Postal Service Switches Retirement Benefits to Medicare

Congressional efforts to revise the country’s mail service might come at the cost of an even more nuanced issue involving Medicare.

The Postal Service Reform Act of 2022 would help to free post office costs by resolving the unusual and challenging legal requirement to fund 75 years of retirement health benefits in advance. In return, this Act would require future Postal Service retirees to participate in Medicare.

The Congressional Budget Office reports that the movie would save postal retirement as well as healthcare programs more than $5 billion and add more than $5 billion in costs to Medicare from now until 2031.

The Size of Medicare

Medicare is a large program and will spend over $900 billion in 2020. As a result, these costs do not impact the program substantially. The limited financial impact, as well as the ongoing crisis with mail delivery, are likely responsible for the substantial bipartisan support the postal bill received in Congress. 120 Republicans joined Democrats to pass the regulation. 

Some policymakers have raised concerns about this move, though. These individuals claim that Congress should more carefully consider the financial impact on the Medicare trust fund, which will likely run dry in 2026. 

Senator Rick Scott recently stated that the regulation shifts to Medicare recipients by adding substantial new costs to Medicare. Senator Scott blocked requests on the Senate floor to speed up the bill’s passage and delayed the bill’s consideration until March 2022 after the Senate returns from its President’s Daybreak.

Coverage for Postal Workers

Postal workers are covered by the Federal Employees Health Benefits plan. Retired workers have several options for health care, which include staying at their original location or switching to Medicare as their primary coverage. Approximately 20 percent of postal workers who retire do not enroll in Medicare and instead prefer to keep their existing federal plan. Under this regulation, retired postal workers have to change to medicare, but maintain a Postal Service of the Federal Employees Health Benefits plan.

The Future of the Change

The change, however, would not take effect until 2025. The Congressional Budget Office’s cost estimate does not encapsulate an entire decade. Senator Scott has requested the costs be revealed for the next decade as well as the 20-year duration. The total cost of this change is likely to be more substantial than the short-term analysis. The projected cost would end up the duty of Medicare, even though the exact impact this switch would have on Medicare is not certain.

Postal Service workers are not concerned about the change, and all of them support this change. Additionally, Senate Majority Leader Schumer claimed that the regulation would save money for the government and that moving postal retirees into Medicare would make sure that they receive benefits they’ve paid for but are not currently using.

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