US Postal Service 2013 Annual Report Download - page 38

2013 Report on Form 10-K United States Postal Service 36
OPM estimates the contributions and benefit payments for the next five years as follows:
Projection of CSRS and FERS Contributions and Benefit Payments as calculated by OPM
For the Years 2013 to 2017
(Dollars in billions)
2013 0.3 11.7 3.1 1.7
2014 0.2 12.1 3.0 1.9
2015 0.2 12.5 3.4 2.1
2016 0.2 12.8 3.5 2.4
2017 0.1 13.2 3.4 2.8
Contributions
Total Benefit
Payments Contributions
Total Benefit
Payments
CSRS FERS
HEALTH BENEFITS
Postal employees and retirees may participate in the Federal Employees’ Health Benefit Program (FEHBP), which is
administered by OPM. The Postal Service accounts for current employee and retiree health benefit costs as an expense
in the period in which the contribution is due. For retiree health benefits, multiemployer plan accounting rules are used.
The drivers of active employee healthcare expense are the number of employees electing coverage and the premium
costs of the selected plans. On average, the Postal Service paid 78% of the premium cost in 2013 and employees paid
the remainder. The average employer contribution was 78% in 2012 and 79% in 2011. The employer contribution
percentage for the majority of our employees is subject to collective bargaining agreements. We expect the Postal Service
contribution to health benefit premiums to continue to decrease in the future, until they reach the average for the
remainder of the Federal Government, which is currently 72%. The total premium cost for each plan is negotiated
annually by OPM with each insurance carrier. In September 2013, OPM announced average premium increases of 3.7%
for calendar year 2014. Previous increases were 3.4% in 2013, 3.8% in 2012, and 7.2% in 2011.
Total employee health benefit expenses were $4,951 million in 2013, a decrease of $236 million, or 4.5%, compared to
$5,187 million in 2012. The 2012 expense of $5,187 million was a decrease of $35 million, or 0.7%, from the 2011 health
benefits expense of $5,222 million. The decreases in 2013 and 2012 expenses were driven by the reduction in the
number of career employees. Employee health benefits expense was 10.6%, 10.9%, and 10.8% of total compensation
and benefits expenses in 2013, 2012, and 2011, respectively.
OPERATING EXPENSES - RETIREE HEALTH BENEFITS
Eligible employees, those with at least five consecutive years of participation in the FEHBP immediately preceding
retirement, are entitled to continue to participate in FEHBP after retirement. The amount due the PSRHBF for prefunding
in any given year is set by law. That amount, plus our portion of the current premium expense for retirees, is recognized
as an expense when due.
P.L. 109-435 made several changes to the way we fund and report the obligation for post-retirement health benefits. The
law established the PSRHBF and initially directed that we make annual prefunding payments of between $5.4 billion to
$5.8 billion per year through 2016 into the fund. Although P.L. 109-435 specifies the funding requirements through 2016,
the amounts to be funded and the timing of the funding can be changed at any time with enactment of a new law or upon
amendment of an existing law.
The prefunding amount has been amended several times. On October 1, 2009, P.L. 111-68 became law and decreased
the scheduled 2009 payment by $4.0 billion, from $5.4 billion to $1.4 billion. On September 30, 2011, P.L. 112-33,
Continuing Appropriations Act, 2012, rescheduled the PSRHBF payment of $5.5 billion previously scheduled to be due by
September 30, 2011, to be due by October 4, 2011. This date was then rescheduled by a number of laws subsequently
passed. The most recent law affecting the PSRHBF payment, P.L. 112-74, Consolidated Appropriations Act, 2012,
rescheduled the due date to August 1, 2012. As a result, the total required PSRHBF payments in 2012 were $11.1 billion:
$5.5 billion due by August 1, 2012, and $5.6 billion due by September 30, 2012. The required PSRHBF payment in 2013
was $5.6 billion.