Will PSHB Cost More Than FEHB? A Pragmatic Analysis

In short, it’s impossible to definitively say whether the PSHB (Postal Service Health Benefits) Program will cost more than the FEHB (Federal Employees Health Benefits) Program for every individual. The answer is nuanced and depends heavily on individual circumstances, plan choices within each program, and future healthcare cost trends. While the PSHB aims for comparable costs, different plan designs, the specific health needs of postal employees and retirees, and market dynamics could lead to varying cost outcomes.

Understanding the Landscape: PSHB vs. FEHB

To unravel this complex question, we need a solid understanding of both the FEHB and PSHB programs. Let’s delve into their structures, goals, and key differences.

What is FEHB?

The Federal Employees Health Benefits (FEHB) Program is a comprehensive health insurance program available to most federal employees, retirees, and their families. It offers a wide array of health plans, from traditional fee-for-service options to HMOs and PPOs. Each plan sets its own premiums, deductibles, co-pays, and covered services. The government, as the employer, contributes a significant portion of the premium, and enrollees pay the remainder. FEHB is known for its breadth of choice and flexibility.

What is PSHB?

The Postal Service Health Benefits (PSHB) Program was established by the Postal Service Reform Act of 2022. It’s specifically designed for Postal Service employees and retirees. The aim is to provide comprehensive healthcare coverage through a separate program administered by the Office of Personnel Management (OPM), similar to FEHB. The PSHB offers plans with various features, mirroring the choices available in FEHB. A critical difference is that PSHB requires all Medicare-eligible Postal Service retirees and their covered family members to enroll in Medicare Part B. This requirement is intended to reduce the overall cost of the PSHB program.

Key Differences and Potential Cost Drivers

Several factors will influence the cost comparison between PSHB and FEHB:

• Medicare Part B Enrollment: The mandatory Medicare Part B enrollment for postal retirees in PSHB is a significant cost factor. While Medicare Part B premiums will add an expense, the potential cost savings for the PSHB program, and thus for enrollees, arise from Medicare shouldering a larger portion of the healthcare costs for those retirees. However, this also means postal retirees in PSHB must pay Medicare Part B premiums, a cost FEHB enrollees can often defer until later in life.
• Risk Pool Differences: FEHB has a broader risk pool including employees from numerous agencies. PSHB is specific to postal employees and retirees. The health needs and demographics of the postal population could be different, impacting the overall cost of providing healthcare. For instance, if the postal population has a higher prevalence of certain conditions, the costs of the PSHB program could be higher.
• Plan Design and Negotiations: The specific plan designs offered within PSHB and FEHB, and the negotiations between OPM and the insurance carriers, will significantly impact premiums and out-of-pocket costs. If PSHB can secure more favorable rates or offer more cost-effective plan designs, it could potentially be cheaper than comparable FEHB plans.
• Future Healthcare Cost Trends: Overall healthcare costs are constantly evolving due to factors such as inflation, technological advancements, and changing utilization patterns. These trends will affect both FEHB and PSHB, potentially widening or narrowing the cost gap over time.
• Individual Healthcare Needs: The amount you spend on healthcare depends heavily on your personal situation, like your general health and medical needs. What’s more cost effective for one person may not be for another. For example, if you utilize specialist doctors often then you may wish to pay more per month for health insurance so that your healthcare costs will be less.

Frequently Asked Questions (FAQs) about PSHB and FEHB Costs

1. Will my premiums be higher under PSHB than they are now under FEHB?

It’s impossible to say definitively without knowing the specific plans you’re considering and the premium rates established for each plan year. OPM aims for PSHB premiums to be comparable to FEHB. However, individual circumstances and plan choices will influence the final cost.

2. Will I be forced to switch to PSHB if I am a Postal Service retiree?

Yes, if you are a Postal Service retiree or a family member covered under your FEHB enrollment who is also eligible for Medicare, you will be required to enroll in a PSHB plan.

3. What happens if I don’t enroll in Medicare Part B as a Postal Service retiree under PSHB?

The Postal Service Reform Act mandates enrollment in Medicare Part B for Medicare-eligible Postal Service retirees and their covered family members participating in PSHB. Failure to enroll will result in disenrollment from the PSHB program.

4. Will PSHB offer the same range of plan options as FEHB?

PSHB is expected to offer a similar range of plan options as FEHB, including HMOs, PPOs, and fee-for-service plans. The goal is to provide postal employees and retirees with a variety of choices to meet their individual healthcare needs.

5. How will the government’s contribution to my health insurance premiums change under PSHB?

The government’s contribution to premiums under PSHB is expected to be similar to the contribution structure under FEHB. This means the government will continue to pay a significant portion of the premium, with enrollees paying the remainder. However, the exact contribution levels may vary depending on the specific plan chosen.

6. Will my out-of-pocket costs, like deductibles and co-pays, be different under PSHB?

Out-of-pocket costs will vary depending on the specific plan you choose within PSHB. Each plan will have its own deductible, co-pay, and coinsurance structures. It’s essential to carefully compare the plan details to understand the potential out-of-pocket expenses.

7. Will my current doctors and hospitals be in-network under PSHB plans?

Provider networks will vary depending on the specific PSHB plan you choose. It’s crucial to check whether your current doctors and hospitals are in-network for the plans you’re considering to avoid higher out-of-network costs. Most plans offer online provider directories to assist with this.

8. How will PSHB impact my access to prescription drugs?

Access to prescription drugs will depend on the specific formulary (list of covered drugs) of the PSHB plan you choose. It’s important to review the formulary to ensure your medications are covered and to understand the cost-sharing arrangements (co-pays or coinsurance).

9. Will PSHB offer dental and vision benefits?

Like FEHB, it’s anticipated that PSHB will offer separate dental and vision plans. These plans will likely be optional, and enrollees can choose whether or not to enroll in them.

10. When will PSHB officially launch, and when will I need to make my enrollment decisions?

The PSHB program launched on January 1, 2025. Enrollment decisions were required during the 2024 Open Season. It is very important to be aware of timelines.

11. Where can I find more information about PSHB plans and costs?

OPM provides comprehensive information about the PSHB program, including plan details, premiums, and enrollment information, on its website. You can also consult with the Postal Service’s human resources department for assistance.

12. How does Medicare interact with PSHB for retirees?

Medicare acts as the primary payer for most healthcare services received by PSHB enrollees who are also enrolled in Medicare Part A and Part B. The PSHB plan then acts as a secondary payer, covering costs not covered by Medicare, depending on the specific plan design. The coordination of benefits between Medicare and PSHB is designed to provide comprehensive coverage for postal retirees.