The monumental Postal Service Reform Act (H.R. 3076) Congress approved this week terminates the mandate that the Postal Service pre-fund its retiree health benefits expenses and requires postal workers to participate in Medicare Parts A and B once they reach 65. This last clause may affect all government employees.

Current federal retirees, including postal retirees, can opt out of Medicare Part B. Retirees are covered by FEHB plans whether they enroll in Medicare or decide only to keep their FEHB coverage.

Few Americans can opt out of original Medicare (Parts A and B) at 65 if they wish to keep their employer-sponsored health insurance. Some companies provide health benefits to retirees only through  Medicare Advantage plans.

Of course, many retirees lose their employer-sponsored health insurance once they retire. They can choose between a Medicare supplement (Medigap) and a Medicare Advantage plan, both available to Medicare Part A and B recipients. Most private retiree health plans are meant to supplement Medicare. They may not cover medical expenses incurred while eligible for Medicare but not enrolled. Military retirees must show proof of enrollment in Medicare Parts A and B to keep TRICARE for Life.

Enrolling in Medicare, especially Part B, is one of the most challenging decisions facing federal retirees. Because introducing Part B costs $170 per person each month in 2022. However, many FEHB plans waive deductibles, copayments, and coinsurance when Medicare is the primary payer. The Part B premium is also partially refunded. FEHB plans that cater to seniors with Medicare as primary coverage have cheaper rates than those that don’t have such incentives.

Approximately 75% of current Medicare-eligible retirees are enrolled in Parts A and B, and 80% of eligible postal retirees are, too.

According to the postal reform measure, current USPS retirees will have a particular period to enroll in Medicare without a late enrollment penalty or keep their FEHB coverage alone. Some postal employees and retirees may have been placed in distinct risk pools in an earlier version of the bill, which might have increased health insurance costs for non-postal federal employees and retirees and non-postal pensioners without Medicare.

The FEHB premiums depend on how much its members use health services and their average annual expenses. Younger, healthier members tend to keep costs down, whereas older, sicker members tend to raise prices. The final postal bill balances the risk pools. The OPM predicts that premiums will decrease for postal and non-postal employees and retirees.

The new law maintains all postal workers in FEHB. All workers can maintain their current plans and use the yearly open season to switch to FEHB.

Postal retirees must enroll in Medicare A and B at 65. Then retiree health coverage will be a mix of Medicare and FEHB.

The question now is whether this rule will be expanded to all federal employees and how it would affect retiree premiums. If that happens, government employees will have one less decision to make when they retire.

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Bio:
After entering the financial services industry in 1994, it was a desire to guide people towards their financial independence that drove Aaron to start Steele Capital Management in 2013. Armed with an extensive background in financial planning and commercial banking coupled with a sincere passion for helping people, Aaron has the expertise and affinity for serving the unique needs of those in transition. Clients benefit from his objective financial solutions and education aligned solely with
helping them pursue the most comfortable financial life possible.

Born in Olympia, Washington, Aaron spent much of his childhood in Denver, Colorado. An area outside of Phoenix, Arizona, known as the East Valley, occupies a special place in Aaron’s heart. It is where he graduated from Arizona State University with a Bachelor of Science degree in Business Administration, started a family, and advanced his professional career.

Having now returned to his hometown of Olympia, and with the days of coaching his sons football and baseball teams behind him, he now has time to pursue his civic passions. Aaron is proud to serve on the Board of Regents Leadership for Thurston County as the Secretary and Treasurer for the Morningside area. His past affiliations include the West Olympia Rotary and has served on various committees for organizations throughout his community.

Aaron and his beautiful wife, Holly, a Registered Nurse, consider their greatest accomplishment having raised Thomas and Tate, their two intelligent and motivated sons. Their oldest son Tate is following in his father’s entrepreneurial footsteps and currently attends the Carson College of Business at Washington State University. Their beloved youngest son, Thomas, is a student at Olympia High School.

Focused on helping veterans and their families navigate the maze of long-term care solutions, Aaron specializes in customized strategies to avoid the financial crisis that care related expenses can create. Experience has shown him that many seniors are not prepared for the economic transition that takes place as they reach an advanced age.

With support from the American Academy of Benefit Planners – an organization with expertise and resources on the intricacies of government benefits – he helps clients close the gap between the cost of care and their income while protecting their assets from depletion.

Aaron can help you and your family to create, preserve and protect your legacy.

That’s making a difference.

Disclosure:
Investment advisory services are offered through BWM Advisory, LLC (BWM). BWM is registered as an Investment Advisor located in Scottsdale, Arizona, and only conducts business in states where it is properly licensed, notice has been filed, or is excluded from notice filing requirements. This information is not a complete analysis of the topic(s) discussed, is general in nature, and is not personalized investment advice. Nothing in this article is intended to be investment advice. There are risks involved with investing which may include (but are not limited to) market fluctuations and possible loss of principal value. Carefully consider the risks and possible consequences involved prior to making any investment decision. You should consult a professional tax or investment advisor regarding tax and investment implications before taking any investment actions or implementing any investment strategies.