, survivor annuitant, or an individual 
with entitlement to an annuity is deemed a reference to Postal Service 
annuitant;
    (4) A reference to employer, employing agency, employing office, or 
agency for Postal Service employees is deemed a reference to the Postal 
Service, for Postal Service annuitants is deemed a reference to the 
appropriate retirement system or other appropriate entity for 
compensationers, those enrolled under TCC or Spouse Equity, and 
annuitants whose annuity is insufficient to withhold the cost of health 
benefits premiums; and
    (5) A reference to carrier is deemed a reference to a PSHB Carrier.


Sec.  890.1603  Eligibility for the Postal Service Health Benefits 
Program.

    (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) Postal Service employee;
    (2) Postal Service annuitant; and
    (3) Member of family of an individual in paragraph (a)(1) or (2) of 
this section.
    (b) For purposes of this subpart, a Postal Service employee 
includes a Postal Service employee who receives monthly compensation 
under 5 U.S.C. chapter 81, subchapter I (``compensationer''), who is 
determined by the Secretary of Labor to be unable to return to duty.
    (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 Sec.  890.1604;
    (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 Sec.  
890.1604; or
    (3) Any individual covered by an FEHB plan under this part, except 
as permitted by Sec.  890.302(a)(2).
    (d) Former spouses of Postal Service employees and Postal Service 
annuitants may establish their eligibility to enroll under subpart H of 
this part. A former spouse of a Postal Service employee or Postal 
Service annuitant who is enrolled in an FEHB plan on or before December 
31, 2024, may continue enrollment in an FEHB plan and is not required 
to enroll in a PSHB plan. A former spouse who is eligible under Sec.  
890.803(a)(2) because of their enrollment in a PSHB plan is not 
eligible to enroll or remain enrolled in a PSHB plan; they may enroll 
in an FEHB plan and, accordingly, the Medicare enrollment requirements 
in Sec.  890.1604 would not apply.
    (e) Survivor annuitants have the same eligibility for reinstatement 
of enrollment as described in Sec.  890.303(d) for enrollment in a PSHB 
plan or an FEHB plan as applicable to the service that gives rise to 
the survivor annuitant status, except that the Medicare enrollment 
requirements in Sec.  890.1604 would apply to reinstatements of 
enrollment into a PSHB plan.
    (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.


Sec.  890.1604  Medicare enrollment requirement for certain Postal 
Service annuitants and eligible family members.

    (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 
Postal Service annuitant is a covered Medicare individual and is 
required to enroll in Medicare Part B in order to be enrolled in a 
health benefits plan under this subpart, a Medicare covered member of 
family of the Postal Service annuitant may not enroll in a health 
benefits plan under this subpart as a member of family of the Postal 
Service annuitant unless the member of family is enrolled in Medicare 
Part B.
    (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 January 1, 2025, is a Postal Service annuitant who is not 
both entitled to Medicare Part A and enrolled in Medicare Part B;
    (ii) As of January 1, 2025, was a Postal Service employee who is at 
least 64 years of age;
    (iii) Resides outside the United States (which includes the States, 
the District of Columbia, the Commonwealth of Puerto Rico, the Virgin 
Islands, Guam, American Samoa, and the Northern Mariana Islands), 
provided that the individual demonstrates such residency to the Postal 
Service;
    (iv) Is enrolled in health care benefits provided by the Department 
of Veterans Affairs (VA) under 38 U.S.C. chapter 17, subchapter II, 
including individuals who are not required to enroll in the VA's system 
of patient enrollment referred to in 38 U.S.C. 1705(a), subject to the 
documentation requirements in paragraph (d)(2) of this section; or
    (v) Is eligible for health services from the Indian Health Service, 
subject to the documentation requirements in paragraph (d)(3) of this 
section.
    (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 the United States (which includes the States, 
the District of Columbia, the Commonwealth of Puerto Rico, the Virgin 
Islands, Guam, American Samoa, and the Northern Mariana Islands), 
provided that the individual demonstrates such residency to the Postal 
Service;
    (iii) Is enrolled in health care benefits provided by the VA under 
38 U.S.C. chapter 17, subchapter II, including individuals who are not 
required to enroll in the VA's system of patient enrollment referred to 
in 38 U.S.C. 1705(a) to receive VA hospital care and medical services, 
subject to the documentation requirements in paragraph (d)(2) of this 
section; or
    (iv) Is eligible for health services from the Indian Health Service 
subject to the documentation requirements in paragraph (d)(3) of this 
section.
    (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:

[[Page 20405]]

    (1) Demonstrating qualification to the Postal Service for the 
exceptions at paragraphs (c)(1)(iii) and (c)(2)(ii) of this section;
    (2) Documentation from the Department of Veterans Affairs in a 
form, manner, and frequency as prescribed by OPM demonstrating the 
individual meets an exception identified in paragraphs (c)(1)(iv) and 
(c)(2)(iii) of this section; or
    (3) Documentation from the Indian Health Service (IHS) in a form, 
manner, and frequency as prescribed by OPM in consultation with IHS 
demonstrating the individual meets an exception identified in 
paragraphs (c)(1)(v) and (c)(2)(iv) of this section.
    (e) A Postal Service Medicare covered annuitant or a Medicare 
covered member of family may notify the Postal Service, in writing, if 
they choose not to enroll in or to disenroll from Medicare Part B as 
described in Sec.  890.1608(e). This will have the effect of a 
termination of coverage, pursuant to Sec.  890.1608(b).
    (f) The process for disenrollment or removal from PSHB enrollment 
for non-enrollment in Medicare Part B is described in Sec.  
890.1608(b).


Sec.  890.1605  Enrollment in the initial contract year.

    (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 Postal Service employee or Postal Service annuitant--
    (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 Postal Service employee or a Postal Service 
annuitant.
    (2) A Postal Service employee or Postal Service annuitant who is 
eligible to enroll in a PSHB plan and is enrolled in an FEHB plan but 
who does not make an election during the transitional Open Season 
either to enroll in a PSHB plan or not to enroll in a PSHB plan will be 
automatically enrolled in a PSHB plan pursuant to paragraph (c) of this 
section.
    (3) During the transitional Open Season, a Postal Service employee 
in a nonpay status, such as leave without pay, except for the case of a 
365-day period of nonpay status as set forth at Sec.  890.303(e), may 
enroll in a PSHB plan or may be automatically enrolled in a PSHB plan 
pursuant to paragraph (b)(2) of this section.
    (c) Automatic enrollment. Each Postal Service employee or Postal 
Service annuitant who is enrolled in a current plan and does not enroll 
or make an election not to enroll, for the initial contract year, will 
be automatically enrolled in a PSHB plan by OPM as follows:
    (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 Postal 
Service employee or Postal Service annuitant automatically enrolled 
under paragraph (c) of this section will be enrolled in the same 
enrollment type they were enrolled in immediately preceding the initial 
contract year. The enrollee's family member(s), if eligible, will be 
covered under the same enrollment type they were covered under 
immediately preceding the initial contract year.
    (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 Sec.  890.301(c) for Postal Service 
employees and Sec.  890.306(c) for Postal Service annuitants.
    (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 January 1 of the contract year.


Sec.  890.1606  Opportunities to enroll, change enrollment, or 
reenroll; effective dates.

    (a) Except as otherwise provided in this subpart, a Postal Service 
employee may enroll or change enrollment, as provided by Sec.  890.301, 
in a PSHB plan and may not enroll in a FEHB plan as a Postal Service 
employee.
    (b) Except as otherwise provided in this subpart, a Postal Service 
annuitant may change enrollment or reenroll as provided by Sec.  
890.306, in a PSHB plan and may not enroll or reenroll in a FEHB plan 
as a Postal Service annuitant.
    (c) Except as otherwise provided in this subpart, reinstatement of 
enrollment in accordance with Sec.  890.305 is permitted in a PSHB 
plan.
    (d) Except as otherwise provided in this subpart, initial decisions 
and reconsiderations on enrollment and eligibility under this subpart 
will be made pursuant to Sec.  890.104.
    (e) Under this subpart, an enrollment, change of enrollment, or 
reenrollment

[[Page 20406]]

made during Open Season takes effect on the January 1 of the next year.
    (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.


Sec.  890.1608  Disenrollment, removal, termination, cancellation, and 
suspension.

    (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 Sec.  890.1603(a), enrollment in an FEHB plan and 
coverage of the enrollee and covered family members under that FEHB 
plan will terminate at the end of the contract year preceding the 
initial contract year. Coverage under a FEHB plan will remain available 
for an eligible family member who is or becomes covered as a member of 
family of a FEHB plan enrollee who is not eligible for a PSHB plan 
pursuant to Sec.  890.1603(a)(1) or (2). Individuals whose coverage is 
terminated under this paragraph (a) are not eligible for temporary 
continuation of coverage under subpart K of this part pursuant to Sec.  
890.1103(b).
    (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 Sec.  890.1604(c), a Postal Service Medicare covered 
annuitant may be disenrolled and a Medicare covered member of family 
may be removed from PSHB coverage if not enrolled in Medicare Part B 
either:
    (i) By the end of their Medicare initial enrollment period or 
applicable Medicare special enrollment period; or,
    (ii) Any time after January 1, 2025, that the PSHB Carrier, the 
Postal Service, or OPM determines that the individual was required to 
be enrolled but has not enrolled in Medicare Part B.
    (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 Sec.  890.1604(c).
    (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 Sec.  890.304(d)(2).
    (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 Sec.  890.401.
    (c) Ineligibility under this subpart. The PSHB Carrier, Postal 
Service, other applicable employing offices, or OPM, as appropriate, 
may take action to disenroll ineligible individuals from enrollment or 
remove covered members of family from an enrollment pursuant to Sec.  
890.308.
    (d) Removal due to fraud or misrepresentation. Pursuant to Sec.  
890.308(e)(3) and (f)(3), fraud or intentional misrepresentation of the 
fact of non-enrollment in, or disenrollment from, Medicare Part B may 
be grounds for retroactive disenrollment and removal to the date of 
loss of eligibility.
    (e) Cancellation of PSHB in writing to the Postal Service due to 
lack of Medicare coverage. As required by 5 U.S.C. 8903c(g)(3)(D), the 
Postal Service Medicare covered annuitant or a Medicare covered member 
of family may cancel coverage under this subpart in writing to the 
Postal Service because the individuals choose not to enroll in or to 
disenroll from Medicare Part B. In such a case, PSHB enrollment or 
coverage under this subpart will be cancelled as described in 
paragraphs (e)(1) through (4) of this section.
    (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 Sec.  890.1609.
    (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 Postal Service that a Medicare 
covered member of family will not enroll in or will disenroll from 
Medicare Part B, the Postal Service Medicare covered annuitant may 
elect to decrease their PSHB plan enrollment type as described in Sec.  
890.306(e).
    (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 Sec.  890.401.
    (f) Temporary extension of coverage and conversion. A Postal 
Service employee, Postal Service annuitant, or their covered family 
member whose enrollment or coverage is terminated other than by 
cancellation of the enrollment or discontinuance of the plan, in whole 
or part, is entitled to a 31-day temporary extension of coverage and 
right of conversion in accordance with Sec.  890.401.


Sec.  890.1609  Temporary extension of coverage, conversion, or 
temporary continuation of coverage.

    (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.


Sec.  890.1610  Minimum standards for PSHB Program plans and Carriers.

    (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 Sec.  
890.201, unless otherwise stated in this subpart;
    (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);

[[Page 20407]]

    (4) Maintain separate reserves, including contingency reserves, 
with respect to enrollees in each PSHB plan as directed by OPM; and
    (5) Begin coverage on January 1 of each year.
    (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 Postal Service 
employees and Postal Service annuitants was 1,500 or more in the 2023 
contract year. OPM may exempt a comprehensive medical plan, as 
described in 5 U.S.C. 8903(4), from the requirement in this paragraph 
(c).
    (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 Sec.  890.1611.


Sec.  890.1611  Withdrawal of approval of health benefits plan or 
carrier.

    (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 Sec.  890.204 if the standards in Sec.  890.1610 and 48 CFR 
1609.70 are not met.
    (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 Sec.  890.205.


Sec.  890.1612  Information sharing.

    (a) OPM shall establish periodic agreements with the Social 
Security Administration regarding Postal Service annuitants and their 
eligible family members for purposes of:
    (1) Determining whether Postal Service Medicare covered annuitants 
and Medicare covered members of family of those annuitants satisfy the 
Medicare enrollment requirements at Sec.  890.1604; and
    (2) Determining which Postal Service annuitants and family members 
of such annuitants may be eligible to enroll in Medicare Part B under 
section 1837(o) of the Social Security Act.
    (b) OPM shall identify Postal Service annuitants and their eligible 
family members who may be covered Medicare individuals from OPM's 
stored enrollment data. OPM will provide identifying information about 
these annuitants and their eligible family members to the Social 
Security Administration via secure data transfer for the purposes as 
outlined in the periodic agreements.
    (c) OPM shall establish periodic agreements with the Department of 
Health and Human Services, the United States Postal Service, the 
Department of Veterans Affairs, and other Federal agencies as needed to 
share data and information as is necessary to carry out 5 U.S.C. 8903c 
and this subpart.
    (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 Postal Service employees or Postal Service 
annuitants may be eligible to enroll in a PSHB plan; and which family 
members may be covered;
    (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 Sec.  890.1604; and
    (3) To create a system for data sharing as needed for carrying out 
5 U.S.C. 8903c and this subpart.


Sec.  890.1613  Contributions and withholdings.

    (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) Postal Service contribution. The Government contribution with 
respect to the Postal Service for health benefits plans under this 
subpart shall be determined annually in accordance with Sec.  890.501 
commencing 2024 using the weighted average of rates offered by PSHB 
plans for the following year with respect to self only, self plus one, 
and self and family enrollments. For the initial contract year, the 
weighted average applicable for determining the Government contribution 
by the Postal Service will be determined using the calculation at 5 
U.S.C. 8903c(i), except that OPM will use available data with respect 
to Postal Service enrollment for 2024, taking into account 2023 data.
    (c) Medicare late enrollment penalty. Upon request by the Postal 
Service, and only until the Postal Service Retiree Health Benefits Fund 
is depleted, OPM will pay out of the Fund any late enrollment penalties 
required under section 1839(e)(1) of the Social Security Act for 
individuals who enrolled during the special enrollment period 
established under section 1837(o) of the Social Security Act (42 U.S.C. 
1395p).
    (d) Calculations for the Postal Service Retiree Health Benefits 
Fund. As directed by 5 U.S.C. 8909a OPM shall make annual computations 
with respect to the cost of claims attributable to Postal Service 
annuitants and their covered family members, and the United States 
Postal Service shall pay into the Fund annually according to those 
computations.
    (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).


Sec.  890.1614  Other administrative provisions.

    (a) Correction of errors. Correction of errors under this subpart 
may be made according to Sec.  890.103, except that retroactive 
corrections to an enrollment under this subpart may not apply 
retroactively beyond the initial contract year. OPM retains authority 
to order correction of errors under this subpart.
    (b) Carrier entitlement to pursue subrogation and reimbursement 
recoveries. Carrier entitlement to pursue subrogation and reimbursement 
recoveries must follow the requirements of Sec.  890.106.
    (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 Sec.  
890.1604.
    (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 Sec.  890.1604 shall be disenrolled or removed pursuant 
to Sec.  890.1608.
    (d) Information about PSHB Program enrollment requirements. OPM 
shall provide timely information about PSHB Program enrollment 
requirements to the United States Postal Service to disseminate to 
Postal Service

[[Page 20408]]

employees, Postal Service annuitants, and their eligible family 
members. Any requests for more information should be directed, in 
writing, to the United States Postal Service.
    (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

0
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.


0
12. Add sections 1602.170-17 through 1602.170-22 to read as follows:
Sec.
* * * * *
1602.170-17 Postal Service.
1602.170-18 Postal Service annuitant.
1602.170-19 Postal Service employee.
1602.170-20 PSHB Carrier.
1602.170-21 PSHB plan.
1602.170-22 PSHB Program.
* * * * *


1602.170-17  Postal Service.

    Postal Service means the United States Postal Service.


1602.170-18  Postal Service annuitant.

    Postal Service annuitant has the meaning set forth in 5 U.S.C. 
8903c(a)(8).


1602.170-19  Postal Service employee.

    Postal Service employee has the meaning set forth in 5 U.S.C. 
8903c(a)(9).


1602.170-20  PSHB 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.


1602.170-21  PSHB plan.

    PSHB plan means a health benefits plan offered under the PSHB 
Program.


1602.170-22  PSHB 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

0
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.

0
14. Add section 1609.7002 to read as follows:


1609.7002  Minimum 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 Postal Service employees or 
Postal Service annuitants in the contract year beginning January 2023 
must offer a PSHB plan in the initial contract year. OPM may exempt a 
comprehensive medical plan, as described in 5 U.S.C. 8903(4), from the 
requirement in this paragraph (b).

[FR Doc. 2023-07080 Filed 4-4-23; 4:15 pm]
BILLING CODE 6325-63-P