Postal Service Might Send Retirees to Medicare

By Allison Bell

March 13, 2014 at 12:15 PM

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The top U.S. Postal Service benefits manager has a solution to that organization's retiree health benefits funding problem: "full Medicare integration."

Jeffrey Williamson, the chief human resources officer at the Postal Service, presented that idea today at a postal benefits liabilities hearing organized by a U.S. House Oversight & Government Reform subcommittee.

The Postal Service has about 1 million employees and retirees.

Federal law now requires the Postal Service to pre-fund "other post-employment benefits" rather than covering the OPEB costs as the bills come in.

Few other public or private employers face similar OPEB funding requirements.

Frank Todisco, an actuary at the U.S. Government Accountability Office, offered written testimony at the hearing that showed that the Postal Service has funded just $47 billion of its $96 billion in retiree health liability.

The Postal Service has funded about $287 billion of its $306 billion in pension liability.

If the Postal Service made Medicare the primary retiree health payer for workers and retirees eligible for Medicare, that would eliminate about $44 billion of the unfunded retiree health liability, reducing the gap to about $3 billion, Williamson testified, according to a written version of his testimony.

The Postal Service also needs to move away from offering a defined benefit pension program for new employees and offer them a defined contribution plan instead, Williamson testified.

"A defined contribution retirement system for future employees would help ensure that the Postal Service remains financially viable," Williamson said.

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