[Federal Register Volume 89, Number 102 (Friday, May 24, 2024)]
[Proposed Rules]
[Pages 45782-45800]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-11127]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 89, No. 102 / Friday, May 24, 2024 / Proposed
Rules
[[Page 45782]]
OFFICE OF PERSONNEL MANAGEMENT
5 CFR Part 890
[Docket ID: OPM-2024-0002]
RIN 3206-AO59
Postal Service Health Benefits Program: Additional Requirements
and Clarifications
AGENCY: Office of Personnel Management.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Office of Personnel Management (OPM) is issuing a notice
of proposed rulemaking to clarify and establish additional requirements
regarding the Postal Service Health Benefits (PSHB) Program, which was
established pursuant to the Postal Service Reform Act of 2022. This
proposed rule expands on previous regulations concerning the PSHB
Program and is intended to provide greater detail and clarity necessary
to properly implement PSHB in 2025 and beyond. In particular, this
proposed rule includes details on: reconsideration of PSHB eligibility
decisions, various applications of the Medicare Part B enrollment
requirement, allocation of reserve credits, calendar year alignment of
Government contribution requirements, financial reporting and actuarial
calculations, premium payment prioritization from the Postal Service
Retiree Health Benefits Fund, and Medicare Part D integration.
DATES: Comments must be received on or before June 24, 2024.
ADDRESSES: You may submit comments, identified by docket number or
Regulation Identifier Number (RIN) and title, by the following method:
[ssquf] Federal eRulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments. All comments
received must include the agency name and docket number or RIN for this
document. The general policy for comments from members of the public is
to make them available for public viewing at https://www.regulations.gov without change, including any personal identifiers
or contact information. However, OPM retains discretion to redact
personal or sensitive information from comments before they are posted.
FOR FURTHER INFORMATION CONTACT: Cameron Stokes, Senior Policy Analyst,
at (202) 936-2847 or [email protected].
SUPPLEMENTARY INFORMATION:
Background
Section 101 of the Postal Service Reform Act of 2022 (PSRA), Public
Law 117-108, added new section 8903c to 5 U.S.C. chapter 89 and directs
OPM to establish the PSHB Program within the Federal Employees Health
Benefits (FEHB) Program for Postal Service employees, Postal Service
annuitants, and their eligible family members. OPM will administer the
PSHB Program in accordance with 5 U.S.C. chapter 89 and implementing
regulations (5 CFR parts 890 and 892, and 48 CFR chapter 16), including
any amendments resulting from this rulemaking. 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.
On April 6, 2023, OPM issued an interim final rule (88 FR 20383) to
establish the PSHB Program. The interim final rule became effective on
June 5, 2023. On May 6, 2024, OPM published a final rule (89 FR 37061)
that made minor changes to the regulations in response to public
comments. (This notice of proposed rulemaking refers to the interim
final rule and the final rule collectively as the ``initial
rulemaking.'') However, as program development and interagency
coordination continued after publication of the interim final rule, OPM
determined a need to provide additional specification on several topics
that were beyond the scope of that initial rulemaking. While that
initial rulemaking established the Program, this proposed rule further
explains and expands on the implementation of the PSHB Program to
provide clarity for PSHB Carriers, other agencies, and Postal Service
employees and Postal Service annuitants before the program begins
enrollment for 2025. In particular, OPM is proposing to provide
implementation details on several additional topics: reconsideration of
initial decisions concerning PSHB eligibility; application of the
Medicare Part B enrollment requirement and associated exceptions in
specific scenarios; allocation of reserve credits; calendar year
alignment of government contribution requirements; financial reporting
and actuarial calculations; premium payment prioritization from the
Postal Service Retiree Health Benefits Fund; and Medicare Part D
integration.
Discussion of the Proposed Changes
Initial Decision and Reconsideration of PSHB Program Eligibility and
Enrollment
The interim final rule at 5 CFR 890.1606(d) provided that 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. However, on page 20401 of the preamble to
that rule at 88 FR 20383 (April 6, 2023) noted that OPM was considering
establishing PSHB-specific processes. With the establishment of a new
enrollment system for the PSHB Program, OPM had to reevaluate how to
process, address, and even adjudicate reconsideration requests,
particularly how to distinguish between reconsideration requests
concerning enrollment decisions versus eligibility decisions.
Therefore, OPM is proposing a series of changes to incorporate existing
FEHB reconsiderations standards and processes into the PSHB Program
while also taking into account aspects of the PSHB Program that are
unique from FEHB. These aspects include OPM's responsibility to
administer the enrollment system and receive information from source
agencies regarding Medicare Part B exceptions.
OPM proposes to amend Sec. 890.1602(c) by adding a definition of
``Reconsideration'' that parallels the definition at Sec. 890.101 with
respect to PSHB reconsiderations. The definition notes that
reconsideration means the final level of administrative review of an
initial decision by an employing office or OPM. Under existing
regulations at Sec. 890.1602, for purposes of this part, the United
States Postal Service is the employing office for Postal Service
employees, and the Retirement Services
[[Page 45783]]
office within OPM is the employing office for Postal Service
annuitants. These changes reflect that OPM will retain authority under
this Part to reconsider certain initial decisions and issue final
agency decisions regarding enrollments and coverage of family members
with respect to Postal Service employees and Postal Service annuitants
in the PSHB Program. In making a final agency decision in response to a
reconsideration request, OPM will consider facts submitted by an
individual, including proof of family member eligibility, facts from a
source agency pursuant to a data exchange and the opportunity for an
individual to contest the data, and certain Medicare Part B exceptions,
as discussed below.
OPM also proposes to define ``source agency.'' The definition notes
that source agency means an agency that routinely provides information
or data to OPM pursuant to an agreement under 5 CFR 890.1612 (regarding
information sharing for Medicare Part B enrollment requirements and
exceptions) or 5 U.S.C. 8903c(e)(3)(C) (regarding identification of
individuals who reside abroad). As indicated in proposed Sec.
890.1612(c), a source agency may also refer to other agencies routinely
providing information as required by OPM.
OPM proposes to amend Sec. 890.1606(d) to reflect that initial
decisions and reconsiderations of PSHB eligibility or enrollment, as
applicable, will be made pursuant to proposed Sec. 890.1607, as
discussed below in the preamble. Currently, there is a cross-reference
to Sec. 890.104, which will no longer be applicable to PSHB.
OPM proposes to add new Sec. 890.1607 governing initial decisions
and reconsiderations of PSHB eligibility or enrollment, as applicable.
Proposed Sec. 890.1607 would replace Sec. 890.104 with respect to the
PSHB Program. These changes reflect that in the PSHB Program, OPM may
issue an initial decision regarding an individual's eligibility for
PSHB where that eligibility is conditioned on a source agency's data or
information that it sends to OPM pursuant to a data exchange, under
Sec. 890.1612, discussed below in this section of the preamble. Before
OPM will issue such an initial decision under Sec. 890.1607, OPM will
provide notice, as described under Sec. 890.1612(f), that information
or data OPM has received from a source agency may render the individual
ineligible for PSHB enrollment or coverage and will provide
instructions on how the individual may contest that information or data
with the source agency before OPM issues a decision. Under proposed
Sec. 890.1612(f), OPM would notify an individual that they may be
ineligible for PSHB enrollment or coverage based on information
provided to OPM by a source agency. In that notice, OPM would provide
the individual with the source agency's contact information on how the
individual may contest the accuracy of the information used to
determine PSHB eligibility. Paragraph (f) would also provide an
explanation of the associated processes and timeframes to contest the
provided evidence and to demonstrate that the individual is so engaged
in such a contest with the source agency. Proposed Sec. 890.1612(g)
provides an individual who would be disenrolled or removed from the
PSHB Program based on information from a source agency with information
on their reconsideration rights. Section 890.1607 cross references
Sec. 890.1612, which accounts for provision of such notice and
establishes a process under which an individual may dispute data OPM
relies on from a source agency, over which OPM does not maintain
authority and cannot independently verify.
Proposed Sec. 890.1607 would include standards and processes for
reconsideration requests concerning PSHB eligibility. First, in
paragraph (a), OPM proposes that reconsiderations will be the
responsibility of the employing agency (the Postal Service or
retirement system) or OPM whereas only the employing agency or
retirement system are responsible for reconsiderations in Sec.
890.104(a). Second, in paragraph (b), OPM proposes to delineate which
initial decisions are made by employing offices (see paragraph (b)(1))
rather than by OPM as the administrator of the PSHB Program (see
paragraph (b)(2)), and that OPM will make an initial decision when it
is based on information that OPM receives from a source agency only
after the notice process is complete, as described in Sec. 890.1612
and discussed below (see paragraph (b)(3)). OPM invites comment on the
delineation of responsibilities for initial decisions.
Third, paragraph (c) gives an individual a right to
reconsideration.
Fourth, paragraph (d) explains the time limits for requesting
reconsideration, and the circumstances under which the time limit may
be extended, similar to Sec. 890.104(d).
Fifth, in paragraph (e), OPM proposes that after reconsideration,
the employing agency (the Postal Service or retirement system) or OPM
will issue a final decision.
OPM proposes to amend Sec. 890.1608 regarding PSHB disenrollment
and removal from coverage by adding new paragraphs (b)(5)(iii) and
(b)(6) through (b)(9), which would allow for reconsideration after
OPM's disenrollment of a Postal Service Medicare covered annuitant or
removal of a Medicare covered family member from the PSHB, as
applicable. Reconsideration in such circumstances is modeled after
Sec. 890.308(f)(4)-(6). OPM invites comment on this proposed approach.
OPM proposes to amend the information sharing provisions at Sec.
890.1612 by adding paragraphs (f) and (g). Proposed paragraph (f)
details the information that OPM would provide in a written notice
before issuing an initial decision on eligibility for PSHB enrollment
or coverage when OPM receives data from a source agency through an
information sharing agreement which establishes a basis that the
individual may be ineligible for PSHB enrollment or coverage. The
notice would include the specific data impacting the individual's PSHB
enrollment or coverage, PSHB enrollment requirements, the source
agency's contact information to dispute the data, and the process and
timeframe for providing OPM with evidence that the individual is
engaged in a dispute with the source agency. The notice would also
provide that the individual will remain enrolled while engaging in the
dispute, but that OPM may issue an initial decision to disenroll or
remove the individual from PSHB within 60 days if the individual does
not provide OPM with sufficient evidence of engagement in the dispute
with the source agency, or if the source agency's data does not
establish a basis for the individual's PSHB eligibility,
notwithstanding evidence of a dispute with the source agency. OPM
invites comments on the approach set forth in proposed paragraph (f),
which details the notice process that OPM will follow prior to issuing
an initial decision on eligibility for PSHB enrollment or coverage
based on data received from a source agency which establishes a basis
that the individual may be ineligible for PSHB enrollment or coverage.
Proposed paragraph (g) of Sec. 890.1612 would provide that if OPM
issues an initial decision to remove or disenroll the individual based
on the information or data from the source agency, the individual will
have reconsideration rights pursuant to Sec. 890.1607 and that such
reconsideration is limited to the source agency's data that was before
OPM at the time it made the initial decision.
Correction of Errors
OPM proposes to amend Sec. 890.1614(a) about correction of errors.
These
[[Page 45784]]
changes are proposed to reflect OPM's central role in administering the
PSHB enrollment process. Currently, Sec. 890.1614(a) cross-references
Sec. 890.103. Corrections will be made pursuant to Sec. 890.1614, and
not according to Sec. 890.103. Proposed Sec. 890.1614(a) would expand
the role of OPM in making correction of errors. Specifically, proposed
Sec. 890.1614(a)(1) would clarify that OPM may also make prospective
or retroactive corrections of administrative errors at any time,
whereas Sec. 890.103(a) only allows employing offices to make such
corrections. Similarly, proposed Sec. 890.1614(a)(2) would allow OPM
to make, in addition to ordering an employing office to make, a
correction of an administrative error for purposes of equity and good
conscience as is the case under Sec. 890.103(b). Proposed Sec.
890.1614(a)(3) would allow OPM to make retroactive corrections of
enrollee enrollment code errors instead of the employing office.
Proposed Sec. 890.1614(a)(4) would adopt the same standards in Sec.
890.103(d) and add a reference to PSHB. Proposed Sec. 890.1614(a)(5)
would note that retroactive corrections are subject to withholdings and
contributions under the provisions of both Sec. Sec. 890.502 and
890.1613, whereas Sec. 890.103(c) cross-references only Sec. 890.502.
OPM invites comments on the proposed changes to Sec. 890.1614(a),
which states that a correction of error under the PSHB will be made
pursuant to 890.1614 and not 890.103, expands OPM's role in the
correction of errors, and would clarify that OPM may also make
prospective or retroactive corrections of administrative errors at any
time and allow OPM to make a correction of an administrative error for
purposes of equity and good conscience.
Court Review
OPM proposes to add a new paragraph (f) to Sec. 890.107. Proposed
paragraph (f) would establish that PSHB enrollment-related lawsuits
concerning Postal Service annuitants and their family members, where
OPM's decision was based on data it received under agreements with
source agencies, but with respect to which OPM lacks authority or means
to attain independent verification, may not be brought later than
December 31 of the 3rd year after the year in which the enrollment
action was effectuated. For example, if the enrollment action at issue
is effectuated for the 2025 plan year, a lawsuit may not be brought
after December 31, 2028. This timeline is consistent with existing
Sec. 890.107(d) and (e), which state that an action to recover on a
claim for health benefits and suits seeking equitable relief,
respectively, may not be brought later than December 31 of the 3rd year
after the year in which the care or service was provided.
This paragraph would also limit the review of OPM's final decision,
based on data obtained by OPM under such agreements, to the
administrative record before OPM when OPM effectuated the enrollment
action. Limiting review to this record is consistent with current Sec.
890.107(d)(3) regarding actions to recover on a claim for health
benefits under Sec. 890.107(c). OPM invites comments on this approach,
including the time limit that is modeled after Sec. 890.107(d) and
(e).
Disenrollment and Removal Due to Non-Enrollment in Medicare Part B
After Notice of Mandatory Enrollment
OPM proposes to amend Sec. 890.1608(b) by adding language to
reflect that where a Postal Service Medicare covered annuitant or
Medicare covered family member is enrolled or covered in a PSHB plan
but is not enrolled in Medicare Part B and does not qualify for an
exception to the Part B enrollment requirement, that individual will be
permitted to stay enrolled in or covered by PSHB if they enroll in
Medicare Part B within a limited period.
In the proposed regulatory text, OPM has proposed specifying that
the period would end at the end of the individual's next Medicare
enrollment period, which may be the next Medicare General Enrollment
Period. (See 42 CFR part 407.) Under this approach, OPM would require
an individual to enroll at their earliest opportunity, including any
Special Enrollment Periods for which they are eligible. OPM could
require an individual to attest to their earliest enrollment
opportunity. OPM would also consider, in a final rule, adopting another
method of establishing this limited period. For example, OPM could
establish a fixed deadline such as March 31, which is the end of the
Medicare General Enrollment Period. One potential challenge of this
approach would be determining the deadline when an individual is
eligible for two different enrollment periods at the same time. For
example, a person's Initial Enrollment Period could run concurrently
with and extend beyond Medicare's General Enrollment Period. Another
option would be to establish the deadline as 30 days after the end of
an applicable enrollment period for coverage to become effective. OPM
is interested in providing some flexibility to allow individuals to
transition to Medicare Part B, given that it is a new requirement, but
also recognizes that individuals who are eligible for Medicare Part B
must be enrolled in Part B to remain eligible for coverage under PSHB.
Furthermore, the PSHB program will realize cost savings with prompt
enrollment in Medicare Part B. Conversely, OPM recognizes that
disenrollment from retirement health benefits under the PSHB program is
a permanent loss of eligibility. OPM solicits comments on how these
proposals, or other suggested options, would impact the program,
enrollees, and carriers. (See also the discussion in ``Medicare Part B
Exception for Postal Service Annuitants, their Family Members, and
Survivor Annuitants Who Reside Outside the United States'' regarding
the time period for enrollment for individuals returning to the U.S.
from living abroad.)
The proposed rule clarifies that this opportunity to remain in a
PSHB plan by enrolling in Medicare Part B at the next enrollment
opportunity is a one-time privilege. OPM also proposes to amend Sec.
890.1608(b) to provide that if the Postal Service Medicare covered
annuitant or eligible Medicare covered family member does not enroll in
Medicare Part B during the next enrollment period, they will be
disenrolled or removed from their 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. OPM
proposes to move the concept of allowing an individual to enroll in
Medicare Part B at the next opportunity in order to retain PSHB
coverage from Sec. 890.1608(b)(2) with respect to Postal Service
annuitants into Sec. 890.1608(b) in order to give this one-time
opportunity to any individual who may not be enrolled in, or who
disenrolls from, Medicare Part B, but is required to be so enrolled in
order to maintain PSHB enrollment or coverage. Individuals who
successfully enroll in Medicare Part B during their next Medicare
enrollment opportunity to maintain their PSHB coverage will be
responsible for any Medicare Part B late enrollment penalty, if
applicable.
OPM proposes in Sec. 890.1608(b)(5) that in any case where a
Postal Service Medicare covered annuitant is disenrolled from a PSHB
plan for non-enrollment in Medicare Part B, except in the case of fraud
or intentional misrepresentation of material fact, OPM will treat this
removal as a termination. A termination, in contrast with a
cancellation, is prospective and confers rights to a 31-day temporary
extension
[[Page 45785]]
of coverage and rights to conversion for the enrollee and covered
family members. In a case of fraud or intentional misrepresentation of
material fact, the individual's coverage will be terminated
retroactively, as applicable, and rights associated with termination
will not be available.
In Sec. 890.1608(b)(6), OPM proposes that a disenrollment or
removal from coverage under PSHB is effective as of the date that OPM
becomes aware of the Medicare Part B non-enrollment, subject to a 31-
day temporary extension of coverage.
OPM proposes in Sec. 890.1608(b)(8) that a family member may be
reinstated after removal from PSHB enrollment after failing to enroll
or non-enrollment in Medicare Part B, so long as the Postal Service
annuitant's enrollment under which they are covered is still effective,
and proof of the family member's Medicare Part B enrollment is provided
to OPM. In Sec. 890.1608(b)(9), OPM proposes the timeframes for
reinstatement when a family member gains coverage under Medicare Part
B, which aligns with OPM's qualifying life event rules (see paragraph
(b)(9)(i)). Proposed Sec. 890.1608(b)(9) would specify that the
reinstatement may be prospective or, if the family member can show
uninterrupted enrollment in Medicare Part B from the time of their
removal from PSHB enrollment, retroactive, at the option of the Postal
Service annuitant who may cover the family member, when the
requirements under the paragraph are met. OPM invites comment on the
proposed changes to Sec. 890.1608(b), which clarifies the
opportunities to remain in a PSHB by enrolling in Medicare Part B at
their next enrollment opportunity, provides that disenrollment from
PSHB with be treated as a termination in certain circumstances, and
provides reinstatement opportunities for family members.
Survivor Annuitants and the Requirement To Enroll in Medicare Part B
Under Sec. Sec. 890.1603 and 890.1604, the eligibility of survivor
annuitants for enrollment or continued enrollment in the PSHB Program
will generally follow the current eligibility requirements for
enrollment or continued enrollment in the FEHB Program but will
include, as applicable, the requirement to enroll in Medicare Part B.
Under certain circumstances, however, requiring a survivor annuitant to
enroll in Medicare Part B in order to enroll or continue enrollment in
the PSHB Program would be inequitable if the survivor annuitant had
relied upon the Part B enrollment exception of the Postal Service
annuitant while they were a covered family member to establish their
own exception to Part B enrollment while the Postal Service annuitant
was alive. Inequities may be presented upon the Postal Service
annuitant's death, unless the survivor annuitant could establish their
own exception to the Part B enrollment requirement (such as enrollment
in Veterans Affairs (VA) health care benefits). The covered Medicare
individual survivor annuitant could be required to enroll in Part B,
perhaps years after their initial enrollment opportunity and may be
required to pay a Part B late enrollment penalty reflecting years of
non-enrollment in Part B.
OPM proposes to amend Sec. 890.1604 to provide that a survivor
annuitant under 5 U.S.C. 8901(3)(B) of a Postal Service annuitant may
continue enrollment in a PSHB plan without enrolling in Part B if, at
the time of the Postal Service annuitant's death, the Postal Service
annuitant had not been required to enroll in Part B because of an
exception under Sec. 890.1604.
Individuals who may continue enrollment as survivor annuitants may
also have their own exception to the Part B enrollment requirement if
they qualify for one (reside outside the United States, are enrolled in
VA health care benefits, or are eligible for health services provided
by the Indian Health Service) under Sec. 890.1604(c).
The following examples are provided to illustrate when the amended
provision may apply to a survivor annuitant:
Example 1. A spouse is married to a Postal Service annuitant who is
not required to enroll in Part B as a condition of eligibility to
enroll in a PSHB plan under Sec. 890.1604(c)(1)(i) (as of January 1,
2025, the Postal Service annuitant was not both entitled to Part A \1\
and enrolled in Part B). The spouse, who is eligible for Medicare, is
also not required to enroll in Part B as their Postal Service annuitant
spouse has an exception to Part B enrollment. If the Postal Service
annuitant dies and the surviving spouse becomes a survivor annuitant,
the surviving spouse will not be required to enroll in Part B to
continue enrollment in a PSHB plan.
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\1\ Under 5 U.S.C. 8903c(a)(1), as adopted by reference in 5 CFR
890.1602(b), the definition of a Medicare covered individual
excludes those eligible to enroll pursuant to sections 1818 and
1818A of the Social Security Act. All references to Medicare Part A
should be read to exclude those enrolled under these sections.
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Example 2. A spouse is married to a Postal Service annuitant who is
not required to enroll in Part B as a condition of eligibility to
enroll in a PSHB plan under Sec. 890.1604(c)(1)(iv) (enrolled in VA
health care benefits). The spouse is not eligible for Medicare because
they are not yet 65. If the Postal Service annuitant dies before the
surviving spouse becomes eligible for Medicare and the surviving spouse
becomes a survivor annuitant, the surviving spouse will not be required
to enroll in Part B to continue enrollment in a PSHB plan when becoming
eligible for Medicare.
Medicare Part B Exception for Postal Service Annuitants, Their Family
Members, and Survivor Annuitants Who Reside Outside the United States
For Postal Service Medicare covered annuitants, Medicare covered
family members, and survivor annuitants who demonstrate residency
outside of the United States, the Medicare Part B exception under Sec.
890.1604 applies with respect to the PSHB plan year, prospectively,
commencing the first day of the month coinciding with or following the
month in which they reside outside the United States. As a result, an
individual who demonstrates residency outside the United States any
time during the period January 1 through December 31 is not required to
be enrolled in Medicare Part B for the remainder of that PSHB plan year
(through December 31 of that year). If an individual who resides
outside of the United States subsequently resides in the United States
at any time before the following PSHB plan year and continues to reside
in the United States in that following year, they must be enrolled in
Medicare Part B by the end of the General Enrollment Period of that
following year.
For example, an individual who is covered under PSHB, entitled to
Medicare Part A and eligible for Medicare Part B but not enrolled in
Part B, and resides outside of the United States on February 1, 2025
through September 30, 2025, is not required to be enrolled in Part B
starting on February 1, 2025 (which coincides with commencement of
residing outside the United States) in order to continue their PSHB
coverage for the remainder of the 2025 PSHB plan year. If the
individual subsequently resides in the United States on October 1,
2025, through December 31, 2025, and still resides in the United States
on January 1, 2026, they are excepted from the Part B enrollment
requirement for the remainder of the 2025 PSHB plan year. In order to
remain covered for the 2026 PSHB plan year, however, they must enroll
in Part B by the end of their next enrollment opportunity which may be
[[Page 45786]]
the 2026 Medicare General Enrollment Period, from January 1 through
March 31, 2026. Failure to enroll in Part B may result in termination
of PSHB coverage as described in Sec. 890.1608. Because 5 U.S.C.
8903c(e)(3)(iii) provides that the exception from Medicare Part B for
individuals residing abroad remains valid for the remainder of the PSHB
contract year, OPM is proposing that individuals moving back to the
U.S. must enroll in Medicare Part B not later than the end of the
Medicare General Enrollment Period beginning January 1 of the following
calendar year. (Compare with discussion in Disenrollment and Removal
Due to Non-enrollment in Medicare Part B After Notice of Mandatory
Enrollment.)
Methodology for Crediting PSHB Program Plan Reserves
OPM administers the contingency reserve as described in Sec.
890.503. The contingency reserve will be administered the same under
the PSHB Program. OPM is proposing to add Sec. 890.1615, titled
``Crediting separate reserves for PSHB,'' to establish a formula for
the one-time allocation of reserves from 2024 FEHB plans with Postal
Service employee and Postal Service annuitant enrollees (collectively
Postal Service enrollees) to 2025 PSHB plans.
In the interim final rule, OPM implemented the statutory
requirement at 5 U.S.C. 8903c(j)(1)(A) that OPM maintain separate
reserves, including a separate contingency reserve, for each PSHB Plan.
OPM codified this requirement at Sec. 890.1610(a)(4).
The law further requires at 5 U.S.C. 8903c(j)(1)(D) that each PSHB
plan ``shall be credited with a proportionate amount of the funds in
the reserves for health benefits plans offered by the carrier.'' As
soon as practicable on or after January 1, 2025, OPM proposes to credit
each PSHB reserve with the proportionate Reserve Credit. The
methodology that OPM proposes to use to credit reserves from FEHB plans
to PSHB plans will be based on the 2024 premium income attributable to
the Postal Service enrollee population as a percentage of the 2024 FEHB
premium income. In general, the requirement to credit reserves will
apply to all 2024 FEHB carriers.
Because FEHB enrollees pay premiums based on the plan option of the
health benefits plan in which they are enrolled, OPM proposes to apply
its Reserve Credit methodology on an Option level. First, OPM would
determine a Postal Service Percentage, which refers to the 2024 premium
attributable to Postal Service enrollees divided by the 2024 premium
attributable to both Postal Service and non-Postal Service enrollees,
for each 2024 FEHB Option. OPM would apply that percentage to the
amounts available in the 2024 FEHB Option's reserves (generally,
amounts not needed for payment of Runout claims and expenses incurred
but not paid, described below) for each 2024 FEHB Option as of December
31, 2024. OPM would credit the resulting reserve amount to the PSHB
plans for 2025.
OPM proposes to define the term Corresponding PSHB Option as the
PSHB Option into which Reserve Credits will flow from a 2024 FEHB
Option that had Postal Service enrollees. Corresponding PSHB Option
means a 2025 PSHB Option that is in the same geographic area and has
equivalent benefits and cost-sharing as a 2025 FEHB Option, and that
2025 FEHB Option was also offered in 2024.
Under OPM's proposal, the amount of the Reserve Credits to be
allocated to PSHB options is not based on an enrollee's enrollment
action, or any automatic enrollments that may occur during the
transitional open season under Sec. 890.1605(b). OPM proposes to
allocate 2025 PSHB Option Reserve Credits into the PSHB Contingency
Reserve and PSHB Letter of Credit Account, as applicable to experience-
rated and community-rated PSHB Options, as follows:
i. If a Carrier offers an FEHB Plan with one, two, or three Options
in 2024 and offers the same number of Corresponding PSHB Options in
2025, the Reserve Credits for those Options will be allocated to the
Corresponding PSHB Options' reserves.
ii. If a Carrier offers an FEHB Plan with two or three Options in
2024 and offers only one Corresponding PSHB Option in 2025, the Reserve
Credits attributable to all the 2024 FEHB Plan's Options will be
allocated to that Corresponding PSHB Option's reserve.
iii. If a Carrier offers an FEHB Plan with three Options in 2024
and offers only two Corresponding PSHB Options in 2025, the Reserve
Credits attributable to the two FEHB Options that have Corresponding
PSHB Options will be allocated to those two Corresponding PSHB Options'
reserves. The Reserve Credit from the third FEHB Option (that does not
have a Corresponding PSHB Option) will be allocated to one of the two
Corresponding PSHB Plan Options that has the lowest self only premium
and is not a High Deductible Health Plan (HDHP).
iv. If a Carrier offers an FEHB Plan in 2024 and offers no FEHB
Plan in 2025, but offers at least one 2025 PSHB Option with similar
benefits and cost sharing and in the same geographic area as the
Carrier's 2024 FEHB plan, as determined by OPM, the Reserve Credit(s)
attributable to that FEHB Plan will be credited to the reserves of the
Carrier's 2025 PSHB Options as described in (i) through (iii) as if the
2025 PSHB Option(s) were a Corresponding PSHB Option.
v. If a Carrier offers an FEHB Plan in 2024, and offers that FEHB
Plan in 2025, but offers no Corresponding PSHB Options for that 2025
FEHB Plan, the Reserve Credit(s) attributable to that FEHB Plan will be
credited to the reserves of the PSHB Options offered in 2025,
proportionately, consistent with 5 U.S.C. 8903c(j)(2) where the
subscription charges paid are the 2024 Postal Service Premium.
vi. If a Carrier offers a 2025 PSHB Option for which no 2024 Postal
Service Premium is attributable, then that 2025 PSHB Option will
receive no Reserve Credit.
OPM seeks comment on this proposed Methodology for Crediting PSHB
Program Plan Reserves, and also seeks comment on any situation that
would not be covered under scenarios i. through vi.
Under 5 U.S.C. 8903c(c)(2), a carrier's 2025 PSHB plan must have
equivalent benefits and cost sharing to the carrier's 2025 FEHB plan;
however, the law does not require a 2025 FEHB plan to have equivalent
benefits and cost sharing to the 2024 FEHB plans, so OPM proposes to
credit the Reserve Credit(s) attributable to that FEHB Plan to the
reserves of the carrier's 2025 PSHB Options as if the 2025 PSHB
Option(s) were a Corresponding PSHB Option. Therefore, generally, where
a carrier offers a 2024 FEHB plan and offers that plan in FEHB in 2025
along with an equivalent 2025 PSHB plan, the Reserve Credits will be
allocated to the 2025 PSHB plan options in accordance with Sec.
890.1615(c)(5)(i) through (iii).
The ``Coverage with Equivalent Benefits and Cost-Sharing''
requirement in 5 U.S.C. 8903c(c)(2) does not apply where a carrier
offers a 2024 FEHB plan and offers a 2025 PSHB plan but does not offer
a 2025 FEHB plan. OPM proposes to ensure that a carrier's 2025 PSHB
plan receives an equitable proportion of reserves attributable to that
carrier's 2024 FEHB plan, and that the expectation of the carriers and
enrollees that a PSHB plan reserves will be funded, and to closely
follow Congress' intent under the PSRA. OPM further intends for the
PSHB Program to have continuity within the FEHB Program. Therefore, OPM
has determined that the reserves from a
[[Page 45787]]
2024 FEHB plan where the carrier does not offer a 2025 FEHB plan will
be allocated to the carrier's 2025 PSHB plan where OPM has determined,
in its discretion, that the benefits and cost sharing are similar
between the 2025 PSHB plan and that carrier's 2024 FEHB plan. Under
this rulemaking, generally, for 2024 FEHB plans covering mostly Postal
Service enrollees where the carrier chooses to not offer a 2025 FEHB
plan, and offers only a PSHB plan in 2025, then Sec.
890.1615(c)(5)(iv) will apply.
For 2024 FEHB Carriers that do not offer a PSHB plan in 2025, any
Reserve Credits attributable to the carrier's 2024 Postal Service
premium will be distributed proportionately into the Contingency
Reserves for each PSHB Option offered in 2025, consistent with 5 U.S.C.
8903c(j)(2). Distributing FEHB Reserve Credits to the PSHB Program in
this way is consistent with OPM's distribution of the reserves of an
FEHB plan that is discontinuing as described under 5 U.S.C. 8909(e), as
described in Sec. 890.1615(c)(5)(v).
Where a carrier offers a 2025 PSHB plan that has no 2025 FEHB plan
with equivalent benefits and cost sharing, and there is no 2024 FEHB
plan with similar benefits and cost sharing, as determined by OPM, no
reserves will be allocated to the carrier's 2025 PSHB plan as described
in Sec. 890.1615(c)(5)(vi).
Runout refers to the estimated amount, as of December 31, 2024,
needed to pay claims and expenses incurred but not paid for periods on
or before December 31, 2024, for an FEHB experience-rated Option,
considering any income attributable to periods on or before, but not
yet received by, December 31, 2024. OPM will estimate the Runout
amount.
Each experience-rated 2024 FEHB Option will have a separate Runout
account. This Runout account will be credited with the Runout amount,
will be available to pay Postal Service and non-Postal Service claims
and expenses incurred but not paid prior to January 1, 2025, and will
receive any income attributable to periods on or before, but not yet
received by, December 31, 2024.
Any remaining funds in an FEHB Option's Runout account after all
pre-2025 claims and expenses are paid will be allocated to the FEHB
Option and PSHB Options' reserves by applying the Reserve Credit
methodology described in this rulemaking. If an FEHB Option's Runout
account becomes depleted before all pre-2025 claims and expenses are
paid, a reallocation of funds from the applicable FEHB and PSHB
reserves to the Runout account will be necessary. In such circumstance,
OPM will estimate the amount of additional funding needed in the Runout
account to pay all remaining pre-2025 claims and expenses. OPM will
determine the estimated amount of additional funding to be credited to
the Runout account by applying the Reserve Credit methodology set forth
in this rule to determine the proportion of additional funds that come
from the applicable FEHB and PSHB options.
Each experience-rated FEHB Option will continue to maintain its
separate FEHB Letter of Credit Account to pay non-Postal Service claims
and expenses incurred on or after January 1, 2025 and to receive any
income attributable to periods on or after January 1, 2025. Each
experience-rated PSHB Option will have a separate PSHB Letter of Credit
Account to pay Postal Service claims and expenses incurred on or after
January 1, 2025 and to receive any income attributable to periods on or
after January 1, 2025.
Any funds OPM receives under 5 U.S.C. 8909(b) for premiums
attributable to periods on or before, but not yet received by, December
31, 2024, will be credited to PSHB Options' and FEHB Options'
Contingency Reserves using the Reserve Credit methodology set forth in
this rulemaking. OPM annually distributes end-of-year Contingency
Reserve adjustments, including earned interest and distribution of FEHB
discontinued Plan funds, to Contingency Reserves in the Spring of the
following year. For the initial PSHB contract year, these end-of-year
2024 adjustments will be allocated between FEHB Options and PSHB
Options using the Reserve Credit methodology set forth in this rule.
Clarification of One-Year Application of Automatic Enrollment
OPM is proposing to amend Sec. 890.1605 ``Enrollment in the
initial contract year'' to clearly delineate the process in which
individuals will be automatically enrolled into a PSHB plan if they do
not select a plan during the transitional Open Season. OPM is
clarifying that the standards and processes are specific to the
transition into PSHB plans in 2025, from FEHB plans in 2024. These
proposed amendments identify the FEHB plan on December 31, 2024 as the
plan from which individuals will be automatically enrolled into a PSHB
plan. The PSHB plan and option into which individuals will be
automatically enrolled will generally be offered by the same carrier
and have equivalent benefits and cost sharing, however there are
exceptions, and the proposed regulatory text addresses the potential
scenarios. OPM invites comment on this process. OPM also invites
comment on whether the proposed regulatory text clearly specifies the
PSHB plan and option into which an individual will be automatically
enrolled.
Aligning the Government Contribution Requirements With the January 1-
December 31 Plan Year
Under Sec. 890.1610(a)(5), PSHB Carriers are required to begin
coverage on January 1 of each year. The PSHB plan year is from January
1 through December 31 each year starting in 2025. Section 890.1606(e)
provides that PSHB enrollments, changes of enrollment, or reenrollments
made during Open Season take effect on January 1 of the next year. A
PSHB plan year is different from a FEHB plan year in that under an
enrollment in an FEHB plan, coverage under a plan elected during Open
Season begins on the first day of the first pay period that starts on
or after January 1.
For PSHB plans, however, coverage begins on January 1st of each
year regardless of whether the individual continues enrollment or
coverage in that PSHB plan or whether the PSHB plan was selected during
Open Season, including when the individual is automatically enrolled in
the PSHB plan during the transitional Open Season.
For most years, January 1st is not the first day of the first pay
period of the year, which means that in the PSHB Program the new
premium for the new plan year will become effective during a pay period
that overlaps calendar years. Under 5 U.S.C. 8906(b)(1), for an
employee, the Government contribution for the new plan year's premiums
begins on the first day of the employee's first pay period of each
year. If section 8906(b)(1) applied to Postal Service employees
enrolled in the PSHB Program, the employee would be responsible for the
difference between the total premium for the new plan year less the
Government share of premium for the prior plan year for the period of
time between January 1st and the beginning of the first full pay period
in the new plan year. In other words, by being responsible for that
difference, Postal Service employees would end up paying a higher
portion of premium in the overlapping pay period than would be paid
pursuant to the statutory formula for all other pay periods in the plan
year.
Therefore, for Postal Service employees, as defined in 5 U.S.C.
8903c(a)(9), OPM is proposing in Sec. 890.1606(e) that the Government
contribution for Postal Service employees starts on January 1st of each
[[Page 45788]]
year. This ensures that the Government contribution is calculated in a
manner that is consistent with the intent of the statute, accounting
for the premiums for the employee's plan and plan type that is
effective for the entire plan year, here under PSHB, from January 1st
through December 31st of each year. As a result, when January 1 is not
the first day of the first pay period of the year, employee premiums
and the Government's share of premiums for that pay period will be
calculated to account for the number of days in the pay period that
occur in the prior plan year, and the number of days in the pay period
that occur in the new plan year in which the change is effective, to
account for the different premiums respectively.
To ensure that Government contributions for PSHB plan premiums are
adjusted and applied starting on January 1 of each year, OPM is
proposing to amend Sec. 890.1613(a) to clarify how 5 U.S.C.
8906(b)(1), which governs the Government contribution adjustment,
applies to Postal Service employees under the PSHB Program.
Financial Reporting and Actuarial Calculations
Section 102 of the PSRA (``The USPS Fairness Act''), makes changes
to how OPM will calculate payments to the Postal Service Retiree Health
Benefits Fund (PSRHBF) trust fund, as well as changes to how OPM will
perform calculations for purposes of financial reporting. OPM is
proposing to amend Sec. 890.1613 ``Contributions and Withholdings'' to
clarify the elements of the statutory financial reporting calculations
that OPM is required to complete yearly under the PSRA.
Under 39 U.S.C. 3654(b), the Postal Service is required to file a
report with the Postal Regulatory Commission, indicating the funded
status of the Postal Service's pension obligations under the Civil
Service Retirement System (CSRS) and Federal Employees Retirement
System (FERS) and its post-retirement health obligations under the FEHB
Program. OPM is responsible for computing the amounts. The pension
obligations of the Postal Service are governed by 5 U.S.C. chapters 83
and 84, while its post-retirement health obligations are governed by 5
U.S.C. 8909a. Section 102 of the PSRA adds section 8909a(e), which
provides that these figures must be based on economic and actuarial
methods and assumptions consistent with the methods and assumptions
associated with determining the Postal Service surplus and supplemental
liability.
Section 8909a(e) states that ``any computation'' required under 39
U.S.C. 3654(b) is to be based on ``the net present value of the future
net claims costs'' of current Postal Service annuitants and active
Postal Service employees who would be eligible to retire under 5 U.S.C.
8901(3)(A)(i) or (ii). In accordance with OPM's actuarial funding
methods applied under 5 U.S.C. 8348(h), that population includes
current and future Postal Service annuitants as of the end of the
fiscal year ending on September 30 of the relevant reporting year. In
this proposed amendment, OPM further clarifies the population on which
the calculations under 39 U.S.C. 3654(b) are based. OPM is also
proposing to remove the word ``future'' from before ``net claim costs''
in Sec. 890.1613(e)(1) to clarify the equivalence in terms is between
``net claims costs'' and ``estimated net claims costs.''
Prioritizing Premium Payments From the Postal Service Retiree Health
Benefits Fund
The interim final rule explained that the Postal Service will pay
any applicable Medicare Part B late enrollment penalty for Postal
Service Medicare covered annuitants and their Medicare covered family
members who enroll during the 6-month Special Enrollment Period in 2024
established by section 1837(o) of the Social Security Act (42 U.S.C.
1395p). The Postal Service may direct OPM to pay these late enrollment
penalties out of the PSRHBF established under 5 U.S.C. 8909a until
those funds are depleted. If at any time the PSRHBF is depleted, 5
U.S.C. 8903c(i)(4) states that USPS shall pay late enrollment penalties
out of its funds established under 39 U.S.C. 2003. OPM proposes, under
its administrative responsibilities granted in 5 U.S.C. 8909a(a), to
prioritize the payment of health benefit premiums for individuals
described in 5 U.S.C. 8906(g)(2)(A) from the PSRHBF, over payment of
the late enrollment penalties as proposed in Sec. 890.1613(c). The
prioritization of premium payments from the PSRHBF will not impact the
Postal Service's ability to pay late enrollment penalties for those
that enroll during the SEP.
Medicare Part D Enrollment for Postal Service Annuitants and Family
Members Who Are Eligible for Part D
Section 8903c(h) of 5 U.S.C. mandates that OPM require PSHB plans
to provide Medicare Part D prescription drug benefits to Postal Service
annuitants and family members who are eligible to enroll in Part D, as
defined in section 1860D-1(a)(3)(A) of the Act, and receive coverage
offered under for Medicare Part D through employment-based retiree
health coverage through a prescription drug plan as defined in section
1860D-41(a)(14) of [the] Act) or ``contracts between such a [PSHB] plan
and PDP sponsor, as defined in section 1860D-41(a)(13) of [the] Act, of
such a prescription drug plan.'' Individuals who are not eligible to
enroll in Part D, will receive prescription drug benefits through their
PSHB plan coverage.
Under chapter 89, carriers are required to offer plan options with
uniform benefits and premium rates. See 5 U.S.C. 8902 and 8903; 5 CFR
890.201 (a)(6). This means that two individuals enrolled in a
particular plan option and enrollment type (self only, self plus one,
or self and family) will receive the same benefit package at the same
premium rate. Under the PSHB Program within chapter 89, an individual
who is eligible to receive benefits under a Medicare Part D plan will
receive the same benefits under a Part D plan option as an individual
who is not eligible to enroll in a Part D plan who is enrolled in the
same option and enrollment type. As such, OPM is proposing at Sec.
890.1616 that a PSHB Carrier must, to the extent necessary to integrate
the Medicare Part D prescription drug benefits coverage required under
5 U.S.C. 8903c, ensure that the prescription drug benefit offered under
its Medicare Part D EGWP is equal to or better than the PSHB plan's
prescription drug benefit. OPM will retain the authority to determine
what is necessary for the carrier to effectuate Medicare Part D
integration.
OPM's proposals in this rulemaking regarding Medicare Part D EGWPs
provided under the PSHB Program should not be construed to affect an
individual's ability to enroll in a Medicare Part D plan outside of
health benefits plans offered under chapter 89. This means an
individual may purchase a Medicare Part D plan, at their own expense,
outside of their PSHB plan. An individually purchased Medicare Part D
plan will not provide EGWP benefits.
OPM invites comment on these proposals concerning integration of
Medicare Part D prescription drug benefits into the PSHB Program.
Group Enrollment of Eligible Individuals Into Part D EGWPs
An employer has the option to enroll individuals who are covered
under the employer's group health plan, as described in section 1860D-
22(c)(3)(A) of the Social Security Act, and who are eligible to receive
benefits under Medicare Part D, into a Part D EGWP. This process is
called ``group enrollment.'' Group enrollment avoids requiring each
individual to submit
[[Page 45789]]
enrollment forms in order to enroll in the Part D EGWP offered by their
employer-based plan. Recognizing that prescription drug benefits are a
fundamental component of an employment-based retiree group health plan,
and that most individuals enrolled in such a plan want to receive
prescription drug benefits through that plan, group enrollment provides
administrative simplicity and ensures that all retirees have access to
prescription drug benefits that meet their needs.
OPM, as the administrator of the PSHB Program, can require PSHB
Carriers to automatically group enroll individuals eligible to enroll
in Part D, and OPM is planning to operationalize Part D enrollment
through group enrollment to support a seamless Part D EGWP enrollment
process for eligible Postal Service annuitants and family members.
Group enrollment provides a simplified process for enrollment into
Medicare Part D and limits the potential for error on the part of an
individual who might otherwise fail to enroll in Medicare Part D. It is
also consistent with the experience of individuals who were previously
covered by an FEHB plan where a single enrollment afforded both medical
and prescription drug coverage.
An individual cannot enroll in more than one Medicare Part D plan
at a time. As a result, the group enrollment process, which enrolls all
individuals regardless of whether or not they have obtained or are
seeking coverage elsewhere, may create an additional burden for some
individuals. For example, an individual may prefer to maintain or
receive Part D coverage under a Part D plan outside of the PSHB plan,
through a standalone Part D plan, or as a covered family member
receiving prescription drug coverage under the employment-based retiree
group health plan of a spouse. If that retiree does not want
prescription drug benefits under their own employer-based plan's Part D
EGWP, they may ``opt out'' of group enrollment. For this reason, this
rule proposes in Sec. 890.1616(d) to require PSHB Carriers to group
enroll eligible individuals into the Medicare Part D EGWP provided by
their PSHB plan carrier by default but allow them to opt out of group
enrollment if they choose.
OPM proposes in Sec. 890.1616(e) that an individual who opts out
of group enrollment into their PSHB plan's EGWP or declines the Part D
EGWP coverage under the PSHB plan, will no longer be group enrolled
into the Part D EGWP for each next consecutive plan year under that
PSHB plan but may request enrollment into a PSHB plan's Part D EGWP at
the individual's next enrollment opportunity described under Sec.
890.1606. While remaining in an opt-out status, the individual will not
be automatically group enrolled into a PSHB plan's Part D EGWP so long
as they remain in the PSHB plan. Should they choose a different plan
during a later enrollment opportunity, they will be group enrolled into
that plan's Part D EGWP unless they request to opt out. In this way,
the decision to opt out of the Part D EGWP does not follow the
individual when they change plans, and they must elect to opt out anew.
Individual Impact of Non-Enrollment in Part D EGWP
Section 8903c(h) of title 5 U.S.C. requires that PSHB Carriers
provide Medicare Part D coverage to Part D eligible individuals within
the PSHB program. Under this proposed rule, Medicare Part D eligible
individuals are not required to be enrolled in Medicare Part D as a
condition of enrollment in a PSHB plan. Instead, this rule would allow
Postal Service annuitants and their family members to decline Medicare
Part D coverage provided under their PSHB plan, by either opting out of
group enrollment into the Part D plan under the PSHB plan or
disenrolling from Part D under the PSHB plan. Declining to enroll in a
PDP EGWP or MAPD EGWP offered through the PSHB plan would eliminate
coverage of prescription drug benefits for the individual under the
PSHB plan but would not result in a reduction of premium. The
individual would continue to pay the same premium for the PSHB plan
charged to all similarly situated enrollees in that option and
enrollment tier. Postal Service annuitants and their family members
would retain all of the other benefits under their PSHB plan. Should
the individual wish to reenroll in the Part D EGWP at a later date,
they may be subject to a Medicare Part D late enrollment penalty.
OPM is proposing this approach because it views it as most
consistent with the PSRA statutory language. The PSRA did not establish
an express requirement for Postal Service annuitants and their family
members to enroll in Medicare Part D. This proposal provides Postal
Service annuitants and their family members with flexibility for
enrollment in Medicare Part D while creating incentives to be enrolled
in the Medicare Part D EGWP offered by their carrier, which is expected
to lead to cost savings for the PSHB program. This proposal is also
consistent with the voluntary nature of the Medicare Part D program.
This approach would permit Postal Service annuitants and their
family members with a higher income who are subject to an Income
Related Monthly Adjustment Amount (IRMAA) (which would require these
individuals to pay an extra amount for Medicare Part D) to decline Part
D and forgo prescription drug coverage under the PSHB plan. Permitting
individuals to decline Part D may present a risk that individuals may
fail to enroll in, or inadvertently disenroll from the Part D EGWP
(which includes either a PDP EGWP or MAPD EGWP, if offered), which
would result in loss of access to prescription drug benefits under the
PSHB plan while paying the full premium. This approach, however, would
not prevent an individual from enrolling in a stand-alone Medicare Part
D plan outside the PSHB Program, at the individual's own expense. This
approach also does not prevent an individual from suspending PSHB
coverage while enrolled in a Medicare Advantage plan. Affirmatively
declining enrollment in the Medicare Part D EGWP provided by the PSHB
plan would result in an individual's loss of prescription drug benefits
under a PSHB plan until the next PSHB enrollment opportunity, as
described in Sec. 890.1606, which could be the next open season. We
seek comment on how best to mitigate the risk of inadvertent
disenrollment and educate Part D-eligible individuals about the PSHB
Program requirements.
OPM recognizes that the mandatory integration of Medicare Part D
benefits into PSHB plans under the PSRA is a significant shift from
requirements for FEHB carriers, which offer plans with prescription
drug benefits and are not required to provide Medicare Part D EGWPs.
Annuitants who are not Postal Service annuitants and who are enrolled
in FEHB plans receive comprehensive, creditable drug coverage if they
elect an FEHB plan that does not offer Medicare Part D benefits. It is
possible for a Postal Service annuitant or the Postal Service
annuitant's family member to fail to recognize that declining to enroll
in or disenrolling from the Part D prescription drug benefits under
their PSHB plan will result in the loss of prescription drug benefits
under the PSHB plan. Moreover, it is possible individuals may not
understand that declining Part D coverage will not result in a lower
PSHB premium, as their PSHB premiums include the cost to the plan of
prescription drugs covered under the Part D EGWP and that portion of
the premium is not severable.
Carriers must ensure a seamless, customer-friendly approach for
affected enrollees and their family members to
[[Page 45790]]
opt out of group enrollment into the Medicare Part D EGWP portion of
the PSHB plan. Carriers may not complicate the opt-out process by
requiring enrollees or their family members to take actions such as
including a wet signature or sending a physical copy of opt-out
documents through the mail. Carriers must comply with all requirements
for group enrollment contained within Centers for Medicare & Medicaid
Services (CMS) guidance including the Medicare Prescription Drug
Benefit Manual and the PDP Enrollment and Disenrollment Guidance. OPM
is also clarifying that a carrier must follow all CMS requirements with
regard to individuals who disenroll from an MAPD EGWP under its PSHB
plan.
OPM expects very few PSHB enrollees and family members to opt out
of or decline coverage from their PSHB plan's Part D EGWP, as (1) the
vast majority of individuals eligible for Part D will be better off
retaining their PSHB drug coverage, (2) there will be seamless
coordination between the PSHB plan and Medicare, and (3) the cost of
the Part D EGWP will be included in their PSHB premium either way.
Those who choose to opt out of group enrollment into the PSHB plan's
EGWP or decline enrollment once effectuated will be doing so after
receiving notice regarding the loss of prescription drug coverage under
the PSHB plan.
A retiree's enrollment in an employment-based retiree health plan
that includes a Medicare Part D EGWP ensures that the prescription drug
benefits will be coordinated by the plan. When a Part D eligible
individual covered under a PSHB plan elects to opt out of group
enrollment in the PSHB plan's Part D EGWP, or if the individual
disenrolls at any time from the EGWP, the individual loses all
prescription drug benefits under the PSHB plan, which includes
coordination of care that would have been afforded between the
prescription drug benefits of the Part D EGWP and the PSHB plan.
Expected Impact of Proposed Changes
Statement of Need
This proposed rulemaking follows an initial rulemaking implementing
sections 101 and 102 of the PSRA, which directed OPM to establish the
PSHB Program for Postal Service employees, Postal Service annuitants,
and their eligible family members. The PSHB Program is contained within
5 U.S.C. chapter 89, which governs the FEHB Program generally.
While developing and implementing the regulatory provisions found
in the initial rulemaking, OPM determined that a number of topics
associated with the PSHB Program needed further refinement,
development, or clarification. For example, in the initial rulemaking,
OPM enacted procedures for handling requests for reconsideration of
initial decisions affecting enrollment in the PSHB Program. After
further consideration, OPM determined that specific changes were needed
to distinguish the different relationship between employing offices and
OPM as it relates to the PSHB Program versus the FEHB Program.
Similarly, several regulatory changes to the PSHB Medicare Part B
requirement are necessary to make the transition from FEHB, where there
is no Medicare Part B requirement, to PSHB as consumer friendly as
possible and to provide policies for certain scenarios that were not
contemplated when the interim final rule was initially developed. As an
example, public comments received on the interim final rule concerning
survivor annuitants as it relates to the Medicare Part B requirement
indicated a need to provide clear regulation of the treatment of this
group and informed the proposal in this rulemaking.
In addition, some issues required more development time and were
not able to be included in the initial rulemaking. Those issues include
reconsiderations of PSHB eligibility decisions, various applications of
the Medicare Part B enrollment requirement, allocation of reserves
credits, calendar year alignment of Government contribution
requirements, financial reporting and actuarial calculations, premium
payment prioritization from the Postal Service Retiree Health Benefits
Fund, and Medicare Part D integration.
Because the PSRA included a statutory deadline for OPM to publish
regulations for the program, OPM reserved for this rulemaking those
more complex issues that required more time than the interim final rule
timeframe allowed. For example, determining a methodology for
allocation of reserve credits required more development time. This
rulemaking provides an additional vehicle for a more comprehensive
regulatory scheme before the PSHB Program begins operation in 2025.
OPM's proposals regarding reconsideration in this rulemaking would
ensure that policies and procedures related to eligibility decisions in
the PSHB Program properly account for aspects that are unique to the
PSHB Program. Without these clarifications, there would be confusion
among agencies as to their responsibilities when faced with a PSHB
reconsideration request. These PSHB-specific reconsiderations
regulations also account for the use of a centralized enrollment
system, which is not used for enrollment in FEHB plans.
OPM is further clarifying Medicare Part B requirements and
exceptions in this rulemaking. The Medicare Part B exceptions included
in this rulemaking are specific scenarios that OPM either received
questions about during the development of the PSHB Program or were
raised internally during the that process. While the most common Part B
exception scenarios are provided in the PSRA and largely clarified in
detail through OPM's initial rulemaking, the scenarios addressed in
this proposed rulemaking were beyond the scope of the initial
rulemaking. Confusion or inequitable treatment among current or future
Postal Service annuitants and their family members could result if OPM
does not address these scenarios before PSHB enrollment begins.
Several of the proposals found in this rulemaking are necessary to
properly operationalize financial aspects of the PSHB Program before it
begins in 2025. The inclusion of the methodology for the allocation of
reserve credits from 2024 FEHB plans, with Postal Service employee and
Postal Service annuitant enrollees, to 2025 PSHB plans is necessary to
implement the calculations of this one-time allocation that is required
in order create the reserves for PSHB plans. Implementing requirements
that align the government contribution adjustment for Postal Service
employees with the calendar year is necessary to ensure the adjustment
aligns with the PSHB plan year, which is also on a calendar-year basis.
Regulations regarding financial reporting and actuarial calculations
are necessary to align PSRA financial requirements of both OPM and USPS
with current actuarial methods. Finally, the proposed rules regarding
payment prioritizing premium payments from the Postal Service Retiree
Health Benefit Fund and thereafter Medicare Part B late enrollment
penalty payments establishes an order of priority for funds. Without
this section, it would be unclear how OPM prioritizes payments
statutorily allowed from the PSRHBF at times when the fund may be
depleted.
Finally, the integration of Medicare Part D benefits into the PSHB
Program, which is a significant aspect of the PSRA, requires further
regulation, particularly as it relates to group enrollment into the
Part D EGWP as well as how an individual may decline
[[Page 45791]]
Part D coverage and the consequences of doing so. This clarification is
necessary to fully implement the Part D integration sections of the
PSRA in compliance with Medicare regulations and requirements. In the
absence of this rulemaking, carriers' plans are required to provide
prescription drug benefits to any Postal Service annuitant and member
of family of such annuitant who is a part D eligible individual (as
defined in section 1860D-1(a)(3)(A) of the Social Security Act) through
employment-based retiree health coverage (as defined in section 1860D-
22(c)(1) of such Act) through (A) a prescription drug plan (as defined
in section 1860D-41(a)(14) of such Act); or (B) contracts between such
a Program plan and PDP sponsor, as defined in section 1860D-41(a)(13)
of such Act, of such a prescription drug plan. Alternatively, in the
absence of this rulemaking, OPM could provide unenforceable guidance
interpreting this provision. OPM agrees that the default for this issue
is unclear based on the initial rulemaking, which is why this
rulemaking is vital.
Impact
This rulemaking proposes additional requirements and clarifications
for the operations and management of the PSHB Program. Based on OPM's
estimates, OPM does not believe that this proposed regulation will have
a large impact on the broader health insurance market. In 2022, Postal
premiums accounted for about 22% of the total FEHB premiums, meaning
that Postal Service employees, Postal Service annuitants, and their
family members make up about one fifth of health insurance carriers'
overall FEHB books of business. OPM seeks general comments on the
impact of this proposed rule.
As with the interim final rule, this proposed rule is intended to
help promote the financial stability and long-term viability of the
Postal Service by implementing the PSHB Program as effectively as
possible. The largest potential impact from this rule is found in the
regulatory proposals addressing reserves. OPM estimates that $4.7
billion of the estimated $22 billion in total FEHB reserves is
attributable to the Postal population. In addition, OPM estimates that
the vast majority of PSHB enrollees will remain with the same carrier
during the move from FEHB to PSHB. In this scenario, the move of funds
from FEHB to PSHB reserves will have no economic impact--the money will
remain with the same carrier, still overseen by OPM. Based on 2023
enrollment and expected carrier participation in the PSHB, OPM
estimates that the total reserves that will be transferred between
carriers will not exceed $100 million.
The other changes in the proposed rule are not expected to be
economically significant. The reconsideration process largely mirrors
that in the FEHB Program, except to the extent the PSHB Program
requires incorporation of verification of the requirement to enroll in
Medicare Part B. Discussions of the application of various Part B
exceptions are clarifications rather than deviations from the status
quo. To the extent there are impacts from the various proposals, they
are discussed below.
A. Impacts on PSHB Carriers
The reserves policies addressed in this proposed rule will result
in a shift of funds from FEHB plan reserves to PSHB plan reserves based
on the proportion of enrollment attributable to PSHB between 2024 and
2025. However, in large part we expect these funds to shift between
plans within the same carrier, as we expect many PSHB enrollees to
remain with their current FEHB carrier to the extent possible.
B. Impacts on PSHB Enrollees
The proposed rule provides clarification on several situations
concerning Medicare Part B enrollment requirements and exceptions under
the PSHB Program. Because each enrollee's circumstances are unique, it
is not possible to expressly regulate every scenario that could arise
under the program. However, the rule does clarify treatment of survivor
annuitants and Postal Service annuitants and family members returning
to the U.S. after living abroad and qualifying for that PSHB Program
exception regarding Medicare Part B enrollment. These clarifications
benefit affected enrollees and family members by providing greater
certainty relating to an affected individual's rights or
responsibilities concerning Part B enrollment as they remain enrolled
in the PSHB Program. They also allow affected enrollees and family
members to plan ahead when making Medicare enrollment decisions upon
reaching Medicare eligibility.
This proposed rule also reiterates the policy first included in the
interim final rule at 88 FR 20387 and codified at 5 CFR 890.1608(b)(2)
that individuals who are required under the PSRA to enroll in Medicare
Part B in order to enroll in the PSHB program will be given the
opportunity to correct a non-enrollment in Part B if OPM discovers the
discrepancy after the individual is enrolled in the PSHB program. This
policy is intended only to allow for good-faith corrections of
mistakenly missing Part B coverage and should apply to a very small
number of individuals. This proposed rule clarifies that this
opportunity is a one-time benefit, and any subsequent instances where
the individual lacks required Medicare Part B enrollment will result in
PSHB termination. OPM expects the number of individuals who face two
good-faith instances of missing Medicare Part B enrollment to be
negligible, so the impact will be very small.
The right to request reconsideration of PSHB Program eligibility
and enrollment decisions is important to enrollees and family members.
The FEHB Program has a robust reconsideration process, and the PSHB
Program incorporates FEHB Program rights and processes where
appropriate. However, this rulemaking is necessary to clarify
differences due to several unique aspects of the PSHB Program. Without
these clarifying regulations, enrollees could face confusion over which
agency should receive their reconsideration request and how they may
challenge an adverse PSHB determination that is not covered by the
reconsideration process related to FEHB plan eligibility and
enrollment. Most notably, the PSHB Program contains a Medicare Part B
enrollment requirement for many Postal Service annuitants, which does
not exist for annuitants eligible for enrollment in FEHB plans. OPM
will receive information from various source agencies that have the
ability to verify certain information about an individual upon which
OPM can determine PSHB eligibility and compliance with Medicare Part B
requirements.
C. Impacts on Employing Agencies
Under this proposed rule, employing agencies (USPS for Postal
Service employees or OPM, as the agency with the authority to approve
payment of annuity, etc., for Postal Service annuitants) will have
similar responsibilities when addressing reconsideration requests for
the PSHB Program as they do for the FEHB Program. With the Medicare
Part B requirement for most Postal Service annuitants and eligible
family members in order to be covered under the PSHB Program, there
will be additional verification for affected Postal Service annuitants
and family members. In addition to performing verification checks where
appropriate, an adverse outcome for enrollees may increase the number
of eligibility reconsideration requests made by individuals seeking
coverage.
[[Page 45792]]
This proposed rule would also ensure that the government
contribution adjustment for PSHB premiums aligns with the January 1 to
December 31 PSHB plan year already set out in the initial rulemaking.
Changing the effective date for the government contribution adjustment
to align with the PSHB plan year will have a slight impact on employing
agencies, that are responsible for ensuring that funds are correct, and
that may need to adapt procedures for timing the adjustment. Because
the changes to the plan year and government contribution adjustment
date only apply to the PSHB Program, the overall impact is limited to
USPS and OPM.
OPM's proposed policy of prioritizing PSHB premium payments over
Medicare Part B late enrollment penalties payments from the PSRHBF will
not result in increased costs for USPS, regardless of the extent to
which Postal Service annuitants take advantage of the PSRA Medicare
Part B Special Enrollment Period. Should the PSRHBF be depleted at any
time and OPM is unable to pay Part B late enrollment penalties out of
the fund, the Part B late enrollment penalties will be paid directly by
USPS' general operating fund, as described in the PSRA. The status of
the PSRHBF will not jeopardize USPS' ability to pay these penalties on
behalf of their Postal Service annuitants.
Finally, the proposed policy relating to Medicare Part D benefit
integration, which allows Part D eligible individuals to opt out of a
PSHB Part D EGWP, will likely have little impact on the program
overall. Very few individuals are expected to opt out given that they
will lose PSHB prescription drug coverage and will see no reduction in
monthly premiums. Carriers will account for the small number of
expected opt-outs in calculating overall premiums, although the effect
of opt-outs on premiums is expected to be insignificant. The impact for
enrollees who retain their Part D coverage through the PSHB plan will
likewise be negligible. However, the impact for any Part D eligible
individual who opts out will be large. They will pay an identical
premium but receive no prescription drug benefit through PSHB. In the
event that they opt out erroneously or due to not understanding the
negative implications of doing so, the financial penalty could be
severe. Out-of-pocket drug costs can be very high, particularly for
name brand drugs, and should an individual later choose to opt back
into the Part D EGWP, they may be faced with a Part D late enrollment
penalty from Medicare. In an effort to ensure that all PSHB enrollees
understand the consequences of opting out of Medicare Part D under the
PSHB plan, OPM and USPS will provide education regarding the
consequences of opting out of Part D benefits and what effect that will
have on their prescription drug benefits. This education will be
provided in addition to a detailed notice that all PSHB enrollees will
receive, as required by CMS regulations. OPM is seeking to ensure
education about Part D and that the implications of opting out are as
clear as possible and is looking to ensure that any individual who opts
out is doing so under full information. OPM invites comment on ways to
most effectively mitigate these concerns.
Costs
OPM does not anticipate that this regulatory action will result in
any significant or quantifiable economic costs. The proposals related
to reserves are strictly distributional and are not expected to result
in any costs. Discussions of the application of the various PSHB
program Medicare Part B exceptions are clarifications of the
requirements established in the interim final rule. Thus, while costs
may be incurred as a result of specific, individual scenarios, these
costs were addressed in the interim final rule and will not be
significantly impacted by the clarifications provided by this proposed
rule.
In particular, this proposed rule would clarify the interim final
rule provision related to PSHB enrollees who are belatedly discovered
to be ineligible based on their non-enrollment in Part B by limiting
the exception to a one-time privilege, thus minimizing the potential
costs to agencies. To the extent that these scenarios result in
additional costs, OPM anticipates that these would be negligible, given
the number of eligibility checks, and would be impossible to quantify.
Because enrollees who use this one-time privilege may be responsible
for a Part B late enrollment penalty, there remains a financial
incentive to enroll in Part B when first eligible. Because this
privilege is only available once, the number of enrollees who utilize
the exception will likely be limited.
Benefits
OPM does not expect this proposed rule to result in any significant
economic benefits. As with the interim final rule, this proposed rule
is intended to promote the financial stability and long-term viability
of the Postal Service by implementing the PSHB Program as effectively
as possible. The resulting societal benefits associated with these
outcomes were appropriately discussed in the interim final rule and are
not expected to be significantly impacted by the clarifications
proposed.
Distributional Effects
OPM estimates that $4.7 billion of the projected $22 billion in
2024 FEHB reserves will be attributable to PSHB enrollees, based on
2023 enrollment, and will therefore be reallocated to PSHB plans in
2025. Despite the size of funds being reallocated, OPM does not expect
these transactions to result in an economically significant transfer,
as defined in OMB Circular A-4, for several reasons.
First, although allocated to individual plans, unobligated reserves
ultimately belong to the FEHB and PSHB programs upon the carrier's
exit. Payments or transfers from the contingency reserves are
regulated, as outlined in 5 CFR 890.503 and in 48 CFR chapter 16, the
Federal Employees Health Benefits Program Acquisition Regulation
(FEHBAR) at 48 CFR 1632.770, and balances are closely monitored by OPM
to ensure compliance with minimum balance standards. Further, if an
existing plan is discontinued or elects not to participate in the FEHB
program, the reserve balances credited to that plan are redistributed
to the remaining plans and carriers.
Second, OPM estimates that more than 97% of the fund transfers will
be attributed to FEHB carriers that plan to offer PSHB plans. In these
cases, reserve funds will remain with the carrier and will be
reallocated from FEHB plans to the PSHB plans, as outlined in the
proposed methodology (scenarios a-c). Thus, to the degree that reserve
funds afford any monetary benefit, the aggregated benefit afforded to
the carrier, across the entire portfolio of plans offered, would remain
the same.
Third, OPM estimates that less than 3% of the funds transferred
will be attributed to FEHB carriers that do not plan to offer PSHB
plans. In these cases, a portion of the reserve funds for each FEHB
plan will be redistributed across the PSHB Options based on the
percentage of 2024 premiums attributable to Postal enrollees, as
described in the proposed methodology (scenario d). To the degree that
reserve funds afford any monetary benefit, these transfers would result
in a net change in the aggregated benefit afforded to each carrier.
Based on 2023 enrollments and anticipated carrier participation in the
PSHB program, OPM estimates that the total amount of these between-
carrier transfers will not exceed $100M, well below the $200M threshold
for economic significance.
[[Page 45793]]
Alternatives
This proposed rule provides that individuals eligible for Medicare
Part D may opt out of group enrollment or disenroll from the Part D
EGWP associated with their PSHB plan. As a result of opting out or
disenrolling from their PSHB plan's Part D EGWP, the individual will
not receive prescription drug benefits under the Part D EGWP or under
the PSHB plan. OPM considered this policy and several alternatives
extensively and ultimately decided on the policy as written considering
enrollee and family member interests, cost saving intent of the PSRA
and OPM's obligations under Medicare regulations, and the text of the
PSRA itself.
One alternative approach would have been to prohibit Part D
eligible individuals from opting out of the Part D EGWP associated with
their PHSB plan. Construing Medicare Part D as an eligibility
requirement would promote the goals of the PSRA by promoting enrollment
in Part D which OPM views Congress intended to promote access to high
quality drug coverage and result in savings to the PSHB Program.
Enrollment in Part D as an eligibility requirement for PSHB would
result in maximum enrollment of Part D eligible individuals ensuring
maximum access to prescription drug coverage and result in maximum cost
saving as intended by Congress. This approach combined with the group
enrollment feature of Medicare EGWPs would limit inadvertent failure to
enroll or inadvertent disenrollment from Medicare Part D and provide
administrative simplicity for OPM and carriers. Requiring Medicare Part
D as an eligibility requirement, however, would create a burden for
those who may have an alternative Part D plan or for those who cannot
access Part D benefits, such as individuals living abroad. It would
require a host of exceptions to a Part D enrollment requirement. This
approach would also require carriers to communicate with OPM and Postal
Service annuitants and family members to ensure that they are aware
that disenrolling or failing to enroll in Part D would result in loss
of not only access to prescription drug coverage but also result in
loss of PSHB coverage. For Postal Service annuitants, PSHB coverage in
retirement cannot be reinstated once it is terminated. As established
in the PSRA, the requirement to provide Medicare Part D through a PDP
EGWP rests with the carrier. There is no equivalent requirement placed
on a Postal Service annuitant or their family member to enroll in
Medicare Part D, which is a voluntary program. The PSRA does not
expressly require Postal Service annuitants to enroll in Part D. While
OPM identified several benefits of this approach, OPM has declined to
require enrollment in Part D as an eligibility requirement as it is not
the most intuitive interpretation of the statute.
Another alternative OPM considered was to allow Part D eligible
individuals to opt out of the Part D EGWP and receive prescription drug
benefits through their PSHB plan. This approach is consistent with the
current requirement in the FEHB program, which does not require
carriers to offer Medicare Part D EGWPs. Annuitants who are not Postal
Service annuitants and who are enrolled in FEHB plans receive
comprehensive drug coverage through their FEHB plan without a need to
enroll in a Medicare Part D plan. However, OPM finds this approach
inconsistent with the PSRA. Congress expressly mandated the integration
of Medicare Part D in the PSHB Program to coordinate benefits between
PSHB plans and Medicare Part D prescription drug coverage. Congress
intended to achieve cost savings to USPS through this coordination,
while providing prescription drug coverage to Postal Service annuitants
and their family members. OPM finds that any alternative approach that
would provide individuals with the ability to opt out of or otherwise
decline Part D coverage under the PSHB plan and then receive PSHB
prescription drug benefits would be counter to these cost-savings
goals.
As a result, OPM considers the policy included in this proposed
rulemaking the most consistent with the PSRA statutory language and
Congressional intent. This proposal provides Postal Service annuitants
and their family members with flexibility for enrollment in Medicare
Part D while creating incentives to enroll in the Medicare Part D EGWP
offered by their carrier, which are expected to lead to cost savings
for the program. This proposal is also consistent with the voluntary
nature of the Medicare Part D program. OPM views this approach to be
the most customer centric because it avoids the potential for loss of
PSHB eligibility for failing to enroll in Medicare Part D. This
approach strikes a balance between Congress' intent to save costs under
the PSHB Program and the prescription drug coverage needs of Postal
Service annuitants and their family members.
Treatment of survivor annuitants under the Program as it relates to
the requirement for Medicare Part B enrollment is another area where
OPM considered alternatives approaches. OPM considered whether a
Medicare eligible family member of a Postal Service annuitant could
lose their exception to the Part B requirement upon the death of that
Postal Service annuitant in a case where the family member does not
have their own Part B exception. The rationale for this approach is
that the family member's exception is derived from the Postal Service
annuitant's status, and with the Postal Service annuitant no longer on
the enrollment there is no Part B exception to apply to the family
member. However, this alternative approach was deemed inequitable for
the family member who relied on their Postal Service annuitant's
exception in making decisions on their own Medicare enrollment options.
To provide the most consumer-friendly approach, OPM decided to propose
the policy in this rulemaking that a family member of a Postal Service
annuitant will receive that Postal Service annuitant's Part B exception
permanently, so that if they become a survivor annuitant who was
entitled to a Part B exception due to the status of their former Postal
Service annuitant, that exception remains with them going forward.
Administrative Procedure Act
OPM is adopting a 30-day comment period to balance the need for
public input with operational considerations for carriers and Postal
Service employees, Postal Service annuitants, and their eligible family
members affected by this rulemaking. OPM is already working with
carriers on their plan benefit proposals, and individuals who will be
enrolled in the PSHB Program as of January 1, 2025, have begun
receiving information regarding the transition. In addition, OPM
previously published an interim final rule that established the PSHB
Program and a final rule that considered comments received on the
interim final rule. This rulemaking provides further clarification on
issues related to implementation of the Program and is based, in part,
on issues commenters raised in the prior rulemaking. In addition, this
rulemaking considers feedback received during the initial
implementation and administration of the Program. Accordingly, this
proposed rule is narrow in scope. OPM believes that a 30-day comment
period provides sufficient time for public comments on this proposed
rule and facilitates the issuance of a final rule before Open Season
begins on November 11, 2024.
These proposed provisions are also time-sensitive, as they will
address the remaining issues needed to finalize the
[[Page 45794]]
Program. For example, with respect to the Medicare Part B enrollment
requirement for Medicare eligible Postal Service annuitants and covered
family members, OPM needs to provide regulatory certainty to Postal
Service employees, Postal Service annuitants, and eligible family
members regarding coverage before they select their health benefits
plans in November 2024 during the transitional Open Season. Similarly,
Postal Service employees, Postal Service annuitants, and eligible
family members need to have complete information regarding PSHB plan
coordination with Medicare Part D. In particular, Postal Service
Medicare covered annuitants need information about their rights so that
they can make informed decisions about prescription medication coverage
during the transitional open season. For each of these issues, the
statute and OPM's initial rulemaking provided a framework, but OPM
needs to codify the specifics of how these provisions will impact
individuals in different circumstances.
As with the individuals eligible for coverage under the PSHB
Program, carriers also need information about the interactions between
the PSHB Program and Medicare Parts B and D. Similarly, carriers need
final details about how insurance reserves will be allocated in the
transition from FEHB plans to PSHB plans. OPM must transfer these funds
as soon as practicable on or after January 1, 2025.
Recognizing that the majority of the PSHB Program has been
addressed through a prior rulemaking, OPM has determined that a 30-day
comment period will provide the public with a meaningful opportunity to
comment on the few, discrete topics presented in this proposed rule.
OPM believes that the trade-off of a longer comment period is
outweighed by the value to affected parties of having complete
information to make informed decisions. OPM aims to review public
comments on this proposed rule and make any necessary modifications
expeditiously to provide as much advance notice to the affected parties
as possible.
For the forgoing reasons, OPM plans to make the final rule
effective upon publication. See 5 U.S.C. 553(d)(3). Generally, the
delay in the effective date of a final rule provides regulated parties
with some time to make adjustments to come into compliance with the new
regulation. For this rule, the requirements are all prospective in the
sense that the PSHB Program will not be fully operational until January
1, 2025. Nonetheless, carriers have long been developing their
proposals and plans for coverage and will benefit from this rule being
finalized as early as possible. Similarly, the individuals eligible for
coverage under the PSHB Program will not need to take action in
response to the finalization of the rule but will benefit from the rule
becoming final as early as possible.
Severability
OPM proposes that, if any of the provisions of this proposed rule
as finalized is held to be invalid or unenforceable by its terms, or as
applied to any person or circumstance, it shall be severable from the
remaining sections and shall not affect the remainder thereof or the
application of the provision to other persons not similarly situated or
to other dissimilar circumstances. For example, if a court were to
invalidate any portions of this proposed rule as finalized regarding
non-enrollment in Medicare Part B, the other portions of the rule--
including the provisions regarding non-enrollment in Medicare Part D--
would independently remain workable and valuable. Similarly, the
portions of this proposed rule providing procedures for challenging
enrollment decisions can and would function independently of any of the
other portions of this proposed rule.
Regulatory Review
OPM has examined the impact of this rule as required by Executive
Orders 13563, 12866, and 14094, which 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, distributive impacts, and equity). The
Office of Management and Budget (OMB) has designated this rulemaking as
a ``significant regulatory action'' under section 3(f) of Executive
Order 12866, as supplemented by Executive Orders 13563 and 14094.
Regulatory Flexibility Act
The Director of OPM certifies that this rulemaking will not have a
significant economic impact on a substantial number of small entities.
Federalism
OPM examined this rulemaking in accordance with Executive Order
13132, Federalism, and determined that it will not have any negative
impact on the rights, roles and responsibilities of State, local, or
Tribal governments.
Civil Justice Reform
This rulemaking meets the applicable standard set forth in
Executive Order 12988.
Unfunded Mandates Reform Act of 1995
This rulemaking will not result in the expenditure by State, local,
and Tribal governments, in the aggregate, or by the private sector, of
$100 million or more in any year and it will not significantly or
uniquely affect small governments. Therefore, no actions were deemed
necessary under the provisions of the Unfunded Mandates Reform Act of
1995.
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 OMB
Control Number.
The information collection for form SF-2809 (OMB Control Number
3206-0160) is currently approved with an estimated public burden of
9,000 hours. OPM notes that there is a corresponding health benefits
election form for retirees, OPM-2809. The information collection
request (OMB control number 3206-0141) associated with that information
collection is currently approved with an estimated public burden of
11,667 hours. A list of routine uses associated with these forms can be
found in the Privacy Act System of Records Notice (SORN), OPM/CENTRAL 1
Civil Service Retirement and Insurance, available at https://www.opm.gov/information-management/privacy-policy/sorn/opm-sorn-central-1-civil-service-retirement-and-insurance-records.pdf.
On May 6, 2024, OPM published ``Submission for Review: Revision and
Consolidation of Two Existing Information Collections Related to Health
Benefits Election Forms'' (89 FR 37269). This publication provides a
60-day notice for an extension of this information collection and
proposes categorizing the SF-2809 as a ``common form.'' OPM is
proposing changes to the SF-2809 and the OPM-2809 for clarity, ease of
use, and implementation of the PSHB Program. OPM has provided copies of
the revised drafts of the SF-2809 and OPM-2809 forms for public review
in the docket at https://www.regulations.gov/docket/OPM-2024-0011/document.While OPM is not currently proposing to consolidate the
[[Page 45795]]
SF-2809 and the OPM-2809 into a single form, we are proposing to
combine the two information collections and manage the two forms under
a single information collection, OMB Control No. 3206-0160, going
forward. The comment period on this notice ends on July 5, 2024.
List of Subjects in 5 CFR Part 890
Administrative practice and procedure, Government employees, Health
facilities, Health insurance, Health professions, Postal Service
employees, Reporting and recordkeeping requirements, Retirement.
Office of Personnel Management.
Kayyonne Marston,
Federal Register Liaison.
Accordingly, OPM proposes to amend 5 CFR part 890 as follows:
PART 890--FEDERAL EMPLOYEES HEALTH BENEFITS PROGRAM
0
1. The authority citation for part 890 continues 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. 890.107 by adding paragraph (f) to read as follows:
Sec. 890.107 Court review.
* * * * *
(f) A suit to compel enrollment or for equitable relief, from an
adverse enrollment action founded on 5 U.S.C. chapter 89, that is based
on information received by OPM pursuant to an agreement with a source
agency as defined at Sec. 890.1602, to determine whether Postal
Service annuitants or family members of such annuitants satisfy the
enrollment requirements set forth in 5 U.S.C. 8903c, may not be brought
later than December 31 of the 3rd year after the year in which the
enrollment action was effectuated, and will be limited to the record
that was before OPM when it effectuated the enrollment action.
Subpart P--Postal Service Health Benefits Program
0
3. Amend Sec. 890.1602 by adding in alphabetical order the definitions
``Reconsideration'' and ``Source agency'' to paragraph (c) to read as
follows:
Sec. 890.1602 Definitions and deemed references.
* * * * *
(c) * * *
Reconsideration means the final level of administrative review of
an initial decision by an employing office or OPM, as applicable.
Source agency means an agency that periodically provides
information or data to OPM pursuant to an agreement under Sec.
890.1612.
* * * * *
0
4. Amend Sec. 890.1604, as amended May 6, 2024, at 89 FR 37061,
effective July 5, 2024, by adding paragraphs (c) and (d)(3) and
revising (f) to read as follows:
Sec. 890.1604 Medicare enrollment requirement for certain Postal
Service annuitants and eligible family members.
* * * * *
(c) Survivor annuitant. (1) A Postal Service annuitant's member of
family who is an annuitant as defined in 5 U.S.C. 8901(3)(B) and who is
entitled to Medicare Part A, must be enrolled in Medicare Part B to
continue enrollment in a health benefits plan under this subpart,
except as otherwise provided by paragraph (d)(3) of this section;
(2) A Postal Service employee's member of family who is an
annuitant as defined in 5 U.S.C. 8901(3)(B) and who is entitled to
Medicare Part A, must be enrolled in Medicare Part B to continue
enrollment in a health benefits plan under this subpart, except as
provided in paragraphs (d)(3)(ii) through (iv) of this section.
* * * * *
(d) * * *
(3) To a survivor annuitant, as described in paragraph (c) of this
section, who:
(i) At the time of becoming a survivor annuitant the Postal Service
annuitant was subject to an exception under (d)(1) of this section;
(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;
(iii) 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 (e)(2) of this
section; or
(iv) Is eligible for health services from the Indian Health
Service, subject to the documentation requirements in paragraph (e)(3)
of this section.
* * * * *
(f) Notification of non-enrollment in Medicare Part B. A Postal
Service Medicare covered annuitant, a Medicare covered member of
family, or a survivor annuitant, as described in paragraph (c) of this
section, who is required to be enrolled in Medicare Part B must
promptly notify OPM or 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).
0
5. Amend Sec. 890.1605 by revising paragraph (c) to read as follows:
Sec. 890.1605 Enrollment in the initial contract year.
* * * * *
(c) Automatic enrollment. Each Postal Service employee or Postal
Service annuitant who is enrolled in an FEHB plan on December 31, 2024,
and does not make an enrollment action during the transitional open
season under Sec. 890.1605(b), will be automatically enrolled in the
PSHB Program as follows:
(1) Into same plan. Individuals enrolled in a carrier's 2024 FEHB
plan where the carrier offers the same plan in 2025 in FEHB and offers
a 2025 PSHB plan with at least one option that has equivalent benefits
and cost sharing and in the same geographic area as the 2025 FEHB plan,
will be enrolled in that 2025 PSHB plan and into an option as follows:
(i) Equivalent option. Individuals enrolled in a carrier's 2024
FEHB option where the carrier offers that option in 2025 in FEHB and
also offers a 2025 PSHB option with equivalent benefits and cost
sharing as the 2025 FEHB option, as determined by OPM, will be
automatically enrolled into that 2025 PSHB option; or
(ii) No equivalent option. Individuals enrolled in a carrier's 2024
FEHB option where the carrier does not offer a 2025 PSHB option that
meets the criteria in (1)(i), will be automatically enrolled into the
lowest-cost option of the 2025 PSHB plan, that is not a High Deductible
Health Plan (HDHP) and does not charge an association or membership
fee, except that if the only option is an HDHP, then the individual
will be enrolled in that HDHP option.
[[Page 45796]]
(2) Into a 2025 PSHB plan where the carrier offers no 2025 FEHB
plan. Individuals enrolled in a carrier's 2024 FEHB plan where the
carrier offers no 2025 FEHB plan and offers a 2025 PSHB plan with at
least one option with similar benefits and cost sharing and in the same
geographic area as the 2024 FEHB plan, as determined by OPM, will be
enrolled in that 2025 PSHB plan and into an option as follows:
(i) Similar option. Individuals enrolled in a carrier's 2024 FEHB
option where the carrier offers a 2025 PSHB option with similar
benefits and cost sharing as the 2024 FEHB option, as determined by
OPM, will be automatically enrolled into that 2025 PSHB option; or
(ii) No similar option. Individuals enrolled in a carrier's 2024
FEHB option where the carrier does not offer a 2025 PSHB option that
meets the criteria in paragraph (c)(2)(i) of this section, will be
automatically enrolled into the lowest-cost option of the 2025 PSHB
plan, or in the case where the 2025 PSHB plan has two or more options,
into the lowest-cost option that is not a High Deductible Health Plan
(HDHP) and does not charge an association or membership fee.
(3) Into different plan. Individuals enrolled in a carrier's 2024
FEHB plan where paragraphs (c)(1) and (2) of this section do not apply
will be enrolled in the lowest-cost nationwide PSHB option, consistent
with Sec. 890.301(n).
(4) Same enrollment type. Individuals automatically enrolled under
this section will be automatically enrolled into the same enrollment
type as the individual's 2024 enrollment type.
* * * * *
0
6. Amend Sec. 890.1606 by revising paragraphs (c) and (d) to read as
follows:
Sec. 890.1606 Opportunities to enroll, change enrollment, or
reenroll; effective dates.
* * * * *
(c) Reinstatement of enrollment in accordance with Sec. 890.305 is
permitted in a PSHB plan.
(d) Initial decisions and reconsiderations of PSHB eligibility or
enrollment will be made pursuant to Sec. 890.1607.
* * * * *
0
7. Add Sec. 890.1607 to read as follows:
Sec. 890.1607 Initial decision and reconsideration.
(a) Who may file. An individual may request the employing agency or
OPM, as applicable, to reconsider the employing office's or OPM's
initial decision denying eligibility for, or enrollment in, or coverage
under, the PSHB Program. Individuals subject to Sec. 890.1112 are not
entitled to reconsideration as used in this subpart.
(b) Initial decision. An employing office's or OPM's initial
decision must be in writing and state the right to an independent level
of review (reconsideration).
(1) Except as otherwise provided in this subpart, employing offices
are responsible for initial decisions concerning PSHB eligibility for
Postal Service employees or Postal Service annuitants.
(2) OPM is responsible for initial decisions concerning:
(i) Verification that an individual is an eligible member of family
under Sec. 890.302;
(ii) Postal Service annuitants or their family members who are not
required to enroll in VA's system of patient enrollment referred to in
38 U.S.C. 1705(a), and who must provide documentation from the VA under
Sec. 890.1604(d)(2) indicating they satisfy the requirements for an
exception described in Sec. 890.1604(c)(1)(iv) or (c)(2)(iii); and
(iii) Postal Service annuitants or their family members who must
provide documentation from the Indian Health Service under Sec.
890.1604(d)(3) indicating they satisfy the requirements for an
exception described in Sec. 890.1604(c)(1)(v) or (2)(iv).
(3) OPM is responsible for initial decisions regarding enrollment
actions made based on information received from source agencies with
which OPM has an information sharing agreement established pursuant to
Sec. 890.1612. An initial decision under this paragraph will be issued
only after the notice process under Sec. 890.1612 is completed.
(c) Reconsideration. (1) A request for reconsideration must be made
in writing, must include the claimant's name, address, date of birth,
Social Security number or other unique identifier, name of the carrier,
reason(s) for the request, documentary evidence in support of the
request, if any, and, if applicable, retirement claim number.
(2) The reconsideration review must be an independent review
designated at or above the level at which the initial decision was
rendered.
(d) Time limit. A request for reconsideration of an initial
decision must be filed with the employing agency or OPM, as applicable,
within 30 calendar days from the date of the written decision stating
the right to a reconsideration. The time limit on filing may be
extended, at the discretion of the employing office or OPM, when the
individual shows that they were not notified of the time limit and were
not otherwise aware of it, demonstrates a good faith effort to obtain
the documentation as described under paragraph (b)(2)(ii) or (iii) of
this section, or that they were prevented by circumstances beyond their
control from making the request within the time limit. The employing
agency's or OPM's decision in response to a request for reconsideration
of an employing office's initial decision is a final decision as
described in paragraph (e) of this section.
(e) Final decision. After reconsideration, the employing agency or
OPM, as applicable, must issue a final decision within 30 days of the
request for reconsideration, which must be in writing and must fully
set forth the findings and conclusions.
0
8. Amend Sec. 890.1608 by revising paragraphs (a), (b) introductory
text, and (b)(2) and (5) and adding paragraphs (b)(6) through (9) to
read as follows:
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.
(1) 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).
(2) Coverage as a family member under a FEHB plan will remain
available for a Postal Service employee or Postal Service annuitant who
is or becomes covered under their family member's FEHB enrollment. A
Postal Service annuitant's or Postal Service employee's family member
who meets the eligibility requirements for their own enrollment in an
FEHB plan will remain eligible to enroll in an FEHB plan.
(3) 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. An individual who is required to be
enrolled in Medicare Part B and is not enrolled in Medicare Part B will
not be disenrolled or removed from PSHB coverage
[[Page 45797]]
immediately and will be given one opportunity to remain enrolled in or
covered by PSHB if they enroll or re-enroll in Medicare Part B during
their next available Medicare enrollment period, which may be the next
Medicare General Enrollment Period, except that an individual who was
excepted from the Medicare Part B requirement pursuant to Sec.
890.1604(d)(1)(iii) or (d)(2)(ii) must enroll not later than the end of
the Medicare General Enrollment Period beginning January 1 of the
following calendar year. Failure to enroll or re-enroll in Medicare
Part B at the next enrollment period may result in disenrollment from
PSHB or removal from coverage under a PSHB enrollment. If disenrolled,
a Postal Service annuitant will not be permitted to re-enroll in PSHB,
as described in paragraph (b)(5) of this section, and a family member
who is removed from coverage under a PSHB enrollment, may have their
PSHB coverage reinstated only as described in paragraph (b)(9) of this
section.
* * * * *
(2) A Postal Service Medicare covered annuitant will not be
disenrolled from PSHB 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.
* * * * *
(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 their covered family members to a
31-day temporary extension of coverage and the right of conversion
under Sec. 890.401, except as provided at paragraph (b)(5)(ii) of this
section.
(i) 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.
(ii) Disenrollment or removal from coverage under an enrollment
will be prospective in all cases except where fraud or intentional
misrepresentation of material fact is found, in which case the
individual's coverage will be terminated retroactively, as applicable,
and no right to a 31-day temporary extension of coverage or to
conversion under Sec. 890.401 will be available.
(iii) Disenrollment or removal under this section will occur only
after a notice process under Sec. 890.1612, if applicable, is
completed and an initial decision to disenroll or remove, subject to
reconsideration under Sec. 890.1607(b), is issued.
(6) An individual who is disenrolled from Medicare Part B, where
the individual is required to be enrolled in Medicare Part B and does
not have an exception under this subpart, will be issued an initial
decision disenrolling them from PSHB or removing from them coverage
under a PSHB enrollment at the time OPM becomes aware of the Medicare
disenrollment. Individuals disenrolled or removed from PSHB coverage
will be entitled to a 31-day temporary extension of coverage and rights
to conversion.
(7) Within 60 days of OPM's initial decision, a Postal Service
Medicare covered annuitant or Medicare covered member of family, as
applicable, may request reconsideration of OPM's initial decision to
disenroll or remove the individual from PSHB coverage. OPM will notify
the carrier when a request for reconsideration of the decision to
disenroll or remove the individual from the enrollment is made. The
time limit for filing may be extended as noted in Sec. 890.1607.
(8) If the Postal Service Medicare covered annuitant provides
acceptable proof of PSHB eligibility subsequent to disenrollment which
renders the disenrollment inappropriate, the enrollment shall be
reinstated retroactively so that there is no gap in enrollment, as
appropriate. A Postal Service Medicare covered annuitant's PSHB
enrollment cannot be reinstated after disenrollment from a PSHB plan
based on failure to enroll in, disenrolling from, or being disenrolled
from Medicare Part B, except that a one-time opportunity as set forth
at Sec. 890.1608(b) may be available if the Postal Service annuitants
has not previously invoked and used it.
(9) If the Postal Service Medicare covered member of family, who is
required to be enrolled in Medicare Part B and is removed from a Postal
Service Medicare covered annuitant's PSHB enrollment because the family
member failed to enroll in, disenrolls from, or is disenrolled from
Medicare Part B, the family member's PSHB coverage may be reinstated.
Reinstatement of the family member's PSHB coverage will be permitted
only if the Postal Service Medicare covered annuitant's PSHB enrollment
continues, and only if proof of the family member's Medicare Part B
enrollment which renders the removal inappropriate, is provided by the
Postal Service Medicare covered annuitant or Medicare covered member of
family, as applicable. The family member's PSHB coverage will be
reinstated upon request by the Postal Service Medicare covered
annuitant to reinstate the family member's PSHB coverage subsequent to
removal, at the Postal Service Medicare covered annuitant's option, as
follows:
(i) Prospectively, within 60 days of the Medicare covered family
member gaining coverage under Medicare Part B, or
(ii) Retroactively to the date of termination of PSHB coverage, so
that there is no gap in coverage, provided that the proof demonstrates
the family member was continuously enrolled in Medicare Part B since
that date and subsequent to removal, as appropriate.
* * * * *
0
9. Amend Sec. 890.1612 by adding paragraphs (f) and (g) to read as
follows:
Sec. 890.1612 Information sharing.
* * * * *
(f) If a source agency has provided information or data, regarding
a Postal Service Medicare covered annuitant or Medicare covered member
of family, which establishes a basis that the individual may be
ineligible for PSHB enrollment or coverage, OPM will provide the
individual with written notice that will contain at a minimum:
(1) An explanation of the PSHB enrollment requirements and
exceptions described in Sec. 890.1604 and the specific information or
data provided to OPM from the source agency that was the basis for the
notice;
(2) The source agency's contact information where the individual
may ask questions or contest the accuracy of the information or data on
which OPM based the notice;
(3) An explanation of the required process and timeframe(s) for
providing OPM with evidence that the individual is engaged in a dispute
with the source agency identified in the notice for the purposes of
seeking the source agency's correction of the information or data,
affecting the individual's PSHB eligibility, provided to OPM pursuant
to the agreements described in this section;
(4) That the individual will remain enrolled or covered under PSHB
while the individual is engaged in disputing the information or data
with the source agency, as described in paragraph (f)(2) of this
section;
(5) That the individual will be disenrolled or removed from PSHB,
as described in Sec. 890.1608 and subject to reconsideration, within
60 days of the date of the notice if the individual does not provide
sufficient evidence, in the discretion of OPM, as described in
paragraph (f)(3) of this section; and
(6) That the individual will be disenrolled or removed from PSHB,
as described in Sec. 890.1608 and subject to
[[Page 45798]]
reconsideration, within 60 days of the notice, notwithstanding evidence
of a dispute, if the information or data OPM receives from the source
agency continues to provide no basis for OPM to establish that the
individual satisfies PSHB enrollment requirements.
(g) OPM will issue an initial decision in accordance with Sec.
890.1607(b)(3). If an individual will be disenrolled or removed from
PSHB based on the information or data from the source agency, in
paragraph (f) of this section, the individual will be notified in
writing that the disenrollment or removal, as applicable, is subject to
reconsideration pursuant to Sec. 890.1607, and that such
reconsideration is limited to a review of the source agency's data or
information, received pursuant to an agreement under this section or 5
U.S.C. 8903c(e)(3)(C) that was before OPM at the time it effectuated
the disenrollment or removal action.
0
10. Amend Sec. 890.1613 by revising the section heading and paragraphs
(a), (c), and (e) to read as follows:
Sec. 890.1613 Postal Service contract year beginning date, Medicare
late enrollment penalty, calculations for the Postal Service Retiree
Health Benefits Fund, and clarification of statutory terms.
(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. For purposes of this subpart,
the subscription charge and the Government contribution under 5 U.S.C.
8906(b) will begin on January 1 of each year for Postal Service
employees and Postal Service annuitants.
* * * * *
(c) Medicare late enrollment penalty. Upon request by the Postal
Service, and only until the Postal Service Retiree Health Benefits Fund
established under 5 U.S.C. 8909a is depleted, OPM will pay out of such
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). If at any time the PSRHBF is depleted,
USPS shall pay late enrollment penalties out of its funds established
under 39 U.S.C. 2003. In making such late enrollment penalty payments,
OPM, as administrator of the Fund under 5 U.S.C. 8909a(a), will
prioritize the payment of health benefit premiums for individuals
described in 5 U.S.C. 8906(g)(2)(A), over the late enrollment
penalties.
* * * * *
(e) Clarification of statutory terms. (1) OPM has determined that
``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).
(2) The computations for post-retirement health obligations
computed under 39 U.S.C. 3654(b) shall be performed using an aggregate
entry-age normal cost method described in 5 U.S.C. 8331(17) and in
accordance with 8348(h).
(3) In accordance with 5 U.S.C. 8348(h), for purposes of computing
the amounts described in 39 U.S.C. 3654(b), this includes:
(i) Current annuitants as described in 5 U.S.C. 8909a(e)(1)(A)
means individuals who are Postal Service annuitants on September 30 of
the relevant reporting year described in 5 U.S.C. 8909a(d); and
(ii) Current employees as described in 5 U.S.C. 8909a(e)(1)(B)
means individuals who are Postal Service employees on September 30 of
that year.
0
11. Amend Sec. 890.1614 by revising paragraph (a) to read as follows:
Sec. 890.1614 Other administrative provisions.
(a) Correction of errors. (1) Except as otherwise provided in this
section, the employing office or OPM may make prospective or
retroactive corrections of administrative errors at any time.
Retroactive corrections may not apply retroactively beyond the initial
contract year.
(2) OPM may order or make, as applicable, a correction of an
administrative error upon a showing satisfactory to OPM that it would
be against equity and good conscience not to do so.
(3) OPM may make retroactive correction of enrollee enrollment code
errors if the enrollee reports the error by the end of the pay period
following the one in which they received the first written
documentation (i.e., pay statement or enrollment change confirmation)
indicating the error.
(4) OPM may order the termination of an enrollment in any
comprehensive medical plan described in 5 U.S.C. 8903(4) and permit the
individual to enroll in another PSHB plan for purposes of this subpart,
upon a showing satisfactory to OPM that the furnishing of adequate
medical care is jeopardized by a seriously impaired relationship
between a patient and the comprehensive medical plan's affiliated
health care providers.
(5) Retroactive corrections are subject to withholdings and
contributions under the provisions of Sec. Sec. 890.502 and 890.1613.
0
12. Add Sec. Sec. 890.1615 and 890.1616 to read as follows:
Sec. 890.1615 Crediting separate reserves for PSHB.
(a) Definitions. For purposes of this section concerning crediting
separate reserves from FEHB Options to PSHB Options, and for these
purposes only, the following definitions apply:
2024 FEHB Option premium means, for a 2024 FEHB Option, the 2024
premium attributable to both Postal Service and non-Postal Service
enrollees.
2024 Postal Service premium means, for a 2024 FEHB Option, the 2024
premium attributable to Postal Service employees and Postal Service
annuitants as defined under 5 U.S.C. 8903c(a).
Amounts available means:
(1) With respect to experience-rated 2024 FEHB Options, the sum of
the balances in the Option's Contingency Reserve Account and Letter of
Credit Account less the Runout as of December 31, 2024; and
(2) With respect to community-rated 2024 FEHB Options, the Option's
Contingency Reserve Account balance as of December 31, 2024.
Corresponding PSHB option means a 2025 PSHB Option that is in the
same geographic area and has equivalent benefits and cost-sharing as a
2025 FEHB Option, and that 2025 FEHB Option was also offered in 2024 by
the same carrier.
Option means a level of benefits offered by a carrier to self only,
self plus one, and self and family enrollees in a specific geographic
area, with a unique set of premiums.
Plan means all Options offered by a carrier within a defined
geographic area under a single contract.
Runout means the amount estimated by OPM, as of December 31, 2024,
needed to pay claims and expenses incurred but not paid for periods on
or before December 31, 2024, for an experience-rated FEHB Option,
considering any income attributable to periods on or before, but not
yet received by, December 31, 2024.
(b) Reserve credits. As soon as practicable on or after January 1,
2025, OPM will credit each PSHB Option's reserves according to the
method described in paragraph (c) of this section.
(c) Reserve credit methodology. OPM will determine the Reserve
credit for each 2024 FEHB Option and allocate it to the PSHB.
(1) OPM will determine the 2024 Postal Service premium by
multiplying
[[Page 45799]]
a 2024 FEHB Option's self only, self plus one, and self and family 2024
premiums by the number of Postal Service enrollments of that Option in
each enrollment type and taking the sum of these three amounts.
(2) OPM will determine the 2024 FEHB Option premium by multiplying
each 2024 FEHB Option's self only, self plus one, and self and family
premiums by the number of total enrollments (inclusive of both Postal
Service and non-Postal Service enrollments) in each enrollment type for
that Option and taking the sum of these three amounts. OPM will use its
March 2024 enrollment reports to determine the total enrollments.
(3) OPM will calculate the Postal Service Percentage for each 2024
FEHB Option by dividing the 2024 Postal Service Premium by 2024 FEHB
Option Premium.
(4) OPM will calculate the Reserve Credit by multiplying the Postal
Service Percentage for each 2024 FEHB Option by the Amounts Available
for that Option.
(5) OPM will reallocate the Reserve Credit for each 2024 FEHB
Option into a PSHB Contingency Reserves and Letter of Credit Account,
as applicable, as follows:
(i) If a carrier offers an FEHB Plan with one, two, or three
Options in 2024 and offers the same number of Corresponding PSHB
Options in 2025, the Reserve Credits for those Options will be
allocated to the Corresponding PSHB Options' reserves.
(ii) If a carrier offers an FEHB Plan with two or three Options in
2024 and offers only one Corresponding PSHB Option in 2025, the Reserve
Credits attributable to all the 2024 FEHB Plan's Options will be
allocated to that Corresponding PSHB Option's reserve.
(iii) If a carrier offers an FEHB Plan with three Options in 2024
and offers only two Corresponding PSHB Options in 2025, the Reserve
Credits attributable to the two FEHB Options that have Corresponding
PSHB Options will be allocated to those two Corresponding PSHB Options'
reserves. The Reserve Credit from the third FEHB Option (that does not
have a Corresponding PSHB Option) will be allocated to one of the two
Corresponding PSHB Plan Options that has the lowest self only premium
and is not a High Deductible Health Plan (HDHP).
(iv) If a carrier offers an FEHB Plan in 2024 and offers no FEHB
Plan in 2025, but offers at least one 2025 PSHB Option with similar
benefits and cost sharing and in the same geographic area as the
carrier's 2024 FEHB Plan, as determined by OPM, the Reserve Credit(s)
attributable to that FEHB Plan will be credited to the reserves of the
carrier's 2025 PSHB Options as described in paragraphs (c)(5)(i)
through (iii) of this section as if the 2025 PSHB Option(s) were a
Corresponding PSHB Option.
(v) If a carrier offers an FEHB Plan in 2024, and offers that FEHB
Plan in 2025, but offers no Corresponding PSHB Options for that 2025
FEHB Plan, the Reserve Credit(s) attributable to that FEHB Plan will be
credited to the reserves of the PSHB Options offered in 2025,
proportionately, consistent with 5 U.S.C. 8903c(j)(2) where the
subscription charges paid are the 2024 Postal Service Premium.
(vi) If a carrier offers a 2025 PSHB Option for which no 2024
Postal Service Premium is attributable, then that 2025 PSHB Option will
receive no Reserve Credit.
Sec. 890.1616 Medicare Part D.
(a) Carrier requirement to offer Medicare Part D prescription drug
benefits. (1) A carrier that offers a PSHB plan must provide
prescription drug benefits to any Postal Service annuitant and member
of family of such annuitant who is a Part D eligible individual (as
defined in section 1860D-1(a)(3)(A) of the Social Security Act) through
a Medicare Part D EGWP as described as employer-based retiree health
coverage under 1860D-22(b), (c)(1), and (3)(A) of such Act.
(2) A carrier must provide Medicare Part D coverage through a
prescription drug plan (PDP), as defined in section 1860D-41(a)(14) of
such Act, or through contracts between the PSHB plan and a PDP sponsor,
as defined in section 1860D-41(a)(13) of such Act, of such a
prescription drug plan.
(3) A carrier may, in addition to offering a PDP required under
(a)(2) and subject to OPM's approval, offer a Medicare Advantage plan
with prescription drug coverage (MAPD), as defined in section 1860D-
1(a)(3)(C) of such Act.
(b) Prescription drug coverage under a PSHB plan through Medicare
Part D. A Postal Service annuitant and a member of family of such
annuitant who is a Part D eligible individual must be enrolled in a
PSHB plan's Part D EGWP in order to receive prescription drug coverage
under the PSHB plan. Prescription drugs are not covered under a PSHB
plan for a Part D eligible individual who is not enrolled in the PSHB
plan's Part D EGWP.
(c) PSHB plan enrollment or disenrollment and Medicare EGWPs.
Changes to enrollment during open season under Sec. 890.301(f) or
because of a qualifying life event as defined in part 892 of this
chapter apply with respect to changes to PSHB plans, that include a
Medicare Part D EGWP.
(d) Carrier requirements for group enrollment into Medicare EGWPs.
A carrier must comply with all applicable CMS requirements regarding
Part D eligible individual group enrollment into Medicare EGWPs,
including all applicable CMS notice requirements. Nothing in this
section shall be construed as affecting an individual's ability to
select a PSHB plan pursuant to Sec. 890.1606.
(1) PDP EGWP. Annually at the conclusion of open season under Sec.
890.301(f), or when an enrollee makes a change to their PSHB enrollment
because of a qualifying life event under Sec. 892.101 of this chapter,
a carrier must automatically group enroll a Part D eligible individual,
who is covered by the carrier's PSHB plan, into the PSHB plan's PDP
EGWP, unless the individual:
(i) Elects to enroll or is enrolled in the PSHB plan's MAPD EGWP
described in paragraph (d)(2) of this section; or
(ii) Has previously opted out of group enrollment in the PSHB
plan's PDP EGWP or MAPD EGWP and has not subsequently requested to be
reenrolled.
(2) MAPD EGWP. Annually, at the conclusion of open season under
Sec. 890.301(f), or when an enrollee makes a change to their PSHB
enrollment because of a qualifying life event, a carrier must
automatically enroll a Part D eligible individual who is covered by the
carrier's PSHB plan into the carrier's PSHB plan's MAPD EGWP if the
individual elects to enroll in the carrier's MAPD EGWP. During the
transitional open season, a carrier must automatically enroll a Part D
eligible individual into the carrier's 2025 PSHB plan's MAPD EGWP if
the individual is covered by that carrier's 2024 FEHB plan's MAPD EGWP,
and if the individual elects the carrier's 2025 PSHB plan or is
automatically enrolled into the carrier's 2025 PSHB plan under Sec.
890.1605.
(3) Notice. In addition to the CMS notice requirements, each year,
not less than 30 calendar days prior to the start of open season under
Sec. 890.301(f), a carrier must send written notice to Part D eligible
individuals who are enrolled in the carrier's PSHB plan that they will
be group enrolled into the PDP EGWP offered under the carrier's PSHB
plan. In addition, when an enrollee makes a change because of a
qualifying life event, a carrier must send such written notice to the
Part D eligible individuals covered under the enrollment. The notice
shall state:
[[Page 45800]]
(i) The carrier intends to enroll the individual in the carrier's
Medicare Part D PDP EGWP as described under paragraph (d)(1) of this
section, or MAPD EGWP as described under paragraph (d)(2) of this
section as applicable, during open season under Sec. 890.301(f), or as
a result of a qualifying life event, as applicable;
(ii) The individual may affirmatively opt out of group enrollment;
(iii) Opting out of group enrollment means that the individual is
deciding not to be enrolled in the PSHB plan's PDP EGWP, or MAPD EGWP
if applicable;
(iv) The date by which the individual must opt out of group
enrollment, if the individual chooses to opt out;
(v) The procedure for how an individual affirmatively opts out of
group enrollment;
(vi) The individual will not receive prescription drug coverage
under the PSHB plan if the individual is not enrolled in the PSHB
plan's PDP EGWP, or MAPD EGWP if applicable; and
(vii) That no adjustment will be made to the enrollee's share of
the PSHB plan option premium.
(4) Additional requirements for PSHB plans providing an MAPD EGWP.
If a PSHB plan offers an MAPD EGWP, the carrier must comply with all
applicable Medicare requirements and the carrier must also provide the
notices as described in (d)(3) of this section. In addition, such
notice must state how the individual can enroll in the PSHB plan's PDP
EGWP if the individual is opting out of group enrollment or
disenrolling from a PSHB plan's MAPD EGWP during open season or as a
result of a qualifying life event, the date by which the individual
must enroll in the PDP EGWP, and must state that if the individual is
required to be enrolled in Medicare Part B in order to maintain
eligibility for PSHB plan coverage and does not qualify for an
exception under Sec. 890.1604, the individual must remain enrolled in
Part B.
(5) Notices to be shared with OPM. A carrier must provide OPM with
the notices under this section and the notices that CMS requires
regarding PDP EGWP and MAPD EGWP group enrollment each year, at the
time the carrier submits its benefit and rate proposal.
(e) Effect of opting out of group enrollment into or disenrolling
from a Medicare EGWP. (1) By opting out of group enrollment in a PSHB
plan's Medicare PDP EGWP or MAPD EGWP, as applicable, the individual
will not receive prescription drug coverage under the PSHB plan unless,
during the open season or pursuant to the qualifying life event in
which the individual opted out of group enrollment, the individual
elects to enroll in a Part D EGWP under their PSHB plan.
(2) A Part D eligible individual may enroll in a PDP EGWP or, if
eligible, an MAPD EGWP, under a PSHB plan, under the same conditions
that govern enrollment in a PSHB plan during open season or pursuant to
a qualifying life event.
(3) An individual may disenroll from their PSHB plan's Part D EGWP
at any time during the plan year which means they will not receive
prescription drug coverage under the PSHB plan.
(f) EGWP prescription drug benefits. A carrier must provide the
same prescription drug benefits to Part D eligible individuals under a
PSHB plan's PDP EGWP, and, if applicable, the plan's MAPD EGWP, as the
prescription drug benefits provided to individuals covered under the
PSHB plan who are not eligible for Part D and not enrolled in the PSHB
plan's PDP EGWP, or, if applicable, MAPD EGWP, except to the extent
necessary, as determined by OPM, to integrate the Medicare Part D
prescription drug benefit coverage required under 5 U.S.C. 8903c and
this section.
[FR Doc. 2024-11127 Filed 5-23-24; 8:45 am]
BILLING CODE 6325-63-P