85012 Federal Register / Vol. 89, No. 206 / Thursday, October 24, 2024 / Rules and Regulations 

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: Final rule. 

SUMMARY: The Office of Personnel 

Management (OPM) is issuing this final 

rule 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 (PSRA). This final 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 final rule includes details on 

reconsideration of PSHB eligibility 

decisions, 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: This final rule is effective 

October 24, 2024. 

FOR FURTHER INFORMATION CONTACT: 

Cameron Stokes, Senior Policy Analyst, 

at (202) 936–2847 or Cameron.Stokes@

opm.gov. 

SUPPLEMENTARY INFORMATION: 

Executive Summary 

On May 24, 2024, OPM issued a 

notice of proposed rulemaking (NPRM) 

‘‘Postal Service Health Benefits 

Program: Additional Requirements and 

Clarifications’’ at 89 FR 45782, to clarify 

and establish additional requirements 

regarding the Postal Service Health 

Benefits (PSHB) Program, which was 

established pursuant to the PSRA. The 

NPRM followed OPM’s May 6, 2024, 

publication of a final rulemaking, 

‘‘Postal Service Reform Act; 

Establishment of the Postal Service 

Health Benefits Program’’ at 89 FR 

37061, that established the PSHB 

Program for Postal Service employees, 

Postal Service annuitants, and their 

eligible family members. The May 6, 

2024, final rule adopted the provisions 

of OPM’s interim final rule, published 

April 6, 2023, at 88 FR 20383, with 

minor clarifying changes. 

Background 

OPM, the United States Postal Service 

(USPS or Postal Service), and PSHB 

Carriers have been working to 

implement the provisions of the PSHB 

Program set out in the PSRA and 

previous rulemaking in anticipation of 

the 2024 Open Season. The provisions 

in this final rule are intended to 

complement and clarify various areas of 

the program that have been identified 

during its development. While OPM 

intends for this final rule, combined 

with the PSRA and the earlier interim 

final rule with request for comment and 

its subsequent final rule, and notice of 

proposed rulemaking, to create a 

comprehensive legal framework for the 

PSHB Program’s January 1, 2025 start 

date, the agency recognizes the 

operation of the program will inevitably 

give rise to further changes as the 

Program is implemented over time. 

As with previous PSHB rulemakings, 

OPM consulted with partner agencies in 

the development of these regulations as 

consistent with 5 U.S.C. 8903c. OPM 

has worked closely with USPS and the 

Centers for Medicare & Medicaid 

Services (CMS), specifically, on the 

substance of this rulemaking, 

particularly as it relates to the impact of 

the Part D benefit integration on Postal 

Service annuitants and eligible family 

members. 

The May 24, 2024, proposed rule had 

a 30-day comment period during which 

OPM received 22 comments, of which 

15 comments were responsive, 

addressing the issues raised in the 

proposed rule. Five comments were 

from organizations consisting of 

employee unions, Federal Employees 

Health Benefits (FEHB) or potential 

PSHB Carriers, and trade groups, and 10 

were from individuals or anonymous 

commenters with six nonresponsive or 

duplicative comments and one 

comment from an individual that is not 

publicly available due to the inclusion 

of personally identifiable information. 

The comment containing personally 

identifiable information expressed 

concerns about the personal impact of 

the Medicare integration provisions of 

the PSRA. The responsive comments are 

summarized and responded to below. 

Court Review—5 CFR 890.107(f) 

OPM proposed to add new paragraph 

(f) to 5 CFR 890.107 to establish that 

PSHB enrollment related lawsuits 

concerning Postal Service annuitants 

and their family members, involving 

data received under agreements with 

source agencies but where OPM lacks 

authority or means to obtain 

independent verification, may not be 

brought later than December 31 of the 

third year after the year in which the 

enrollment action was effectuated. This 

proposal also limited the review of OPM 

final decisions based on data obtained 

under data exchange agreements with 

source agencies to the administrative 

record before OPM when OPM 

effectuated the enrollment action. 

OPM did not receive any comments 

on this proposal. OPM is adopting this 

provision as proposed. 

Definitions and Deemed References—5 

CFR 890.1602(c) 

OPM proposed to add new definitions 

for ‘‘Reconsideration’’ and ‘‘Source 

agency’’ for purposes of initial decisions 

and reconsiderations of eligibility 

determinations. Under existing 

regulations at § 890.1602, for purposes 

of this part, the USPS is the employing 

office for Postal Service employees, and 

the Retirement Services office within 

OPM is the employing office for Postal 

Service annuitants. These proposed 

changes reflect that OPM would 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. 

Two commenters expressed support 

for OPM’s approach to determining 

eligibility for family members of USPS 

employees and annuitants. The 

commenters suggest that this approach, 

which streamlines eligibility 

determinations within OPM for these 

groups, will enhance consistency and 

accuracy of eligibility determinations. 

OPM welcomes these comments in 

support of the proposed approach to 

determining eligibility for family 

members of USPS employees and 

annuitants. OPM agrees that this 

approach will result in efficiencies in 

the eligibility process and will promote 

accuracy in the process. 

Another commenter requested 

clarification on what would make a 

Postal Service employee or annuitant 

ineligible for the PSHB Program. They 

asked whether there are pre-existing 

condition exclusions or any other 

eligibility limitations based on health 

status. 

OPM appreciates this comment and 

request for clarification around PSHB 

eligibility. This comment is beyond the 

scope of this rulemaking as this 

rulemaking does not establish new 

eligibility criteria for PSHB Program 

participation. In response to the inquiry 

about the use of health status in 


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1OPM’s PSHB Program information can be found 

at https://www.opm.gov/healthcare-insurance/ 

pshb/. 

2MyHR is the new USPS human resources 

website and is only accessible to USPS employees. 

The name and location of USPS human resources 

website is subject change with time. 

3 Keeping Posted is a USPS-operated website 

providing benefits information targeted at Postal 

retirees. The PSHB resources page can be accessed 

at https://www.keepingposted.org/postal-servicehealth-benefits.htm. The name and location of the 

USPS website is subject change with time. 

4Under 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. 

eligibility determinations, OPM is 

clarifying that the FEHB statute, at 5 

U.S.C. 8902(f), prohibits the use of 

health status, including pre-existing 

conditions, in eligibility determinations 

in FEHB and PSHB. OPM and USPS 

have developed, and will continue to 

develop, educational resources that 

address questions such as those relating 

to eligibility. More information about 

the PSHB is available on OPM’s 

website,1 and USPS has additional 

resources including the USPS MyHR2

PSHB page and keepingposted.org.3

OPM and USPS encourage anyone with 

questions to review these resources. 

OPM is finalizing these definitions as 

proposed. 

Medicare Enrollment Requirement for 

Certain Postal Service Annuitants and 

Eligible Family Members; Survivor 

Annuitants—5 CFR 890.1604(c), (d), 

and (f) 

OPM proposed in § 890.1604(c) to 

clarify that a survivor annuitant who is 

entitled to Medicare Part A 4 must be 

enrolled in Medicare Part B to continue 

enrollment in PSHB, unless the 

individual qualifies for an exception as 

set forth in § 890.1604(d)(3). In 

§ 890.1604(d)(3), OPM proposed 

exceptions to the Medicare Part B 

enrollment requirement for those 

survivor annuitants who are entitled to 

Part A. Specifically, OPM proposed that 

a survivor annuitant would retain any 

exception that the Postal Service 

annuitant qualified for prior to the 

annuitant’s death. A survivor annuitant 

would also individually qualify for a 

Part B enrollment exception in several 

additional circumstances: if the survivor 

annuitant resides outside of the United 

States and its territories, if the survivor 

annuitant is enrolled in health care 

benefits provided by the Department of 

Veterans Affairs (VA) (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)), or if the survivor annuitant is 

eligible for health services from the 

Indian Health Service. Survivor 

annuitants would be subject to all 

documentation requirements. In 

§ 890.1604(f), OPM proposed to require 

all Medicare covered annuitants, 

Medicare covered family members, and 

survivor annuitants to provide OPM or 

the Postal Service with written 

notification if the individual chooses 

not to enroll in or disenrolls from 

Medicare Part B. The following 

scenarios were included in the preamble 

of the NPRM and are being reproduced 

here to provide additional clarity: 

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 § 890.1604(c)(1)(i) (as 

of January 1, 2025, the annuitant was 

not both entitled to premium-free 

Medicare Part A 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. 

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 § 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. 

Several commenters, including an 

association representing Federal 

employees and a labor organization, 

expressed support for the proposal to 

clarify an exception to the requirement 

to enroll in Medicare Part B for certain 

survivor annuitants who had relied on 

a Part B enrollment exception of a 

deceased annuitant while they were 

enrolled as a family member. The 

commenters generally supported this 

approach as consistent with the statute 

and noted that the failure to clarify this 

exception could result in inequities for 

some survivor annuitants and therefore 

supported finalizing as proposed. One 

commenter suggested this proposal 

would impact a limited number of 

individuals and would have a negligible 

financial impact on the program. 

OPM appreciates comments 

supporting this proposal and agrees that 

it will promote fairness and 

predictability for survivor annuitants 

who made decisions regarding Medicare 

Part B enrollment based on the 

expectation that the annuitant’s Part B 

exception would continue to apply to 

them. As noted by commenters, this 

approach will also ensure the 

individuals who reasonably relied on 

the deceased annuitant’s Part B 

exception do not later become subject to 

a Medicare Part B late enrollment 

penalty which could make coverage 

unaffordable or even result in the loss 

of coverage. Accordingly, OPM is 

finalizing as proposed. 

Enrollment in the Initial Contract 

Year—5 CFR 890.1605(c) 

Section 890.1605(c) implements the 

automatic enrollment requirements of 

the PSRA found at 5 U.S.C. 8903c(f)(2). 

As proposed, OPM would automatically 

enroll each Postal Service employee, 

annuitant, and their covered family 

members into a plan offered by their 

2024 FEHB Carrier if the carrier offers 

a 2025 PSHB plan. If the carrier offers 

the corresponding plan in FEHB and 

PSHB in 2025, with at least one option 

that has equivalent benefits and cost 

sharing, the enrollees and their covered 

family would be enrolled into that 

carrier’s plan and the equivalent option. 

If the carrier does not offer an 

equivalent option, the enrollees and 

their family members would be enrolled 

in the lowest cost option that is not a 

high deductible health plan (HDHP) and 

does not charge an association or 

membership fee, unless the only option 

is a HDHP. If the only option is a HDHP, 

individuals would be enrolled in that 

carrier’s HDHP. 

Individuals enrolled in a carrier’s 

2024 FEHB plan where the carrier does 

not offer a 2025 FEHB plan would be 

enrolled in the carrier’s 2025 PSHB plan 

if the plan offers at least one option with 

similar benefits and cost sharing as the 

2024 FEHB plan. Individuals would be 

enrolled into the similar option with 

similar benefits and cost sharing as the 

2024 FEHB option. If there is no similar 

option, individuals would be enrolled 

in the lowest-cost option of the 2025 

PSHB plan. If the plan has more than 

two options, the individuals would be 

enrolled the lowest cost option that is 

not a HDHP. 

If an individual’s 2024 FEHB Carrier’s 

plan does not meet any of the other 

criteria, that individual would be 

enrolled in the lowest cost nationwide 

plan that is not a HDHP and does not 


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charge an association or membership 

fee. All determinations on equivalent or 

similar plans would be determined by 

OPM. All Postal Service annuitants and 

employees would be automatically 

enrolled into the same enrollment type 

(self, self plus one, or self and family), 

as their 2024 enrollment type. All 

automatic enrollment decisions would 

take into account the geographic region 

limitations of the plan offered. 

Commenters were generally 

supportive of the approach in proposed 

§ 890.1605(c). One carrier suggested that 

this approach would increase continuity 

of coverage and reduce administrative 

burdens during the transition from 

FEHB to PSHB. Another commenter 

supported the approach and stressed 

that the process for automatic 

enrollment should be made clear in 

educational information distributed to 

Postal Service employees and 

annuitants. 

A carrier asked whether OPM 

intended to enroll as many enrollees as 

possible into a 2025 PSHB plan offered 

by the carrier of their 2024 FEHB 

enrollment and, in scenarios where this 

is not possible, to use the default plan 

as defined in § 890.1605. 

Under 5 U.S.C. 8903c(f), OPM is 

required to automatically enroll Postal 

Service employees and annuitants who 

do not make an election to enroll in a 

PSHB plan during the transitional Open 

Season. OPM’s intent is to minimize 

disruption for Postal Service employees 

and annuitants as they transition to the 

PSHB Program. Without a process for 

automatic enrollment, an individual 

transitioning to the PSHB Program for 

2025 who takes no action during the 

transitional Open Season—either 

because they are not aware of the new 

program or do not understand they must 

make an affirmative selection in order to 

effectuate their enrollment—otherwise 

would lose their health insurance 

coverage for plan year 2025 (or lose 

eligibility for PSHB coverage altogether 

in the case of annuitants) unless they 

have a qualifying life event. The 

proposed automatic enrollment process 

would prevent such unintended loss of 

coverage for individuals transitioning 

from FEHB to PSHB. In addition, this 

proposal would ensure that individuals 

are enrolled into coverage that is 

equivalent or similar to their 2024 FEHB 

plan when available. Individuals will be 

enrolled into the default plan as 

required by the law only when 

enrollment with the same carrier is not 

available. 

One commenter raised a concern 

about this approach as it relates to 

enrollees in certain U.S. territories. The 

commenter suggested the nationwide 

plans are less competitive and more 

expensive than the regional plans would 

be. The commenter recommended 

altering § 890.1605 so that when an 

enrollee’s FEHB Carrier is not 

participating in the PSHB Program 

within the enrollee’s geographic area 

and the enrollee takes no action during 

transitional Open Season, the enrollee 

would be automatically enrolled in a 

comparable PSHB plan offered by an 

approved regional carrier. 

OPM appreciates the concerns raised 

by the commenter. The proposed 

approach on automatic enrollment 

aligns with the statutory requirements 

under 5 U.S.C. 8903c(f)(2), which, in 

certain circumstances, includes 

automatically enrolling an individual in 

the lowest-cost nationwide plan option 

that is not a HDHP and does not charge 

a membership fee. For individuals in 

certain geographical areas, enrollees 

may have limited PSHB plan options. In 

some cases, certain carriers offering 

plans in geographic areas with fewer 

PSHB Carriers would not be included in 

the automatic enrollment hierarchy 

proposed in § 890.1605. OPM 

recognized that, in some instances, 

under the proposed automatic 

enrollment hierarchy, individuals may 

be enrolled into a plan that does not 

best meet their needs. However, the 

proposed approach is designed to meet 

the needs of the majority of Postal 

Service enrollees, while ensuring that 

all Postal Service enrollees have 

continuous coverage without requiring 

active plan selections. Therefore, OPM 

is finalizing § 890.1605 as proposed. 

This approach will ensure that the vast 

majority of PSHB enrollees who take no 

action during transitional Open Season 

will have the best outcome for 2025 

coverage. OPM is adopting this 

approach to ensure that the majority of 

Postal Service enrollees who do not 

actively select a plan are not surprised 

with an unexpectedly high premium 

and ensures as robust of a network as 

possible across the United States, 

regardless of the enrollee’s location. 

In addition, pursuant to 5 CFR 

890.301(n), which describes how OPM 

determines the lowest-cost nationwide 

plan option, OPM reserves the right to 

select an alternate plan for automatic 

enrollment if circumstances warrant it, 

as determined by OPM. Therefore, if, for 

example, OPM determines that the 

automatic fallback option for enrollees 

in a certain geographic area is not in the 

best interest of enrollees, OPM may 

designate an alternate plan option most 

suitable to the circumstances of those 

enrollees. 

Enrollees are encouraged to review all 

available PSHB plans leading up to and 

during the upcoming transitional Open 

Season to assist them in making the best 

selection for their personal 

circumstances. OPM’s PSHB decision 

support tool is designed to provide 

enrollees with the information 

necessary to make an informed decision 

regarding PSHB coverage. The tool is 

scheduled to be available by Open 

Season at www.opm.gov/pshb. 

OPM is finalizing its proposal with 

two minor technical changes. In 

§ 890.1605(c), OPM is replacing the 

reference to ‘‘§ 890.1605(b)’’ with the 

term ‘‘paragraph (b) of this section’’ for 

consistency within the section. In 

§ 890.1605(c)(1), OPM is replacing the 

term ‘‘same’’ with the term 

‘‘corresponding’’ for consistency within 

the section. Otherwise, OPM is 

finalizing § 890.1605 as proposed. 

Opportunities To Enroll, Change 

Enrollment, or Reenroll; Effective 

Dates—5 CFR 890.1606(c) and (d) 

OPM proposed to amend 5 CFR 

890.1606(c) related to automatic 

reinstatement of enrollment for 

individuals returning to civilian status 

after separation from the uniformed 

services, as described in 5 CFR 890.305. 

OPM identified that this proposal was 

included in the NPRM in error and is 

not finalizing this proposed amendment 

in this rule. 5 CFR 890.1606(c) remains 

unchanged. 

OPM proposed to amend 5 CFR 

890.1606(d) to reflect the initial 

decision and reconsideration process 

that would govern PSHB eligibility or 

enrollment decisions as proposed in 

§ 890.1607. As proposed, this provision 

was also amended to remove the 

existing cross-references to the process 

set forth at § 890.104, which would no 

longer apply to PSHB. See the 

discussion below for additional details 

about the initial decision and 

reconsideration process under 5 CFR 

890.1607. OPM did not receive any 

comments on the proposed amendments 

to § 890.1606. OPM is finalizing 5 CFR 

890.1606(d) as proposed. 

Initial Decision and Reconsideration— 

5 CFR 890.1607 

OPM proposed a process for initial 

decisions and reconsideration to reflect 

OPM’s new role in eligibility 

determinations. As proposed, 

individuals would file a request with 

the employing office or OPM, as 

applicable. OPM would be responsible 

for initial decisions concerning family 

member eligibility determination under 

§ 890.302, as well as initial decisions 

concerning whether a Postal Service 

annuitant or their family member is not 

required to enroll in Medicare Part B 


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because the annuitant or family member 

is entitled to Department of Veterans 

Affairs (VA) benefits under 38 U.S.C. 

1705(a), or whether a Postal Service 

annuitant or their family members is not 

required to enroll in Medicare Part B 

because they are eligible for health 

services from the Indian Health Service 

(IHS). OPM would also be responsible 

for initial decisions based on 

information OPM receives as the result 

of an information sharing agreement 

between OPM and a source agency. As 

proposed, a reconsideration must be an 

independent review at or above the 

level at which the initial decision was 

issued. Reconsiderations must be filed 

within 30 calendar days from the date 

of the decision stating the right to 

reconsideration. The employing agency 

or OPM can extend the time limit if the 

individual shows they were not 

informed, needed to obtain information 

from an outside source, or if they were 

prevented by circumstances beyond 

their control from complying with the 

time limit. The employing agency or 

OPM would issue a final decision 

within 30 days of the request for 

reconsideration. 

OPM did not receive any comments 

on this proposal. OPM is finalizing as 

proposed with a minor technical 

correction in § 890.1607(d) to change a 

reference to the ‘‘employing office’’ to 

‘‘employing agency’’ for consistency 

within the section. Otherwise, the 

provision is finalized without 

modification. 

Disenrollment, Removal, Termination, 

Cancellation, and Suspension—5 CFR 

890.1608(b) 

As proposed, a Postal Service 

annuitant or family member who is 

required, as a condition of PSHB 

Program eligibility, to be enrolled in 

Medicare Part B but is not enrolled in 

Part B, would be given a one-time 

opportunity to enroll in Part B during 

the next available Medicare enrollment 

period. As proposed, the individual 

would not be removed from PSHB 

coverage until after the end of the next 

Medicare enrollment period. OPM 

requested comment on this proposal, 

including the deadline by which the 

individual must be enrolled in Part B 

before PSHB coverage is terminated. 

Commenters generally supported the 

proposed one-time opportunity for 

individuals who are required to be, but 

are not yet, enrolled in Part B in order 

to be eligible to enroll in the PSHB 

Program. One carrier commented that 

this approach provides clear parameters 

for enrollees, smooths the transition to 

PSHB, and reduces the risk of 

interruption in an individual’s health 

coverage. A carrier also commented to 

support the proposed approach but 

requested that OPM provide Postal 

Service annuitants with as generous of 

a window as possible to enroll in Part 

B, noting that the goal is to assist people 

with enrolling in Part B as soon as 

possible. A commenter sought 

confirmation that the approach outlined 

would allow individuals who are 

required to enroll in Part B, but have not 

done so, to remain enrolled in a PSHB 

plan if they enroll in Part B during their 

next Medicare enrollment period. The 

commenter suggested that, if the 

individual fails to enroll in Part B at that 

point, OPM may disenroll the 

individual from the PSHB plan. 

One commenter, a union organization, 

suggested the Medicare Part B 

enrollment deadline for these 

individuals should be the end of the 

next Medicare General Enrollment 

Period that starts at least six months 

after the individual is required to enroll 

in Part B, suggesting that this privilege 

would be infrequently utilized. In some 

cases, such as where the individual is 

required to enroll near the end of a 

calendar year, the enrollment 

opportunity could run beyond a full 

year, because the next Medicare General 

Enrollment period would not start at 

least six months after the individual is 

required to enroll in Part B. 

OPM supports providing a generous 

opportunity for Part B enrollment and 

understands that the PSHB program 

eligibility rules and enrollment 

processes may be confusing for Postal 

Service annuitants and their families 

during the early stages of this program, 

especially as it relates to the Part B 

enrollment requirement. It is for these 

reasons that OPM proposed the onetime enrollment opportunity for these 

individuals. The approach proposed by 

the commenter, recommending 

extending the deadline to the Medicare 

General Enrollment Periods starting at 

least six-months after the individual is 

required to enroll in Part B, could 

conflict with the cost savings intent of 

the PSRA. Providing PSHB enrollees, in 

certain circumstances, with more than a 

full plan year to enroll in Part B could 

result in a higher cost burden on USPS 

and the PSHB program. This cost-saving 

goal must be balanced against the 

flexibility provided to enrollees. OPM 

agrees with the commenter’s assertion 

that these enrollment opportunities 

should be needed infrequently, 

particularly as education and 

experience regarding the PSHB Program 

improves and believes that the policy as 

proposed by OPM will provide 

sufficient flexibility for these 

individuals to enroll in Part B and 

remain enrolled in the PSHB Program. 

OPM is finalizing with two minor 

technical corrections. In § 890.1608(b) 

the term ‘‘re-enroll’’ has been replaced 

with ‘‘reenroll’’ to conform to drafting 

conventions in Subpart P. In 

§ 890.1608(b)(6), the term ‘‘from’’ was 

moved within the first sentence from 

after ‘‘. . . initial decision disenrolling 

them from PSHB or removing . . .’’ to 

after ‘‘them’’ and before ‘‘coverage 

under a PSHB enrollment at the time 

OPM becomes aware of the Medicare 

disenrollment’’ to correct a 

typographical error. 

Information Sharing—5 CFR 

890.1612(f) and (g) 

OPM proposed to amend the 

information sharing provisions at 

§ 890.1612 by adding new paragraphs (f) 

and (g). First, in subsection (f), OPM 

proposed to provide a written notice 

prior to issuing an initial decision on 

eligibility for PSHB enrollment or 

coverage based on information or data 

OPM receives from a source agency 

through an information sharing 

agreement that establishes a basis that 

the individual may be ineligible for 

PSHB enrollment or coverage. The 

proposed notice would include certain 

required information, such as the 

specific data impacting the individual’s 

PSHB enrollment or coverage, source 

agency contact information, timelines, 

and information on the individual’s 

rights during the dispute. OPM solicited 

comments on this proposal. 

In proposed paragraph (g) of 

§ 890.1612 OPM proposed that, if OPM 

issues an initial decision to remove or 

disenroll the individual based on the 

information or data from a source 

agency, the individual would have 

reconsideration rights pursuant to 

§ 890.1607. As proposed, 

reconsideration would be limited to the 

data or information from the source 

agency that was before OPM at the time 

OPM made the initial decision. 

OPM did not receive any comments 

on these proposals. OPM is finalizing as 

proposed. 

A trade association commented to 

request that OPM expand its 

information sharing rule at 5 CFR 

890.1612 to include the entire FEHB 

Program, not just PSHB, and allow 

carriers access to that database for 

coordination of benefits and Section 111 

reporting purposes. The commenter 

noted that Medicare Part A becomes 

primary over FEHB coverage on the last 

day of work preceding retirement and 

requests that OPM include a field for 

this date in the database. 

OPM appreciates this feedback, but 

this comment is beyond the scope of 


lotter on DSK11XQN23PROD with RULES2
85016 Federal Register / Vol. 89, No. 206 / Thursday, October 24, 2024 / Rules and Regulations 

5Methodology for Crediting Postal Service Health 

Benefits (PSHB) Program Plan Reserves and Earned 

FEHB Medical Loss Ratio Credits (Letter Number 

2023–13), July 19, 2023, available at https://

www.opm.gov/healthcare-insurance/carriers/fehb/ 

2023/2023-13.pdf. 

this rulemaking. As a general matter, 

OPM agrees that information sharing 

between agencies is critical to 

administer the PSHB Program 

effectively. OPM is not expanding its 

information sharing effort to the entire 

FEHB Program since the PSRA’s 

information sharing provisions are 

intended to implement the PSHB 

Program and its Medicare enrollment 

requirement for certain Postal Service 

annuitants and their family members. 

Similarly, OPM does not intend to 

provide the information that is the 

subject of interagency information 

sharing agreements with carriers, except 

in limited circumstances required to 

operate the PSHB Program as permitted 

under the Privacy Act. 

Postal Service Contract Year Beginning 

Date, Medicare Late Enrollment 

Penalty, Calculations for the Postal 

Service Retiree Health Benefits Fund, 

and Clarifications of Statutory Terms— 

5 CFR 890.1613(a), (c), and (e) 

OPM proposed in § 890.1613(a) to 

calculate the contributions and 

withholdings for coverage for the PSHB 

program as described under 5 U.S.C. 

8906 and subpart E of part 890. As 

proposed, the subscription charge and 

the Government contribution would 

begin on January 1 of each year for 

Postal Service annuitants and Postal 

Service employees. 

Under § 890.1613(c), OPM proposed 

that, upon request from the USPS, and 

until the Postal Service Retiree Health 

Benefits Fund (the PSRHBF) is depleted, 

OPM will pay out from the PSRHBF 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). 

As required under the PSRA, if the 

PSRHBF is depleted, the Postal Service 

will pay the late enrollment penalties 

from the Postal Service Fund, 

established under 39 U.S.C. 2003. OPM 

has proposed to prioritize use of the 

PSRHBF to pay health benefit premiums 

of individuals described in 5 U.S.C. 

8906(g)(2)(A) before use of the PSRHBF 

for payment of late enrollment 

penalties. 

In § 890.1613(e), OPM proposed that 

the ‘‘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). As proposed, the 

computations for post-retirement health 

obligations computed under 39 U.S.C. 

3654(b) will be performed using an 

aggregate entry-age normal cost method 

described in 5 U.S.C. 8331(17) and in 

accordance with OPM’s actuarial 

funding methods under 5 U.S.C. 

8348(h). OPM proposed to remove the 

word ‘‘future’’ from before ‘‘net claim 

costs’’ in § 890.1613(e)(1) to clarify the 

equivalence in terms is between net 

claims costs and estimated net claims 

costs. 

OPM did not receive any comments 

on these proposals. OPM is finalizing as 

proposed with a minor technical 

correction in § 890.1613(c) to change a 

reference to the ‘‘special enrollment 

period’’ to ‘‘Special Enrollment Period’’ 

to conform with the drafting 

conventions of the Social Security Act. 

Otherwise, OPM is finalizing without 

change. 

Other Administrative Provisions—5 

CFR 890.1614(a) 

OPM proposed to amend 

§ 890.1614(a) to reflect OPM’s central 

role in administering the PSHB 

enrollment process. As proposed, OPM 

may make prospective or retroactive 

corrections of administrative errors at 

any time and may make a correction of 

an administrative error for purposes of 

equity and good conscience, in addition 

to ordering an employing office to make 

such corrections. OPM, rather than the 

employing office, would also be able to 

make retroactive corrections of enrollee 

enrollment code errors. OPM proposed 

to adopt the standards in § 890.103(d) 

with the addition of a reference to 

PSHB. As proposed, retroactive 

corrections would be subject to 

withholdings and contributions under 

the provisions of both §§ 890.502 and 

890.1613. 

OPM did not receive any comments 

on these proposed amendments to 5 

CFR 890.1614(a). OPM is finalizing as 

proposed. 

Crediting Separate Reserves for PSHB— 

5 CFR 890.1615 

OPM proposed a Reserve credit 

methodology for crediting the reserves 

from FEHB options to PSHB options. To 

effectively credit reserves OPM 

proposed definitions that only apply for 

crediting purposes. These definitions 

include 2024 FEHB Option premium, 

2024 Postal Service premium, Amount 

available, Corresponding PSHB option, 

Option, Plan, and Runout. OPM 

proposed to credit reserves as soon as 

practicable on or after January 1, 2025, 

using the methodology proposed in this 

section. Reserves will be credited by 

determining the 2024 Postal Service 

premium by multiplying the 2024 FEHB 

Option’s enrollment types (self only, 

self plus one, self and family) by the 

number of Postal Service enrollments of 

the Option and taking the sum of those 

amounts. OPM will then determine the 

Postal Service Percentage, which is 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 proposed to apply that percentage 

to the amounts available in the 2024 

FEHB Option’s reserves, taking into 

account the need for Runout, for each 

2024 FEHB Option as of December 31, 

2024. OPM will credit the resulting 

reserve amount to the PSHB Options for 

2025. The reserves will be allocated to 

the PSHB Options, for experience-rated 

and community-rated Options, 

depending on the conditions that the 

Option meets. Each condition is based 

on the number of 2024 FEHB Options 

and the number of Corresponding PSHB 

Options offered by the carrier in 2025. 

OPM also proposed conditions for 2024 

FEHB Carriers that do not offer a 2025 

PSHB plan and for those 2025 PSHB 

Carriers that do not offer a 2025 FEHB 

plan. 

As proposed, OPM will estimate the 

Runout amount considering any income 

attributable to periods for FEHB 

experience-rated Options. Finally, OPM 

proposed that 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 

detailed above. 

Two commenters addressed the 

reserve credit portion of the proposed 

rule. A carrier commented to note the 

importance of codifying reserve 

allocation guidance provided in a 

detailed carrier letter, Methodology for 

Crediting Postal Service Health Benefits 

(PSHB) Program Plan Reserves and 

Earned FEHB Medical Loss Ratio 

Credits (Letter Number 2023–13),5 dated 

July 19, 2023, on the topic of reserve 

credit and stated its appreciation for this 

detailed guidance. A trade association 

commented to request that OPM 

confirm that the letter remains in effect 

except to the extent it conflicts with this 

rule. 

OPM confirms that Carrier Letter 

2023–13 remains in effect. While OPM 

is unaware of any conflict between 

Carrier Letter 2023–13 and this rule, 

nonetheless we agree that a conflict 

between the Carrier Letter and the rule 

would properly be resolved in favor of 

this rule. 


lotter on DSK11XQN23PROD with RULES2
Federal Register / Vol. 89, No. 206 / Thursday, October 24, 2024 / Rules and Regulations 85017 

6See 40.1.6—Group Enrollment Mechanisms for 

Employer/Union Sponsored PDPs, Medicare 

Prescription Drug Benefit Manual, Chapter 3— 

Eligibility, Enrollment and Disenrollment, available 

at https://www.cms.gov/Medicare/Eligibility-andEnrollment/MedicarePresDrugEligEnrol/ 

Downloads/CY_2018_PDP_Enrollment_and_

Disenrollment_Guidance_6-15-17.pdf. 

Another commenter sought clarity on 

requirements for Runout accounts. 

Specifically, the commenter asked 

whether plans would need two separate 

runout accounts: one for FEHB paying 

claims for services rendered on or before 

December 31, 2024, but paid after 

January 1, 2025, and another account for 

PSHB. 

As it relates to Runout accounts, there 

could be up to three LOCA Runout 

accounts: one for paying FEHB claims 

for services rendered on or before 

December 31, 2024, but paid after 

January 1, 2025, one for FEHB claims for 

services on or after January 1, 2025, and 

one for PSHB claims for services on or 

after January 1, 2025. 

A commenter also recommended that 

OPM promote fair allocation of carrier 

reserves. 

As stated in the proposed rule and 

Carrier Letter 2023–13, reserves will be 

allocated proportionately, based on 

2024 premium attributable to the Postal 

Service and non-Postal Service 

populations for each Option. OPM 

considered incorporating a risk 

component in the allocation of reserves; 

however, OPM determined the method 

outlined in Carrier Letter 2023–13 is 

most consistent with current FEHB 

practice. 

Finally, a trade association requested 

that OPM issue guidance soliciting 

waiver requests from any FEHB plan 

that expects the cost of calculating the 

reserve transfer will approximate or 

exceed the amount of the reserve 

transfer, with a submission deadline of 

October 1, 2024. 

This comment is outside of the scope 

of this regulation. OPM notes that any 

carrier concerns can be addressed to the 

appropriate contracting officer. 

OPM is finalizing the proposal 

without changes. 

Medicare Part D—5 CFR 890.1616 

§ 890.1616(a): Carrier Requirement To 

Offer Medicare Part D Prescription Drug 

Benefits 

As proposed, a carrier offering a plan 

in the PSHB program must provide 

prescription drug benefits to any Part Deligible Postal Service annuitant and 

their family members who are Part Deligible through a Medicare Part D 

employer group waiver plan (EGWP). 

The carrier must offer a Part D EGWP 

through a prescription drug plan (PDP) 

EGWP or contract with a PDP sponsor. 

A carrier may, with the approval of 

OPM, offer a Medicare Advantage plan 

(MAPD) EGWP in PSHB; however, the 

carrier must also offer a PDP EGWP. All 

PSHB Carriers must be approved by and 

contracted with CMS prior to offering 

PSHB Part D coverage through a PDP or 

MAPD EGWP. 

A commenter recommended that 

OPM allow carriers to decide whether to 

offer a PDP EGWP or MAPD EGWP, or 

both, rather than requiring PSHB 

Carriers to offer a PDP EGWP as the 

default method of Part D benefits 

integration. 

Section 8903c(h)(2) of title 5 U.S.C. 

states that OPM ‘‘shall require each 

Program plan’’ to provide prescription 

drug benefits to Part D-eligible Postal 

Service annuitants and their eligible 

family members through a PDP EGWP 

or ‘‘through a contract with a PDP 

sponsor.’’ The statute requires all 

carriers to offer a PDP EGWP to all Part 

D-eligible annuitants and their Part Deligible family members. OPM’s final 

rule ‘‘Postal Service Reform Act; 

Establishment of the Postal Service 

Health Benefits Program’’ (at 89 FR 

37061) permits carriers to offer an 

MAPD EGWP, as approved by OPM, in 

PSHB so long as the carrier also offers 

a PDP EGWP pursuant to the statutory 

requirement. OPM does not have the 

authority under the statute to permit 

carriers to decide whether to offer a PDP 

EGWP in the PSHB Program. 

Another commenter suggested that 

OPM align PSHB EGWP guidance with 

existing FEHB EGWP guidance. 

While the PSHB is included under the 

FEHB Program umbrella, PSHB is 

subject to distinct statutory 

requirements, including those governing 

the requirement to offer a PDP EGWP 

and to integrate Medicare Part D 

benefits under 5 U.S.C. 8903c(h)(1) and 

(2). When enacting the PSRA, Congress 

was addressing specific policy goals, 

including increasing enrollment in 

Medicare by USPS annuitants and 

promoting long term financial health for 

the PSHB Program, which require 

certain variances from policies that are 

generally applicable in the FEHB 

Program. As discussed in more detail 

below, the specific statutory 

requirements governing the PSHB 

Program as well as the unique policy 

goals of PSHB require separate 

regulations, policies, and 

implementation of PSHB EGWPs within 

the FEHB Program. 

OPM is finalizing the proposal 

without changes. 

§ 890.1616(b): Prescription Drug 

Coverage Under a PSHB Plan Through 

Medicare Part D and § 890.1616(e): 

Effect of Opting Out of Group 

Enrollment Into or Disenrolling From a 

Medicare EGWP 

In 5 CFR 890.1616(b), OPM proposed 

that Postal Service annuitants and 

family members who are Part D-eligible 

must be enrolled in the PSHB plan’s 

Part D EGWP to receive prescription 

drug coverage under the PSHB plan. A 

Part D-eligible individual who is not 

covered by the EGWP would not receive 

prescription drug coverage as a benefit 

under the PSHB plan. OPM also 

proposed that a Part D-eligible 

individual would also not receive 

prescription drug coverage through their 

PSHB coverage if they opted out of the 

PSHB Part D group enrollment process 

in 5 CFR 890.1616(e) and did not 

otherwise select a PDP EGWP or MAPD 

EGWP associated with their PSHB plan. 

As proposed, OPM would require all 

PSHB Carriers to group enroll all Part Deligible Postal Service annuitants and 

their Part D-eligible family members 

into the EGWP offered by their PSHB 

plan. This proposal is consistent with 

CMS rules 6 and permits these Part Deligible individuals to opt out of the 

group enrollment process. OPM 

proposed that, if an individual opts out 

of group enrollment, the individual 

would not receive prescription drug 

coverage under the PSHB plan. The 

individual would retain their rights to 

change their elections during Open 

Season or a qualifying life event and 

could later elect to enroll in Part D 

coverage offered by their chosen PSHB 

plan. 

OPM received numerous comments 

on these proposals. One carrier stated 

they were aligned with the proposal and 

stated that they are prepared to proceed 

as proposed. Another carrier supported 

the approach and noted the importance 

of ensuring PSHB enrollees understand 

their options for receiving prescription 

drug coverage. The carrier suggested 

that allowing Part D-eligible individuals 

to opt out of the PDP EGWP and into an 

MAPD EGWP serves the interests of 

annuitants. 

Other commenters, including 

individuals and a union, indicated that 

individuals may want to opt out of the 

Part D plan offered by their PSHB 

Carrier to avoid paying an IncomeRelated Monthly Adjustment Amount 

(IRMAA), an income-related monthly 

adjustment amount assessed and 

applied by Medicare. An individual 

commenter also noted that Postal 

Service annuitants and their family 

members who opted out of Part D would 

be paying for a plan that includes drug 

coverage and not receiving any of the 


lotter on DSK11XQN23PROD with RULES2
85018 Federal Register / Vol. 89, No. 206 / Thursday, October 24, 2024 / Rules and Regulations 

7See 42 CFR 423.46(a). 

benefits because declining Part D 

coverage would not result in a reduced 

premium. Another commenter noted 

that Part D enrollees cannot use drug 

company discounts for expensive drugs, 

thus limiting PSHB enrollees’ access to 

these discounts. 

A union representing Federal 

employees and retirees stated that it 

believes OPM incorrectly interpreted 

the statute, specifically noting that the 

PSRA does not impose a Part D 

enrollment requirement on Medicare 

Part D-eligible Postal Service annuitants 

but instead mandates that PSHB Carriers 

provide prescription drug benefits 

through Part D benefits integration. The 

union suggested that Congress would 

not create detailed grandfathering and 

exemption provisions from the Part B 

requirement and not do the same for 

Part D if the Part D provisions were a 

mandate. Thus, the commenter 

concluded that Congress intended to 

allow Part D-eligible individuals to opt 

out of the Part D EGWPs without losing 

all prescription drug coverage under the 

PSHB plan. Instead, the commenter 

suggested, OPM and carriers could limit 

the number of opt-outs by educating 

Postal Service annuitants about the 

substantial changes to the Part D 

program in 2025. Several commenters 

also noted that the PSRA does not 

impose a Part D enrollment requirement 

on Medicare Part D-eligible Postal 

Service annuitants and their family 

members, but instead mandates that 

PSHB plans provide prescription drug 

benefits through Part D. Several 

commenters requested that OPM allow 

Postal Service annuitants and their 

family members to choose whether to 

enroll in the Part D EGWP offered by 

their PSHB plan or to retain the nonMedicare prescription drug coverage 

offered by their PSHB plan. 

Finally, a trade association 

commented asserting that the FEHB 

program is subject to Section 1557 of the 

Affordable Care Act (ACA) and that a 

Medicare-eligible annuitant in the PSHB 

program could allege the Part D opt-out 

proposal violates Section 1557’s 

prohibition on age discrimination. This 

commenter argued that this proposal 

would impose additional cost-sharing or 

impose other limitations on coverage for 

a protected class of individuals. The 

commenter requested that OPM provide 

a legitimate, non-discriminatory basis 

for this proposal. 

OPM appreciates these comments and 

the thoughtful concerns they raised. 

OPM believes that its proposed 

approach—namely, that Part D-eligible 

Postal Service annuitants and their 

eligible family members who opt out of 

the Medicare Part D plan offered by 

their PSHB plan will lose prescription 

drug benefits under their PSHB plan— 

is most consistent with the PSRA and its 

policy goals. As commenters noted, the 

PSRA, at 5 U.S.C. 8903c(h)(2), clearly 

requires carriers to provide PSHB 

prescription drug benefits to Part-D 

eligible annuitants and their Part-Deligible family members through a 

Medicare Part D EGWP. And it requires, 

at 5 U.S.C. 8903c(c)(2), for carriers to 

integrate Part D coverage. While 

commenters are correct that the PSRA 

does not explicitly require Part Deligible annuitants and their family 

members to enroll in Medicare Part D as 

a condition of PSHB enrollment—and, 

indeed, CMS regulations afford 

individuals that are group enrolled into 

a Part D EGWP the right to opt-out—the 

PSRA’s express goal is to create cost 

savings for the PSHB Program, in part 

through shifting costs to Medicare. OPM 

believes that requiring Part D-eligible 

annuitants and their Part D-eligible 

family members to obtain PSHB 

prescription drug coverage through a 

Part D EGWP, rather than through their 

PSHB plan, best advances Congress’ 

intent. 

Further, 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 the vast majority 

of individuals eligible for Part D will be 

better off retaining their PSHB 

prescription drug coverage, there will be 

seamless coordination between the 

PSHB plan and Medicare, and the cost 

of the Part D EGWP will be included in 

their PSHB premium, with no reduction 

for those who opt out. 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. For these reasons, 

OPM is finalizing the proposal to 

require Part D-eligible Postal Service 

annuitants and their eligible family 

members to receive their prescription 

drug benefits under their PSHB plan 

through the Medicare Part D plan 

offered by their PSHB plan. 

OPM is, however, making changes in 

response to comments expressing 

concern about the consequences of 

opting out of or disenrolling from the 

Part D EGWP for individuals who make 

the choice inadvertently or without full 

awareness of the implications of their 

decision. OPM is finalizing with 

changes to 5 CFR 890.1616(d), discussed 

in more detail in a separate section, and 

paragraph (e) to address these concerns. 

OPM believes that these changes will 

add important protections for Part Deligible annuitants and their Part Deligible family members. 

OPM is amending proposed 

890.1616(e) to add new subparagraph 

(4) establishing enrollment flexibility to 

individuals who opt out or decline the 

plan’s Part D EGWP due to an error. 

OPM is clarifying that a Part D-eligible 

annuitant or family member who is not 

enrolled in the Part D EGWP, either by 

opting out of group enrollment or 

actively declining the plan’s Part D 

EGWP, can enroll in the plan’s Part D 

EGWP during this limited enrollment 

flexibility. This flexibility is available 

where an individual opted out or 

declined the plan’s Part D EGWP due to 

an error. OPM’s policy is to construe 

this flexibility broadly, especially 

during the first year of the PSHB 

Program, consistent with applicable 

law. 

This enrollment flexibility will allow 

individuals who are not enrolled in the 

Part D EGWP to enroll in Part D EGWP 

coverage within 90 days from the date 

at which their Part D coverage would 

have been effective. The effective date of 

the enrollment will be retroactive to the 

extent permitted in CMS regulations 

and guidance. OPM has determined the 

high risk of confusion, especially during 

early years of implementation of the 

PSHB Program, and the potential 

consequences for Part D-eligible 

annuitants and family members 

associated with errors around Part D 

EGWP enrollment, warrants this 

flexibility to allow for corrections when 

timely reported. OPM notes that this 

enrollment flexibility itself does not 

impact whether or not an individual 

may be subject to a Part D LEP if they 

remain without Medicare Part D or other 

creditable prescription drug coverage for 

more than 63 consecutive days.7 As the 

PSHB Program matures and there is 

more familiarity with Part D, the need 

for this flexibility is anticipated to 

decline and it is our expectation that it 

will be needed infrequently. 

Recognizing that the flexibility in 

§ 890.1616(e)(4)(i) may not provide 

sufficient time for all individuals to 

request correction of Part D EGWP 

enrollment errors, OPM is further 

clarifying in § 890.1616(e)(4)(ii) that 

individuals who identify an error 91 

days or more after their plan’s effective 

date can also request Part D EGWP plan 

corrections with a prospective effective 

date. An individual may be permitted to 

enroll or reenroll into the Part D EGWP 

plan offered by their PSHB plan option 

based on exceptional circumstances, 

broadly defined and as determined by 

OPM. The effective date of enrollment 


lotter on DSK11XQN23PROD with RULES2
Federal Register / Vol. 89, No. 206 / Thursday, October 24, 2024 / Rules and Regulations 85019 

8See 42 CFR 423.4, 423.30 and 423.44(b)(2)(i), as 

well as 42 CFR 422.2, 422.50(a)(3), and 

422.74(b)(2)(i). 

will be prospective. The flexibilities 

described above are limited to new Part 

D EGWP enrollments (either PDP or 

MAPD, as applicable). The flexibility 

does not permit a change to the 

individual’s PSHB plan enrollment and 

does not permit an individual to change 

enrollment from a PDP EGWP to an 

MAPD EGWP, or from an MAPD EGWP 

to a PDP EGWP, offered by their PSHB 

plan. OPM appreciates and shares 

commenters’ concerns with making sure 

that all PSHB enrollees have access to 

prescription drug coverage. OPM 

believes that its final rule—which 

requires Part D-eligible annuitants and 

their Part D-eligible family members to 

obtain drug coverage through a Part D 

EGWP but provides significant 

enrollment flexibility for those who opt 

out of Part D inadvertently or without 

understanding the consequences— 

appropriately balances the PSRA’s 

express goals of cost-savings with the 

important goal of protecting enrollees 

and making sure they have the option of 

obtaining prescription drug coverage. 

In response to the comment raising 

concerns related to Section 1557 of the 

Patient Protection and Affordable Care 

Act (ACA), and age discrimination 

issues in particular, OPM notes that 

discrimination complaints in the PSHB 

are not subject to the Section 1557 

complaint process; rather, as stated in 

HHS’s May 6, 2024 final rule 

implementing Section 1557, entitled 

‘‘Nondiscrimination in Health Programs 

and Activities,’’ 89 FR 37522, 37627, 

HHS will ‘‘refer to OPM complaints 

alleging discrimination in the FEHB 

Program (including the Postal Service 

Health Benefits Program).’’ More 

substantively, OPM ensures that the 

FEHB and PSHB Programs comply with 

applicable Federal nondiscrimination 

laws, and, as noted above, has chosen 

this approach to Part D coverage for 

multiple nondiscriminatory reasons, 

including that it is most consistent with 

the PSRA and helps advance the PSRA’s 

cost-saving goals. 

Medicare Part D Enrollment for Part DEligible Postal Service Annuitants and 

Family Members Living Abroad 

One commenter, a carrier 

organization, noted that individuals 

living outside of the United States 

cannot obtain Medicare Part D coverage, 

as eligibility is limited to individuals 

who live within a Part D plan’s service 

area, which must be within the United 

States. The commenter suggested that 

Part D-eligible Postal Service annuitants 

and their family members who live 

outside the United States and its 

territories be exempt from the 

requirement that their PSHB plan may 

only provide them with prescription 

drug coverage through a Part D EGWP. 

OPM appreciates this comment raising 

this important issue regarding access to 

Part D coverage outside of the United 

States. 

After considering these issues, OPM 

recognizes the need for a narrow 

exception to the proposal to group 

enrollment and limitation of 

prescription drug coverage for Part Deligible annuitants and their eligible 

family members who reside outside of 

the Part D plan’s service area and are 

ineligible to enroll in Medicare Part D. 

Under CMS rules, individuals must live 

within a Part D plan’s service area to be 

eligible to enroll in that Part D plan.8

OPM is clarifying in the final rule that 

Part D-eligible Postal Service annuitants 

and their family members who live 

outside of the United States (including 

the 50 States, the District of Columbia, 

the Commonwealth of Puerto Rico, the 

Virgin Islands, Guam, American Samoa, 

and the Northern Mariana Islands) 

would not be group enrolled into their 

PSHB plan’s Part D EGWP because they 

reside outside of the Part D plan’s 

service area and are therefore not 

eligible to enroll. Accordingly, OPM is 

amending § 890.1616(b) to clarify that 

PSHB plans may not group enroll 

individuals residing outside of the 

United States into the Part D plan and 

must provide these individuals with 

prescription drug coverage through the 

PSHB plan benefits. 

§ 890.1616(c): PSHB Plan Enrollment or 

Disenrollment and Medicare EGWPs 

In § 890.1616(c), OPM proposed that 

changes to PSHB enrollments during 

Open Season or because of a qualifying 

life event, as defined in part 892, would 

include the ability to change enrollment 

in the Part D EGWP offered by the PSHB 

Carrier. 

Two commenters, a carrier and an 

individual, requested clarity on the 

specific timeframes and circumstances 

in which an individual would be 

allowed to enroll into a Part D EGWP or 

make changes to their enrollment. The 

individual asserted that FEHB MAPDs 

allow members to enroll in or disenroll 

from the MAPD during the plan year 

and asked whether Postal Service 

enrollees would only be allowed to 

enroll in the PSHB MAPD EGWP during 

Open Season or pursuant to a qualifying 

life event. The commenter also 

requested clarity on whether the 

Medicare Part D-eligible annuitant who 

opts out of or disenrolls from their 

PSHB plan’s MAPD EGWP would be 

automatically enrolled in their PSHB 

plan’s PDP EGWP or would instead 

receive no prescription drug benefits 

under PSHB. 

We appreciate these comments and 

requests for clarification. Consistent 

with the rules governing FEHB 

enrollment, PSHB enrollees will be 

allowed to make changes to their 

enrollment during Open Season or 

subject to a qualifying life event. These 

existing rules will apply to PSHB Part 

D coverage, either through the PSHB 

PDP EGWP or an MAPD EGWP, the 

same as they apply to the PSHB plan, 

meaning a Part D-eligible annuitant or 

family member will have an opportunity 

to enroll in Part D coverage during the 

next available Open Season or during 

any qualifying life event that may apply. 

An individual who opts out of or 

disenrolls from their PSHB MAPD plan 

would have opted out of the Part D plan 

offered by their PSHB Carrier and would 

not receive prescription drug coverage 

as a benefit under the PSHB plan unless 

they make an active plan selection into 

the PDP EGWP during Open Season or 

any available qualifying life events (or 

during the flexibility period under 

1616(e)(4)). The individual would not 

be automatically group enrolled into the 

PSHB Carrier’s PDP EGWP. OPM is 

finalizing as proposed. 

§ 890.1616(d): Carrier Requirements for 

Group Enrollment Into Medicare EGWPs 

OPM proposed that all carriers 

automatically group enroll all Part Deligible Postal Service annuitants and 

their eligible family members into the 

plan’s Part D EGWP. Group enrollment 

is a waiver permitted by CMS that 

allows carriers to enroll individuals into 

the Part D EGWP without the need for 

the individual to complete an additional 

enrollment. All carriers are required to 

comply with all applicable CMS 

requirements, including all notice 

requirements for group enrollment into 

PDP and MAPD EGWPs. As proposed, 

the group enrollment requirement for 

carriers does not impact the individual’s 

right to choose a PSHB plan during 

Open Season or during a qualifying life 

event. 

The proposed requirement for 

automatic group enrollment applies to 

both PDP and MAPD EGWPs. For PDP 

EGWPs, the carrier, at the end of Open 

Season or during a qualifying life event, 

would be required to automatically 

group enroll Part D-eligible annuitants 

and their Part D-eligible family members 

into the PDP EGWP, unless the 

individual elects to enroll into the 

plan’s MAPD EGWP or opts out of group 

enrollment. For MAPD EGWPs, at the 


lotter on DSK11XQN23PROD with RULES2
85020 Federal Register / Vol. 89, No. 206 / Thursday, October 24, 2024 / Rules and Regulations 

9See Federal Employees Health Benefits and 

Postal Service Health Benefits Programs Call Letter, 

Office of Personnel Management, Letter No. 2024– 

04, Feb. 8, 2024, available at https://www.opm.gov/ 

healthcare-insurance/carriers/fehb/2024/2024- 

04.pdf at pp 6–7. 

end of Open Season or during a 

qualifying life event, the carrier must 

automatically group enroll Part Deligible Postal Service annuitants and 

family members if they elect to enroll in 

the carrier’s MAPD EGWP. During the 

2025 transitional Open Season, a PSHB 

MAPD EGWP may only automatically 

group enroll individuals if they were 

covered by the carrier’s 2024 FEHB 

MAPD or if the individual actively 

elects to enroll in the carrier’s MAPD 

plan for plan year 2025. OPM has also 

proposed that in addition to CMS notice 

requirements, that each year, not less 

than 30 days prior to Open Season, 

PSHB Carriers must send notice to Part 

D-eligible individuals detailing that the 

carrier intends to group enroll the 

individual into the Part D plan, that the 

individual may opt out of the group 

enrollment, the impact of opting out, the 

date by which the individual must opt 

out, how to opt out, that the individual 

will not receive prescription drug 

coverage under the PSHB plan, and that 

no adjustment will be made to the 

premium. An MAPD plan must also 

inform the individual that they may 

enroll in the plan’s PDP EGWP and 

inform individuals that they may be 

required to remain enrolled in Medicare 

Part B to maintain eligibility for the 

PSHB Program. 

Two carriers expressed support for 

the use of automatic group enrollment 

of individuals eligible for Part D and not 

currently receiving a Medicare Part D 

product. Each commenter counseled 

caution, however, stressing the 

importance of coordination between 

OPM and carriers to ensure smooth 

enrollment and clear communication to 

affected enrollees, as well as the tight 

timing between group enrollment, Open 

Season, and the January 1 PSHB 

coverage effective date. 

OPM appreciates the comments in 

support of this proposal as well as 

comments raising concerns about the 

potential risks associated with this 

proposal. OPM is committed to working 

closely with PSHB Carriers to ensure a 

seamless process for Part D-eligible 

annuitants and their Part D-eligible 

family members. OPM understands the 

carriers’ concerns about the timeline 

between Open Season and the PSHB 

coverage effective date of January 1, 

2025. OPM is working on additional 

guidance for carriers to ensure a smooth 

transition to the PSHB Program for both 

the enrollees and the carriers. OPM is 

clarifying that all Part D-eligible Postal 

Service annuitants and their eligible 

family members will be automatically 

group enrolled into the Part D plan 

offered by their carrier in 2025. There is 

no limitation to only those annuitants 

and family members currently enrolled 

in a Part D plan in 2024. Additionally, 

OPM is amending § 890.1616(d)(1)(ii), to 

require the carriers to group enroll and 

provide the required notice to all Postal 

Service annuitants and family members, 

annually. This amendment requires 

carriers to annually group enroll all 

Medicare Part D-eligible Postal Service 

annuitants and family members 

regardless of the individual’s decision to 

opt out of the plan’s Part D EGWP in the 

prior plan year. OPM is amending this 

section in consideration of the 

comments, as detailed in § 890.1616(b) 

and (e), about the risk of Postal Service 

annuitants and family members not 

understanding the consequences of 

opting out of the group enrollment into 

the Part D EGWP offered by their PSHB 

plan. This amendment will require an 

individual to opt out of the Part D 

EGWP offered by their PSHB plan on an 

annual basis. 

OPM is finalizing the Medicare Part D 

group enrollment requirement with the 

amendments described above. 

§ 890.1616(f): EGWP Prescription Drug 

Benefits 

OPM proposed that a carrier must 

provide the same prescription drug 

benefits to Part D-eligible individuals 

under the PDP or MAPD EGWP, as the 

carrier provides to the non-Part Deligible individuals enrolled in 

prescription drug benefits under the 

PSHB plan, except to the extent 

necessary to integrate Medicare Part D 

prescription drug benefits, as 

determined by OPM. OPM identified 

that in the preamble text this standard 

was described as requiring carriers to 

offer ‘‘equal or better’’ benefits in their 

Part D plans as is offered in the PSHB 

plan formulary, whereas in the 

proposed regulatory text the standard 

was described as ‘‘the same.’’ This error 

is addressed in the final rule, as 

discussed in more detail below. 

Several commenters provided 

feedback on this proposal. One 

commenter supported the approach, 

emphasizing the importance of OPM’s 

position. A carrier commented that it 

understood the proposal to require Part 

D EGWP formularies to cover the same 

medications as PSHB formularies, with 

equivalent or better cost-sharing and 

tiering. 

A Federal employee association 

requested clarification about the 

difference in language used in the 

preamble to the proposed rule, 

proposing the ‘‘equal or better’’ 

standard, from the proposed regulatory 

language at 5 CFR 890.1616(f), 

proposing that benefits must be the 

‘‘same.’’ This commenter requested 

additional clarity around these 

standards to ensure Part D-eligible 

individuals receive coverage that is 

equal or better than existing coverage. A 

commenter asserted that some Part D 

coverage offered in the FEHB Program 

in plan year 2024 may not have met the 

equal or better standard, noting that in 

certain instances tier classifications may 

have resulted in enrollees paying higher 

out-of-pocket costs for the same 

prescription medication. This 

commenter supported language 

included in the 2024 Carrier Call 

Letter,9 issued February 8, 2024, which 

included a requirement that PDP EGWP 

formularies include the same covered 

drugs at the same or lower cost-sharing 

as the plan’s non-PDP EGWP formulary, 

and encouraged OPM to incorporate 

similar language in the final rule to 

ensure that Part D coverage is really 

equal to or better than PSHB plan drug 

coverage. 

A carrier requested further clarity 

regarding the specifics of formulary 

match standards between the Part D 

EGWP prescription drug benefit and the 

PSHB plan prescription drug benefit. 

The commenter requested greater detail 

on formulary design requirements and 

clarity on cost implications. This 

commenter further stated that carriers 

could promote health care savings and 

promote enrollee choice in the PSHB 

Program by designing PSHB formularies 

to meet the needs for active employees, 

while designing PDP formularies to 

meet the needs of Medicare Part Deligible individuals. 

One commenter suggested that the 

language in proposed § 890.1616(f) is 

not strong enough to ensure that Part D 

drug coverage will be equal to or better 

than PSHB plan drug coverage. The 

other suggested a potentially 

unintended impact on the ability to 

generate cost savings based on the 

proposed requirement that Part D EGWP 

formularies cover the same drugs as 

PSHB formularies, with equivalent or 

better cost-sharing and tiering. The 

commenter suggested that the 

requirement for parity in prescription 

drug benefits could limit the flexibility 

needed to leverage rebates and 

innovative pricing strategies effectively 

on the smaller membership population. 

These constraints might reduce the 

potential for cost savings typically 

achieved through negotiated agreements 

and formulary management within the 

Part D framework. They suggested that 


lotter on DSK11XQN23PROD with RULES2
Federal Register / Vol. 89, No. 206 / Thursday, October 24, 2024 / Rules and Regulations 85021 

10Technical Guidance and Instructions for 2025 

Benefit Proposals, Letter No. 2024–06, March 7, 

2024, available at https://www.opm.gov/healthcareinsurance/carriers/fehb/2024/2024-06.pdf. 11See 5 U.S.C. 8906(d). 

OPM consider these factors to ensure 

that the implementation of this 

requirement does not inadvertently 

hinder cost-saving opportunities for the 

PSHB Program and its enrollees. 

OPM appreciates these comments 

requesting additional clarifications and 

is finalizing with amendments to 

provide more clarity and to better 

ensure Postal Service annuitants and 

family members who are Medicare Part 

D enrollees receive at least equal 

benefits to those offered in the 

corresponding PSHB plan, to the extent 

consistent with applicable Medicare 

Part D requirements. OPM previously 

provided carriers with details on PSHB 

formulary requirements in Carrier Letter 

2024–06,10 and OPM is amending 

§ 890.1616(f) to explicitly incorporate 

these standards. Section 890.1616(f), as 

amended, adds new paragraphs (1) and 

(2) that require that the Part D EGWP 

formularies within the PSHB Program 

include the same medications, products, 

and supplies as covered in the PSHB 

formulary with the same or lower costsharing, and that carriers may not lower 

or otherwise limit or restrict benefits, 

such as by limiting the number or types 

of medications on the formulary or 

increasing cost sharing, offered in the 

PSHB formulary to meet this standard. 

New paragraph (3) provides that OPM 

has authority to grant exceptions to 

these requirements, in OPM’s discretion 

to the extent necessary and consistent 

with applicable law, where requested by 

carriers. 

We appreciate comments seeking 

additional flexibility to innovate and 

leverage prescription medication 

rebates. While OPM appreciates the 

benefits that may be derived from 

carrier innovation, the need to ensure 

all PSHB enrollees receive equal 

benefits, regardless of their Part D 

eligibility status, outweighs the 

potential theoretical benefits that may 

be derived through the types of 

innovations commenters asserted may 

be limited by the proposed approach. 

OPM believes that this approach strikes 

a balance between innovation and 

ensuring that all individuals in the 

PSHB Program continue to have access 

to the same high quality prescription 

drug coverage. 

Medicare Part D Premium 

One individual commenter expressed 

concern that mandating payment of 

Medicare Part D premiums will increase 

the cost of health coverage for Postal 

Service annuitants, given they will 

already be required to pay Medicare Part 

B premiums. 

OPM appreciates this comment 

seeking clarity regarding the Part D 

premium. A Part D-eligible Postal 

Service annuitant and family member 

enrolled in the Part D EGWP will not 

pay an additional premium for Part D 

coverage. Part D coverage is included in 

the premium for PSHB coverage. The 

FEHB Program requires that all FEHB 

enrollees enrolled in the same plan and 

coverage level, as well as all PSHB 

enrollees enrolled in the same plan and 

coverage level, pay the same premium 

whether an eligible individual chooses 

to stay in or opt out of the available Part 

D EGWP.11 This means that those who 

opt out of Part D coverage will not 

receive a reduction in premium costs as 

a result of opting out of Part D. 

Comments Beyond the Scope of This 

Rulemaking 

The following comments are outside 

of the scope of this rulemaking, but 

OPM summarizes them here for the sake 

of completeness. 

Contracting and Carrier Requirements 

A trade association submitted 

comments raising several questions 

pertaining to contracting issues. The 

commenter asserted that OPM did not 

request advance agreement as it relates 

to precontract costs under the FEHBAR 

(48 CFR 1631.205–77) from FEHB plans 

joining the PSHB Program, asserting that 

OPM stated this would be an 

unnecessary technicality. The 

commenter requested that OPM state in 

the final rule that such precontract costs 

‘‘are allowable to the extent they would 

have been allowable if incurred after the 

date of the contract.’’ OPM appreciates 

this comment, but it is beyond the scope 

of the proposed rule. 

PSHB Special Enrollment Period 

Two commenters made suggestions 

regarding the Postal Service Reform 

Act’s Medicare Part B Special 

Enrollment Period, which ran from 

April 1, 2024, through September 30, 

2024. One commenter suggested that the 

existence of a Medicare Part B Special 

Enrollment Period for Postal Service 

annuitants is wrong or unlawful given 

that a number of Postal Service 

annuitants are already paying late 

enrollment penalties for Medicare Part 

B. This commenter requested that USPS 

pay Part B late enrollment penalties for 

all Postal Service annuitants, regardless 

of when the Postal Service annuitant or 

the family member enrolled in Medicare 

Part B. The other commenter suggested 

USPS would not pay Part B late 

enrollment penalties for those who 

enroll in Part B during the Postal SEP. 

With respect to the first comment, we 

note that the Special Enrollment Period 

at issue is established by the PSRA. In 

any event, both comments are beyond 

the scope of this rulemaking. 

Automatic Enrollment Into Medicare 

Part B 

One commenter suggested that OPM 

explore with SSA and CMS automatic 

enrollment into Medicare Part B like 

there is for Part D group enrollment. 

OPM appreciates this commenter’s 

suggestion to simplify the Medicare Part 

B enrollment requirement for Postal 

Service annuitants and their eligible 

family members and promote 

administrative simplicity, but this 

comment is outside of the scope of this 

regulation. 

True Out-of-Pocket and Maximum Outof-Pocket Metrics 

One carrier commenter recommended 

that OPM maintain separate 

accumulation metrics for true out-ofpocket (TrOOP) and maximum out-ofpocket (MOOP) metrics, suggesting that 

integrating the two metrics could strain 

government budgets by allowing 

individuals to reach their out-of-pocket 

limits quicker and placing more of the 

cost burden on the Federal system. 

Another carrier commenter added that 

the Inflation Reduction Act (IRA) 

included significant changes to the PDP 

plans that go into effect on January 1, 

2025. The changes make the PDP 

designs institute zero-dollar cost share 

once the enrollee meets the $2,000 

TrOOP. 

OPM appreciates these comments, but 

they are outside the scope of this 

regulation. 

General Program Education 

Multiple comments from USPS 

employees, annuitants, and their 

families made it clear that enrollee and 

family member education remain very 

important as the PSHB Program moves 

towards implementation and providing 

coverage. Several commenters asked for 

available resources to learn about 

Medicare-related options and costs, as 

well as eligibility requirements for the 

PSHB, rights related to the Medicare 

Part B Special Enrollment Period, and 

how Medicare-related matters relate to 

PSHB integration. Another requested a 

PSHB plan comparison tool to facilitate 

plan selection during the first PSHB 

Open Season. 

OPM appreciates commenters raising 

these questions and concerns and 


lotter on DSK11XQN23PROD with RULES2
85022 Federal Register / Vol. 89, No. 206 / Thursday, October 24, 2024 / Rules and Regulations 

12OPM’s PSHB Program information can be 

found at https://www.opm.gov/healthcareinsurance/pshb/. 

13MyHR is the new USPS human resources 

website and is only accessible to USPS employees. 

14 Keeping Posted is a USPS-operated website 

providing benefits information targeted at Postal 

retirees. The PSHB resources page can be accessed 

at https://www.keepingposted.org/postal-servicehealth-benefits.htm. 

15Office of Personnel Management, Postal Service 

Health Benefits Program, ‘‘PSHB Program NPRM 

FAQ,’’ June 11, 2024, available at https://

www.opm.gov/healthcare-insurance/pshb/ 

#url=FAQs. 

understands the importance of 

providing Postal Service employees and 

annuitants with sufficient information 

to make informed PSHB plan 

enrollment decisions. While these 

comments are out of scope, OPM 

reminds stakeholders of the range of 

educational resources currently 

available from OPM 12 and USPS 

through the MyHR13 PSHB page and 

keepingposted.org,14 in addition to 

PSHB educational resources mailed to 

employees and annuitants. Anyone with 

questions about the range of options 

available under the PSHB Program and 

the impacts on Postal Service employees 

and annuitants are encouraged to review 

all available resources. 

In addition, individuals will have 

available a web-based decision support 

tool to simplify the comparison of 

covered benefits, premiums, provider 

networks and pharmacy information for 

enrollees choosing among a wide array 

of plan choices. OPM plans to launch 

the tool in late October, and it will be 

available within the PSHB System, the 

online enrollment portal. 

OPM continues to work closely with 

USPS to develop and release PSHB 

educational materials for Postal Service 

employees, annuitants, and their family 

members. In June 2024, OPM posted a 

series of FAQs explaining parts of the 

proposed rule for consumers.15 In late 

July 2024, USPS developed and 

distributed a new PSHB guide covering 

OPM’s proposed rules on EGWP 

coverage, among other relevant updates. 

Regulatory Changes in This Final Rule 

OPM is making several changes to this 

final rule from the NPRM in response to 

comments as well as changes to address 

one error in the proposed rule and 

several technical corrections. 

OPM is making minor technical 

corrections throughout this rule to 

replace the term ‘‘open season’’ with 

‘‘Open Season’’ to reflect drafting 

conventions in part 890 of Title 5. OPM 

is also making minor technical 

corrections throughout this rule to add 

the term ‘‘paragraph’’ where applicable 

to conform with drafting conventions in 

part 890 of Title 5. This change was 

made to §§ 890.1602(c)(4), 

890.1604(d)(3)(i), and 890.1616(f). 

Section 890.1606(c) 

The proposed rule included a 

proposed amendment to § 890.1606(c). 

This amendment was included in error, 

so OPM is not finalizing this proposal. 

Section 890.1605(c) 

OPM is making a minor technical 

correction in § 890.1605(c) to replace 

the reference to ‘‘§ 890.1605(b)’’ with 

the term ‘‘paragraph (b) of this section’’ 

for consistency within the section. 

OPM is making a minor technical 

correction in § 890.1605(c)(1) to replace 

the term ‘‘same plan’’ with the term 

‘‘corresponding plan’’ for consistency 

within the section. 

Section 890.1607(d) 

OPM is making a minor technical 

correction in § 890.1607(d) to replace 

the term ‘‘employing office’’ with the 

term ‘‘employing agency’’ for 

consistency within the section. 

Section 890.1608(b) 

OPM is making two minor technical 

corrections in § 890.1608(b). First, the 

term ‘‘re-enroll’’ has been replaced with 

‘‘reenroll’’ to conform to drafting 

conventions in Subpart P. In 

§ 890.1608(b)(6), the term ‘‘from’’ was 

moved to correct a typographical error. 

Section 890.1613(c) 

OPM is making minor technical 

corrections in this section to replace the 

term ‘‘special enrollment period’’ with 

‘‘Special Enrollment Period’’ to conform 

to drafting conventions of the Social 

Security Act. 

Section 890.1616(a) 

OPM is making minor technical 

corrections in this section to add the 

term ‘‘section’’ prior to 1860D–22(b), 

(c)(1), to conform to the drafting 

conventions of the Social Security Act. 

Section 890.1616(b)(1) 

Under 5 CFR 890.1616(b), a Part Deligible individual (as defined in section 

1860D–1(a)(3)(A) of the Social Security 

Act) must be enrolled in their PSHB 

plan’s Part D EGWP by their PSHB 

Carrier in order to receive prescription 

drug coverage under the PSHB Program. 

However, under CMS regulations at 42 

CFR 423.30(a)(1)(ii), an individual who 

is living abroad is not eligible to enroll 

in Part D as they cannot meet the 

requirement of residing in the service 

area of a Part D plan. 

In § 890.1616(b)(1), OPM is clarifying 

that a Part D-eligible Postal Service 

annuitant or family member of 

annuitant who resides outside of the 

United States must not be group 

enrolled in the Part D EGWP. Instead, 

these individuals will receive nonMedicare prescription drug coverage 

provided by the PSHB plan for as long 

as they reside outside of the United 

States. 

Section 890.1616(d) 

In consideration of the comments 

about the risk of Postal Service 

annuitants and family members not 

understanding the consequences of 

opting out of the Part D EGWP offered 

by their PSHB plan, OPM is amending 

§ 890.1616(d)(1)(ii), to require the 

carriers to group enroll and provide the 

required notice to all Postal Service 

annuitants and family members, 

annually. This amendment also requires 

carriers to annually group enroll all 

Medicare Part D-eligible Postal Service 

annuitants and family members 

regardless of the individual’s decision to 

opt out of the plan’s Part D EGWP in the 

prior plan year. This amendment will 

require an individual to opt out of the 

Part D EGWP offered by their PSHB plan 

on an annual basis. OPM is making this 

change in part to address concerns 

about individuals losing access to 

prescription drug benefits 

unintentionally. 

Section 890.1616(e)(4) 

OPM received several public 

comments expressing concern for 

individuals who may opt out of or 

disenroll from the Part D EGWP due to 

a lack of complete understanding of the 

consequences of that decision, despite 

OPM’s and USPS’s best efforts to 

provide education and awareness to the 

affected population. In the interest of 

providing greater flexibility for Postal 

Service annuitants and their family 

members during the transition to PSHB, 

OPM is establishing a Part D EGWP 

enrollment flexibility for Part D-eligible 

Postal Service annuitants and their 

eligible family members. This 

enrollment flexibility will allow these 

individuals to enroll in their PSHB plan 

option’s Part D EGWP for up to 90 days 

after the start of the plan year or the 

effective date of coverage after a 

qualifying life event that permitted a 

plan change. For those who utilize the 

enrollment opportunity, Part D coverage 

will be retroactive to the extent 

permitted by CMS regulations and 

guidance. In addition, for individuals 

who seek to enroll after 90 days, an 

individual will be permitted to request 

to enroll or reenroll into the Part D plan 

offered by their PSHB plan option based 

on exceptional circumstances, as 


lotter on DSK11XQN23PROD with RULES2
Federal Register / Vol. 89, No. 206 / Thursday, October 24, 2024 / Rules and Regulations 85023 

16See 42 CFR 423.46(a). 

17The previous rulemaking referred to here is the 

collective interim final rule and the final rule under 

the title Postal Service Reform Act; Establishment 

of the Postal Service Health Benefits Program. 

These documents are herein referred to collectively 

as the ‘‘initial rulemaking.’’ The final rule can be 

found at 89 FR 37061, which adopted the 

provisions of OPM’s interim final rule, published at 

88 FR 20383, with minor clarifying changes. 

determined by OPM. For those who 

utilize this enrollment opportunity, Part 

D coverage will be prospective as 

permitted by OPM regulations. These 

enrollment flexibilities are limited. This 

flexibility does not permit a change to 

the individual’s PSHB plan enrollment 

and does not permit an individual to 

change enrollment from a PDP EGWP to 

an MAPD EGWP, or from an MAPD 

EGWP to a PDP EGWP. 

OPM notes that a Part D-eligible 

individual may be subject to a Part D 

LEP if they remain without Medicare 

Part D or other creditable prescription 

drug coverage for more than 63 

consecutive days.16 This possible LEP is 

not affected by the availability of the 

enrollment opportunity. This Part D LEP 

is separate and apart from the Part B 

LEP that is paid by the Postal Service for 

annuitants participating in the PSRA 

SEP. All Part D LEP for delayed Part D 

enrollment is the responsibility of the 

enrollee. 

Section 890.1616(f)(1) & (2) 

As proposed in the NPRM, carriers 

would be required to provide the same 

prescription drug benefits to Part Deligible individuals under a PSHB 

plan’s 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 EGWP except to the 

extent necessary, as determined by 

OPM, to integrate the Medicare Part D 

prescription drug benefit coverage. 

As a result of comments received, 

OPM is amending § 890.1616(f) by 

changing ‘‘the same as’’ standard to 

‘‘equal to or better’’ to correct the 

drafting error in the NPRM. OPM is also 

adding new (f)(1), (2), and (3) to specify 

that: (1) Prescription drug benefits 

under the EGWP must cover the same 

medications as in the PSHB formulary 

with the same or lower cost-sharing, to 

the extent consistent with applicable 

Medicare provisions; (2) Carriers must 

not lower benefits, such as by limiting 

the number or types of medications on 

the formulary or increasing cost sharing 

offered in the PSHB formulary to meet 

this standard; and (3) a carrier may 

request OPM approval to offer different 

medications, products, or supplies, or 

modify cost sharing on their EGWP 

formulary, subject to OPM’s approval, 

where the requests are necessary and 

consistent with applicable law. 

Expected Impact of This Final Rule 

Statement of Need 

This rulemaking follows a previous 

rulemaking 17 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 codified 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 as compared to the FEHB 

Program. Similarly, several regulatory 

changes to the PSHB Medicare Part B 

requirement were identified as needed 

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 processes and 

situations that were not contemplated 

when the interim final rule was initially 

developed. As an example, OPM 

received public comments on the 

interim final rule concerning survivor 

annuitants as it relates to the Medicare 

Part B requirement indicating a need to 

provide clear regulation of the treatment 

of this group and informed the proposal 

in the proposed rule. 

In addition, some issues required 

more time for policy development and 

were not able to be included in the 

initial rulemaking. Those issues 

included 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 

PSRHBF, 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 some of the 

more complex issues that required more 

time than the interim final rule 

timeframe allowed, such as the 

methodology for allocation of reserve 

credits. This rulemaking provides an 

additional vehicle for a more 

comprehensive regulatory scheme 

before the PSHB Program begins 

operation in 2025. 

OPM is finalizing the provisions in 5 

CFR 890.1607 regarding 

reconsiderations, which will 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 reconsideration 

regulations also account for the use of 

a centralized enrollment system, which 

is not used for enrollment in FEHB 

plans. Because some of the data used in 

eligibility determinations will come 

from source agencies rather than OPM 

directly, the regulations establish a 

multistep process for an affected 

individual where the information does 

not belong to OPM and therefore cannot 

be independently verified. 

OPM is further clarifying Medicare 

Part B requirements and exceptions in 

this rulemaking. 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 final rule regarding the applicability 

of the Medicare Part B requirement and 

exceptions to survivor annuitants 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 policies 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 


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85024 Federal Register / Vol. 89, No. 206 / Thursday, October 24, 2024 / Rules and Regulations 

18The reserves for FEHB and PSHB are held in 

the Employees Health Benefits Fund. Interest on the 

reserves accrues to the Fund. 

requirements that align the government 

contribution adjustment for Postal 

Service employees and Postal Service 

annuitants 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. This 

rule’s provisions regarding prioritizing 

premium payments from the PSRHBF, 

and thereafter Medicare Part B late 

enrollment penalty payments, establish 

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 opt-out 

or decline Part D coverage and the 

consequences of doing so. This 

clarification is necessary to fully 

implement the Part D integration 

sections of the PSRA, as interpreted and 

determined appropriate by OPM, in 

compliance with Medicare regulations 

and requirements. 

In addition, this rulemaking is 

necessary to clarify the meaning of the 

statutory provision contained in 5 

U.S.C. 8903c(h)(2) that requires carriers 

to provide prescription drug benefits to 

Postal Service annuitants and their 

eligible family members who are Part Deligible (as defined in the statute) 

through employment-based retiree 

health coverage via a Part D prescription 

drug plan (PDP) or contracts between a 

carrier and a PDP sponsor. Specifically, 

this rule codifies preamble discussion 

from the interim final rule stating that 

a carrier may, in addition to offering one 

of the above options, also offer a 

Medicare Advantage Prescription Drug 

(MAPD) Plan. This rule codifies that 

carriers must group enroll all Medicare 

Part D-eligible annuitants and their 

eligible family members, consistent with 

applicable CMS requirements, including 

the right to opt out or decline Part D 

EGWP coverage. This rule further 

clarifies that PSHB Part D EGWP 

prescription drug coverage must be 

equal to or better than the PSHB 

prescription drug coverage available to 

active PSHB employees and their family 

members, to ensure that Medicare Part 

D-eligible PSHB annuitants and their 

eligible family members continue to 

receive the same high level of coverage. 

Further, the rule makes clear that the 

only way that a Medicare Part D-eligible 

annuitant or their eligible family 

member may receive PSHB prescription 

drug coverage is through a carrier’s 

PSHB EGWP, unless the Part D-eligible 

annuitant or their eligible family 

member resides outside of the United 

States. OPM determined that regulations 

were necessary to provide clarity to both 

carriers and Postal Service annuitants 

on implementation of 5 U.S.C. 

8903c(h)(2). These issues were not 

addressed in the initial rulemaking with 

sufficient clarity for the regulated 

community and other stakeholders. 

Impact 

This rulemaking establishes 

additional requirements and 

clarifications for the operations and 

management of the PSHB Program. 

Based on OPM’s estimates, OPM 

determined that this regulation will not 

have a significant impact on the broader 

Federal health insurance market. In 

2023, Postal premiums accounted for 

about 21% 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. 

As with the initial rulemaking, this 

rulemaking 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, while ensuring 

minimal disruptions to enrollees during 

the early years of the program. The 

largest potential impact from this rule is 

found in the regulatory portions 

addressing reserves. OPM estimates that 

$4.9 billion of the estimated $23 billion 

in total FEHB reserves—which includes 

contingency reserves and the Letter of 

Credit Account within the EHB Fund— 

as of the end of 2023 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 be 

approximately $100 million. 

The other changes in this rule are not 

expected to be economically significant. 

The reconsideration process largely 

mirrors that of 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 rule will result in a shift of funds 

from FEHB plan reserves to PSHB 

Option reserves based on the proportion 

of enrollment attributable to Postal 

Service employees and Postal Service 

annuitants between 2024 and 2025. 

However, as discussed above, in large 

part we expect these funds to shift 

between plans or Options within the 

same carrier, as we expect many PSHB 

enrollees to remain with their current 

FEHB Carrier to the extent possible.18

B. Impacts on PSHB Enrollees 

The rule provides clarification on 

several circumstances concerning 

Medicare Part B enrollment 

requirements and exceptions under the 

PSHB Program. The rule clarifies 

treatment of survivor annuitants as well 

as Postal Service annuitants and family 

members returning to the U.S. after 

living abroad as it relates to 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 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 inadvertently 

or mistakenly missing Part B coverage 

and should apply to a very small 

number of individuals. This rule 

clarifies that this opportunity is a onetime benefit, and any subsequent 

instances where the individual lacks 

required Medicare Part B enrollment 


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would result in PSHB termination. OPM 

expects the number of individuals who 

face multiple good-faith instances of 

missing Medicare Part B enrollment to 

be negligible, so the impact of limiting 

this benefit to one use 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 and 

eligible family members, which does not 

exist for annuitants or family members 

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 rule, employing agencies 

(USPS for Postal Service employees, or 

OPM 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 Medicareeligible Postal Service annuitants and 

eligible family members in order to be 

enrolled in or covered under the PSHB 

Program, there will be additional 

verification for affected Medicareeligible Postal Service annuitants and 

family members. In addition to 

performing verification checks where 

appropriate, an adverse outcome for 

enrollees and family members may 

increase the number of eligibility 

reconsideration requests made by 

individuals seeking coverage. 

This rule will 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 May 6, 2024 Final 

Rule. 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 

amounts withheld from the pay of each 

enrolled Postal Service employee and 

from the annuity of each enrolled Postal 

Service annuitant are correctly 

calculated and align with the pro-rated 

period of coverage for which premium 

is being paid 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, OPM, and DOL. 

OPM determined that 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. 

Carriers will need to account for the 

Part D opt-outs in calculating overall 

premiums, although the effect of optouts on premiums is expected to be 

insignificant. The impact for enrollees 

who retain Part D coverage through the 

PSHB plan is expected to be negligible; 

however, the impact for any Part Deligible individual who opts out will be 

large as those who opt out 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 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 coverage and the 

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 also finalizing 

the rule to provide enrollment flexibility 

for Medicare Part D-eligible annuitants 

and family members who opt out or 

disenroll from their plan’s Part D EGWP 

in error. OPM seeks to ensure that any 

individual who opts out is doing so 

based on an informed understanding of 

the consequences and that anyone who 

opts out in error can have their Part D 

EGWP enrollment corrected. 

Costs 

OPM does not anticipate that this 

regulatory action will result in 

significant or quantifiable economic 

costs. The provisions 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 initial rulemaking and 

will not be significantly impacted by the 

clarifications provided by this rule. 

In particular, this rule clarifies the 

May 6, 2024 final rulemaking provision 

related to PSHB enrollees and family 

members who are belatedly discovered 

to be ineligible based on their nonenrollment 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 

infeasible to quantify. Because enrollees 

and family members who use this onetime privilege may be responsible for a 

Part B late enrollment penalty, there 

remains a financial incentive to enroll 

in Part B when first eligible. 

Benefits 

As with the interim final rule, this 

final 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 

these clarifications. 

Distributional Effects 

OPM estimates that $4.9 billion of the 

$23 billion in 2023 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 


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85026 Federal Register / Vol. 89, No. 206 / Thursday, October 24, 2024 / Rules and Regulations 

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 discontinuation of its 

plan under the FEHB. Program 

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 

Employee Organization plan is 

discontinued and not merged with other 

Employee Organizations under the 

FEHB Program, or if a Comprehensive 

Medical Plan is discontinued under the 

FEHB Program, the reserve balances 

credited to those plans are redistributed 

to the plans continuing under the FEHB 

Program, as indicated at 5 U.S.C. 

8909(e). 

Second, OPM estimates that more 

than 97% of the reserve 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 found in § 1615(c)(5)(i)–(iii). 

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 found in § 1615(c)(5)(iv)). 

Based on 2023 enrollments and 

anticipated carrier participation in the 

PSHB Program, OPM estimates that the 

total amount of these between-carrier 

transfers will be approximately $100M, 

well below the $200M threshold for 

economic significance. 

Alternatives 

This 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, the PSRA Medicare integration 

requirement, the cost saving intent of 

the PSRA, and consistency with 

Medicare regulations. 

One alternative approach would have 

been to prohibit Part D-eligible 

individuals from opting out of the Part 

D EGWP associated with their PSHB 

plan. Construing Medicare Part D as an 

eligibility requirement would promote 

the goals of the PSRA by establishing 

Program-wide enrollment in Part D, 

consistent with Congressional intent to 

promote access to high-quality drug 

coverage and savings to the PSHB 

Program. 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. Making Medicare Part D 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 not only result in loss of 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 

reasonable 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 structure 

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 determined 

this was not the best interpretation of 

the statute in light of Congressional 

intent. 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 in part 

by providing prescription drug coverage 

to Postal Service annuitants and their 

family members through Medicare Part 

D. 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 

not be the most efficient approach to 

promote these cost-savings goals. 

As a result, OPM considers the policy 

included in this rulemaking to be 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 alternative 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 


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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 establish 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 finds good cause to make this 

final rule effective upon publication. 

See 5 U.S.C. 553(d)(3). As discussed 

more fully in the NPRM, OPM is 

balancing the interests of carriers and 

Postal Service employees, Postal Service 

annuitants, and their eligible family 

members affected by this rulemaking. 

OPM worked 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. 

The provisions in this final rule are 

time-sensitive, as they will address the 

remaining issues needed to finalize the 

Program. For example, Postal Service 

Medicare covered annuitants need 

information about their rights so that 

they can make informed decisions about 

prescription drug coverage during the 

transitional Open Season. 

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 immediately. 

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 being final as the 

transitional Open Season begins. 

Regulatory Flexibility Act 

The Acting Director of OPM certifies 

that this rule will not have a significant 

economic impact on a substantial 

number of small entities. 

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. 

Severability 

If any of the provisions of this final 

rule 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 

final rule 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 rule providing 

procedures for challenging enrollment 

decisions can and would function 

independently of any of the other 

portions of this rule. 

E.O. 13132, Federalism 

OPM examined this rule 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. 

E.O. 12988, Civil Justice Reform 

This rule meets the applicable 

standard set forth in Executive Order 

12988, Civil Justice Reform. 

Unfunded Mandates Reform Act of 

1995 

The Unfunded Mandates Reform Act 

of 1995 (2 U.S.C. 1531–1538) (UMRA) 

requires Federal agencies to assess the 

effects of their discretionary regulatory 

actions. Section 202 of the Unfunded 

Mandates Reform Act of 1995 (UMRA) 

requires that agencies assess anticipated 

costs and benefits before issuing any 

rule that would impose spending costs 

on State, local, or Tribal governments in 

the aggregate, or on the private sector, 

in any 1 year of $100 million in 1995 

dollars, updated annually for inflation. 

That threshold is currently, 

approximately $183 million. Although 

we have not been able to quantify all 

costs, this rule does not contain 

mandates that would impose spending 

costs on State, local, and Tribal 

governments or the private sector in 

excess of the threshold. Therefore, no 

actions were deemed necessary under 

the provisions of the Unfunded 

Mandates Reform Act of 1995. 

Congressional Review Act 

The Administrator of the Office of 

Information and Regulatory Affairs has 

determined that this rule does not meet 

the criteria specified in 5 U.S.C. 804(2). 

Paperwork Reduction Act of 1995 (44 

U.S.C. Chapter 35) 

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-23 FEHB Program 

Enrollment Records, available at 89 FR 

72902 (September 6, 2024) at https://

www.federalregister.gov/d/2024-20061. 

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 provided a 60- 

day notice for an extension of this 

information collection. OPM proposed 

changes to the SF 2809 and the OPM 

2809 for clarity, ease of use, and 

implementation of the PSHB Program. 

OPM provided copies of the revised 

drafts of the SF 2809 and OPM 2809 

forms for review in the docket at https:// 

www.regulations.gov/docket/OPM-2024- 

0011/document. OPM is not 

consolidating the SF 2809 and the OPM 

2809 into a single form; however, we are 

proposing to manage the two forms 

under a single information collection, 

OMB Control No. 3206–0160, going 

forward. During the 60-day comment 

period, OPM received fourteen 


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85028 Federal Register / Vol. 89, No. 206 / Thursday, October 24, 2024 / Rules and Regulations 

comments, including six unique 

comments and one comment 

representing eight submissions, from 

agencies regarding aspects of the SF 

2809. 

One commenter suggested that the SF 

2809 form should allow one to list 

addresses for minor children who live at 

a different location than enrollee. 

Another commenter noted that the SF 

2809 form should allow an option to 

remove a family member. We agree with 

these recommendations and are 

amending the SF 2809 accordingly. 

Three commenters suggested changes to 

the formatting of the paper form SF 

2809. We are declining to make these 

changes because most enrollees will use 

electronic systems to enroll. There were 

also comments about the eOPF that 

were beyond the scope of this 

information collection request. OPM 

made a technical correction indicating 

that common law marriage must be 

initiated in any ‘‘state, the District of 

Columbia, or other jurisdiction’’ instead 

of ‘‘state’’ that recognizes such 

marriages; the technical correction 

accounts for common law marriages in 

the District of Columbia. OPM 

published a 30-day notice with a request 

for comments on September 24, 2024, at 

89 FR 77899. 

List of Subjects in Title 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 amends 5 CFR part 

890 as follows: 

PART 890—FEDERAL EMPLOYEES 

HEALTH BENEFITS PROGRAM 

■ 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 

■ 2. Amend § 890.107 by adding 

paragraph (f) to read as follows: 

§ 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 § 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 

■ 3. Amend § 890.1602 by adding in 

alphabetical order definitions for 

‘‘Reconsideration’’ and ‘‘Source agency’’ 

to paragraph (c) to read as follows: 

§ 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 § 890.1612. 

* * * * * 

■ 4. Amend § 890.1604, by adding 

paragraphs (c) and (d)(3) and revising 

paragraph (f) to read as follows: 

§ 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 

paragraph (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 § 890.1608(e). 

* * * * * 

■ 5. Amend § 890.1605 by revising 

paragraph (c) to read as follows: 

§ 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 

paragraph (b) of this section, will be 

automatically enrolled in the PSHB 

Program as follows: 

(1) Into corresponding 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 


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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. 

(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 § 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. 

* * * * * 

■ 6. Amend § 890.1606 by revising 

paragraph (d) to read as follows: 

§ 890.1606 Opportunities to enroll, change 

enrollment, or reenroll; effective dates. 

* * * * * 

(d) Initial decisions and 

reconsiderations of PSHB eligibility or 

enrollment will be made pursuant to 

§ 890.1607. 

* * * * * 

■ 7. Add § 890.1607 to read as follows: 

§ 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 

§ 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 

§ 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 

§ 890.1604(d)(2) indicating they satisfy 

the requirements for an exception 

described in § 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 § 890.1604(d)(3) 

indicating they satisfy the requirements 

for an exception described in 

§ 890.1604(c)(1)(v) or (c)(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 § 890.1612. An 

initial decision under this paragraph 

will be issued only after the notice 

process under § 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 agency 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. 

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. 

■ 8. Amend § 890.1608 by revising 

paragraph (a), adding paragraph (b) 

introductory text, revising paragraphs 

(b)(2) and (5), and adding paragraphs 

(b)(6) through (9) to read as follows: 

§ 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 § 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 an FEHB plan will 

remain available for an eligible family 

member who is or becomes covered as 

a member of family of an FEHB plan 

enrollee who is not eligible for a PSHB 

plan pursuant to § 890.1603(a)(1) or (2). 


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(2) Coverage as a family member 

under an 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 § 890.1103(b). 

(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 immediately and 

will be given one opportunity to remain 

enrolled in or covered by PSHB if they 

enroll or reenroll 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 

§ 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 

reenroll 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 reenroll 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 § 890.401, 

except as provided at paragraph 

(b)(5)(ii) of this section. 

(i) A Postal Service annuitant will 

have no further opportunity to reenroll 

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 § 890.401 will be available. 

(iii) Disenrollment or removal under 

this section will occur only after a 

notice process under § 890.1612, if 

applicable, is completed and an initial 

decision to disenroll or remove, subject 

to reconsideration under § 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 them from 

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 

§ 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 onetime opportunity as set forth at 

§ 890.1608(b) may be available if the 

Postal Service annuitant 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. 

* * * * * 

■ 9. Amend § 890.1612 by adding 

paragraphs (f) and (g) to read as follows: 

§ 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 § 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 


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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 § 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 § 890.1608 and subject to 

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 § 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 § 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. 

■ 10. Amend § 890.1613 by revising the 

section heading and paragraphs (a), (c), 

and (e) to read as follows: 

§ 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 postretirement 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. 

■ 11. Amend § 890.1614 by revising 

paragraph (a) to read as follows: 

§ 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 §§ 890.502 and 

890.1613. 

* * * * * 

■ 12. Add §§ 890.1615 and 890.1616 to 

read as follows: 

§ 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: 

(i) 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 

(ii) 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 


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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 

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. 

§ 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 section 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 paragraph 

(a)(2) of this section 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. The prescription 

drug benefit is not covered under a 

PSHB plan for a Part D-eligible 

individual who is not enrolled in the 

PSHB plan’s Part D EGWP. 

(1) Prescription Drug Coverage for 

Medicare Part D-eligible annuitants and 

members of family residing outside of 

the United States. A carrier will not 

group enroll, as described in paragraph 

(d) of this section, a Medicare Part 

D-eligible Postal Service annuitant or a 

member of family of such annuitant 

who resides outside of 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) into the Medicare Part 

D EGWP offered by the plan. A carrier 

must provide prescription drug coverage 

through the PSHB plan to these 

individuals. 

(c) PSHB plan enrollment or 

disenrollment and Medicare EGWPs. 

Changes to enrollment during Open 

Season under § 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 Deligible 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 § 890.1606. 

(1) PDP EGWP. Annually at the 

conclusion of Open Season under 

§ 890.301(f), or when an enrollee makes 

a change to their PSHB enrollment 

because of a qualifying life event under 

§ 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 


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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 opted out of group enrollment 

in the PSHB plan’s PDP EGWP or MAPD 

EGWP for the current or upcoming plan 

year, as applicable. 

(2) MAPD EGWP. Annually, at the 

conclusion of Open Season under 

§ 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 

§ 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 § 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: 

(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 

§ 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 

§ 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 benefits and rate 

proposal. 

(e) Effect of opting out of group 

enrollment into or disenrolling from a 

Medicare EGWP—(1) Effect of opting out 

of group enrollment. 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) Opportunity to enroll other than 

group enrollment. 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) Disenrollment. 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. 

(4) Enrollment flexibility. A Part 

D-eligible individual who is not 

enrolled in the PDP EGWP or MAPD 

EGWP, as applicable, for prescription 

drug benefits offered by their PSHB plan 

may request enrollment into their PSHB 

plan’s EGWP outside of Open 

Enrollment or a qualifying life event to 

correct errors. 

(i) Part D EGWP Enrollment 

Flexibility. A Part D-eligible individual 

who opts out of Part D EGWP group 

enrollment or disenrolls from their 

PSHB plan’s Part D EGWP can request 

enrollment into their plan’s Part D 

EGWP within 90 days of the start of 

plan year or 90 days from the effective 

date of coverage after a qualifying life 

event that permitted a plan change. 

Enrollments made under this paragraph 

(e)(4)(i) will be retroactive to the extent 

consistent with applicable CMS 

regulations. 

(ii) Exceptional circumstances. A Part 

D-eligible individual who opts out of 

Part D EGWP group enrollment or 

disenrolls from their PSHB plan’s Part D 

EGWP can request enrollment into their 

plan’s Part D EGWP 91 days or more 

after the start of the plan year or the 

effective date of coverage after a 

qualifying life event that permitted a 

plan change as determined by OPM. 

Enrollments made under this paragraph 

(e)(4)(ii) will be prospective. 

(iii) Changes to enrollment under this 

paragraph (e)(4) are limited to new 

enrollments into the individual’s 

current PSHB plan’s Part D EGWP. 

(f) PDP EGWP and MAPD EGWP 

prescription drug benefits. A carrier 

must provide prescription drug benefits 

to a PSHB EGWP plan’s Part D-eligible 

covered individuals that are equal to or 

better than the prescription drug 

benefits provided to that PSHB plan’s 

covered individuals who are not eligible 

to enroll in Part D and not enrolled in 

the plan’s EGWP, subject to paragraph 

(f)(3) of this section. For purposes of this 

section: 

(1) A carrier must ensure that a 

Medicare Part D EGWP within the PSHB 

Program includes the same medications, 

products, and supplies covered in the 

corresponding plan option’s PSHB 

pharmacy benefit with the same or 

lower cost sharing, to the extent 

consistent with applicable Medicare 

provisions; and 

(2) A carrier must not reduce or 

otherwise limit prescription drug 

benefits to meet this standard, for 

example by limiting the coverage of 

medications, products, and supplies or 

increasing cost sharing of the 

prescription drug benefits provided to 

individuals covered under the PSHB 

plan who are not eligible for Part D. 


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85034 Federal Register / Vol. 89, No. 206 / Thursday, October 24, 2024 / Rules and Regulations 

(3) A carrier may request OPM 

approval to offer different medications, 

products, or supplies, or modify cost 

sharing on their EGWP formulary. OPM 

has discretion to determine whether and 

to what extent a carrier request under 

this subsection is necessary and 

consistent with 5 U.S.C. 8903c. 

[FR Doc. 2024–24796 Filed 10–23–24; 8:45 am] 

BILLING CODE 6325–38–P 


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