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OPM is issuing this rule to administer the PSHB Program. The Postal Service Reform Act of 2022, Public Law 117-108 establishes the PSHB Program for Postal Service employees, Postal Service annuitants, and their eligible family members, which will be administered by OPM and the first contract year will begin January 2025.

This regulation affects OPM as the administrator of the PSHBP and other agencies that it may consult with during rulemaking and implementation of the PSHBP such as USPS, HHS, VA, DOL, and SSA. It is estimated that the rule would require individuals employed by these agencies to spend time providing information to OPM regarding eligibility, enrollment, and other necessary information. For the purpose of this cost analysis, OPM is focusing on OPM’s costs of administering the PSHBP. The Act allocates $70.5 million to OPM for start-up costs to carry out the PSHBP. This encompasses three program offices within OPM: Healthcare and Insurance (HI), which will have the largest impact as a result of this Act; Retirement Services (RS); and the Chief Financial Officer (CFO). OPM will incur additional costs (apart from the $70.5 million start-up costs) for ongoing administration of the PSHBP, including operations and maintenance of information systems (such as the central enrolment portal) and continuous data exchanges with partnering agencies, staffing for oversight and engagement with health plans, and maintaining separate systems for PSHBP financial transactions.

With respect to benefits, this regulation will ensure continuity of health insurance coverage for Postal Service employees, annuitants, and their family members who will no longer be eligible for FEHB in January 2025; enable enrollees access to more prescription drug coverage options and potential reduction in prescription drug costs for Medicare Part D eligible enrollees; reduce the Postal Service’s premiums by approximately $5.7 billion over 10 years (CBO Analysis) and reduce its future liability for retiree health benefits; enable use of a central enrollment portal that will reduce administrative burden for enrollment, ensure more accurate payment of plans, allow more frequent sharing of enrollment data with plans, and limit human error.