[Federal Register Volume 89, Number 206 (Thursday, October 24, 2024)]
[Rules and Regulations]
[Pages 85012-85034]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-24796]



[[Page 85011]]

Vol. 89

Thursday,

No. 206

October 24, 2024

Part II





Office of Personnel Management





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5 Part 890





Postal Service Health Benefits Program: Additional Requirements and 
Clarifications; Final Rule

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

[[Page 85012]]


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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.

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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 <a href="/cdn-cgi/l/email-protection#d695b7bbb3a4b9b8f885a2b9bdb3a596b9a6bbf8b1b9a0"><span class="__cf_email__" data-cfemail="90d3f1fdf5e2fffebec3e4fffbf5e3d0ffe0fdbef7ffe6">[email protected]</span></a>.

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 Sec.  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

[[Page 85013]]

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 MyHR \2\ PSHB page and 
keepingposted.org.\3\ OPM and USPS encourage anyone with questions to 
review these resources. OPM is finalizing these definitions as 
proposed.
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    \1\ OPM's PSHB Program information can be found at https://www.opm.gov/healthcare-insurance/pshb/.
    \2\ MyHR 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-service-health-benefits.htm. The name and location of the USPS website is subject 
change with time.
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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 Sec.  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 Sec.  890.1604(d)(3). In 
Sec.  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 Sec.  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:
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    \4\ Under 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.
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    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 Sec.  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 Sec.  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 
Sec.  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 Sec.  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 Sec.  
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 Sec.  
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 Sec.  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 
Sec.  890.1605(c), OPM is replacing the reference to ``Sec.  
890.1605(b)'' with the term ``paragraph (b) of this section'' for 
consistency within the section. In Sec.  890.1605(c)(1), OPM is 
replacing the term ``same'' with the term ``corresponding'' for 
consistency within the section. Otherwise, OPM is finalizing Sec.  
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 Sec.  890.1607. As proposed, 
this provision was also amended to remove the existing cross-references 
to the process set forth at Sec.  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 Sec.  
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 Sec.  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

[[Page 85015]]

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 Sec.  
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 one-time 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 Sec.  890.1608(b) the term 
``re-enroll'' has been replaced with ``reenroll'' to conform to 
drafting conventions in Subpart P. In Sec.  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 Sec.  
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 Sec.  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 Sec.  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

[[Page 85016]]

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 Sec.  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 Sec.  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 Sec.  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 Sec.  
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 Sec.  
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 Sec.  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 
Sec.  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 Sec. Sec.  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.
---------------------------------------------------------------------------

    \5\ Methodology 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.
---------------------------------------------------------------------------

    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.

[[Page 85017]]

    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

Sec.  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 D-eligible Postal 
Service annuitant and their family members who are Part D-eligible 
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 D-eligible 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.

Sec.  890.1616(b): Prescription Drug Coverage Under a PSHB Plan Through 
Medicare Part D and Sec.  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 D-eligible 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 D-eligible 
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.
---------------------------------------------------------------------------

    \6\ See 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-and-Enrollment/MedicarePresDrugEligEnrol/Downloads/CY_2018_PDP_Enrollment_and_Disenrollment_Guidance_6-15-17.pdf.
---------------------------------------------------------------------------

    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 Income-Related 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

[[Page 85018]]

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 non-Medicare 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-D-eligible 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 D-eligible 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 D-
eligible annuitants and their Part D-eligible 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.
---------------------------------------------------------------------------

    \7\ See 42 CFR 423.46(a).
---------------------------------------------------------------------------

    Recognizing that the flexibility in Sec.  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 Sec.  
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

[[Page 85019]]

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 D-Eligible 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 D-eligible 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 Sec.  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.
---------------------------------------------------------------------------

    \8\ See 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).
---------------------------------------------------------------------------

Sec.  890.1616(c): PSHB Plan Enrollment or Disenrollment and Medicare 
EGWPs

    In Sec.  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.

Sec.  890.1616(d): Carrier Requirements for Group Enrollment Into 
Medicare EGWPs

    OPM proposed that all carriers automatically group enroll all Part 
D-eligible 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

[[Page 85020]]

end of Open Season or during a qualifying life event, the carrier must 
automatically group enroll Part D-eligible 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 Sec.  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 Sec.  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.

Sec.  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 D-eligible 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.
---------------------------------------------------------------------------

    \9\ See 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.
---------------------------------------------------------------------------

    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 D-eligible individuals.
    One commenter suggested that the language in proposed Sec.  
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

[[Page 85021]]

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 Sec.  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 cost-sharing, 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.
---------------------------------------------------------------------------

    \10\ Technical Guidance and Instructions for 2025 Benefit 
Proposals, Letter No. 2024-06, March 7, 2024, available at https://www.opm.gov/healthcare-insurance/carriers/fehb/2024/2024-06.pdf.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \11\ See 5 U.S.C. 8906(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 Out-of-Pocket Metrics

    One carrier commenter recommended that OPM maintain separate 
accumulation metrics for true out-of-pocket (TrOOP) and maximum out-of-
pocket (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

[[Page 85022]]

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 MyHR \13\ 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.
---------------------------------------------------------------------------

    \12\ OPM's PSHB Program information can be found at https://www.opm.gov/healthcare-insurance/pshb/.
    \13\ MyHR 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-service-health-benefits.htm.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \15\ Office 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.
---------------------------------------------------------------------------

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 Sec. Sec.  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 Sec.  
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 Sec.  890.1605(c) to 
replace the reference to ``Sec.  890.1605(b)'' with the term 
``paragraph (b) of this section'' for consistency within the section.
    OPM is making a minor technical correction in Sec.  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 Sec.  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 Sec.  890.1608(b). 
First, the term ``re-enroll'' has been replaced with ``reenroll'' to 
conform to drafting conventions in Subpart P. In Sec.  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 D-eligible 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 Sec.  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 non-Medicare 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 Sec.  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

[[Page 85023]]

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.
---------------------------------------------------------------------------

    \16\ See 42 CFR 423.46(a).
---------------------------------------------------------------------------

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

    As proposed in the NPRM, carriers would be required to provide the 
same prescription drug benefits to Part D-eligible 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 Sec.  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.
---------------------------------------------------------------------------

    \17\ The 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.
---------------------------------------------------------------------------

    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

[[Page 85024]]

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 D-eligible 
(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\
---------------------------------------------------------------------------

    \18\ The reserves for FEHB and PSHB are held in the Employees 
Health Benefits Fund. Interest on the reserves accrues to the Fund.
---------------------------------------------------------------------------

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 
one-time benefit, and any subsequent instances where the individual 
lacks required Medicare Part B enrollment

[[Page 85025]]

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 Medicare-eligible 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 
Medicare-eligible 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 opt-outs 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 D-eligible 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 non-enrollment 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 one-time 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

[[Page 85026]]

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 Sec.  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 Sec.  
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

[[Page 85027]]

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

[[Page 85028]]

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

0
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

0
2. Amend Sec.  890.107 by adding paragraph (f) to read as follows:


Sec.  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 Sec.  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

0
3. Amend Sec.  890.1602 by adding in alphabetical order definitions for 
``Reconsideration'' and ``Source agency'' to paragraph (c) to read as 
follows:


Sec.  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 Sec.  
890.1612.
* * * * *

0
4. Amend Sec.  890.1604, by adding paragraphs (c) and (d)(3) and 
revising paragraph (f) to read as follows:


Sec.  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 
Sec.  890.1608(e).
* * * * *

0
5. Amend Sec.  890.1605 by revising paragraph (c) to read as follows:


Sec.  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

[[Page 85029]]

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 Sec.  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.
* * * * *

0
6. Amend Sec.  890.1606 by revising paragraph (d) to read as follows:


Sec.  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 Sec.  890.1607.
* * * * *

0
7. Add Sec.  890.1607 to read as follows:


Sec.  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 Sec.  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 Sec.  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 
Sec.  890.1604(d)(2) indicating they satisfy the requirements for an 
exception described in Sec.  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 Sec.  
890.1604(d)(3) indicating they satisfy the requirements for an 
exception described in Sec.  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 
Sec.  890.1612. An initial decision under this paragraph will be issued 
only after the notice process under Sec.  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.

0
8. Amend Sec.  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:


Sec.  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 Sec.  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 Sec.  890.1603(a)(1) or (2).

[[Page 85030]]

    (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 Sec.  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 Sec.  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 Sec.  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 Sec.  890.401 will be available.
    (iii) Disenrollment or removal under this section will occur only 
after a notice process under Sec.  890.1612, if applicable, is 
completed and an initial decision to disenroll or remove, subject to 
reconsideration under Sec.  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 Sec.  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 one-time opportunity as set forth 
at Sec.  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.
* * * * *

0
9. Amend Sec.  890.1612 by adding paragraphs (f) and (g) to read as 
follows:


Sec.  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 Sec.  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

[[Page 85031]]

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 Sec.  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 Sec.  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 Sec.  
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 Sec.  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.

0
10. Amend Sec.  890.1613 by revising the section heading and paragraphs 
(a), (c), and (e) to read as follows:


Sec.  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 post-retirement 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.

0
11. Amend Sec.  890.1614 by revising paragraph (a) to read as follows:


Sec.  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 Sec. Sec.  890.502 and 890.1613.
* * * * *

0
12. Add Sec. Sec.  890.1615 and 890.1616 to read as follows:


Sec.  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

[[Page 85032]]

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.


Sec.  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 Sec.  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 D-eligible 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 Sec.  890.1606.
    (1) PDP EGWP. Annually at the conclusion of Open Season under Sec.  
890.301(f), or when an enrollee makes a change to their PSHB enrollment 
because of a qualifying life event under Sec.  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

[[Page 85033]]

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 
Sec.  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 Sec.  
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 
Sec.  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 Sec.  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 Sec.  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.

[[Page 85034]]

    (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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