Retiree healthcare reform would help USPS back to solvency, Donahoe says


Reforming Postal Service healthcare so retirees utilize Medicare would save USPS money and help keep the agency solvent, USPS Postmaster General Patrick Donahoe told a Senate panel Sept. 26.

Moving USPS retirees out of Federal Employees Health Benefits plans and into a separate plan that integrates with Medicare would reduce the amount the Postal Service spends on health care from 20 cents of every revenue dollar to 8 cents, Donahoe said at a Senate Homeland Security and Governmental Affairs Committee hearing.

Currently, the Postal service and its retirees pay into the FEHB system as well as paying into Medicare taxes, Donahoe said.

USPS is required to make fixed payments to prefund the healthcare cost of future retirees through FEHB. The agency defaulted on those payments twice last year.

"Postal employees pay into Medicare taxes but many of the agency's retirees never draw on Medicare benefits because it doesn't integrate well with FEHBP plans," Donahoe said in testimony. "We are, effectively, buying insurance we do not need and we're overpaying for it."

Donahoe said retirees should be using Medicare as their base coverage and he wants the authority to manage USPS retiree healthcare by wrapping supplementary plans around Medicare.

"Under this vastly preferable scenario, the Postal Service and our retirees would merely need to fund far less costly benefits wrapped around full Medicare coverage," Donahoe said.

For more:
- go to the hearing page (with webcast and prepared testimony)
- go to Donahoe's prepared testimony

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