Jane Dotson
The U.S. federal government offers pensions to its employees through the Federal Employees Retirement System (FERS), which was established in 1986 and came into effect on January 1, 1987, replacing the older Civil Service Retirement System (CSRS). FERS provides benefits from three sources: a Basic Benefit Plan, Social Security, and the Thrift Savings Plan (TSP). The U.S. Postal Service, which was established in 1971, participates in the Federal Employees Health Benefits (FEHB) program and offers coverage through the Federal Employees' Group Life Insurance (FEGLI) program. While the Postal Service provides health benefits to its employees, there has been a debate about the allocation of pension costs between the Postal Service and the federal government.
| Characteristics | Values |
|---|---|
| Postal Service pension costs | Split between the Postal Service and the federal government |
| Pension program | Federal Employees Retirement System (FERS) |
| FERS benefits | Basic Benefit Plan, Social Security, and Thrift Savings Plan (TSP) |
| FERS eligibility | New federal civilian employees with retirement coverage |
| Survivor benefits | Monthly or lump-sum benefits payable to survivors when a federal employee dies |
| Health benefits | Federal Employees Health Benefits (FEHB) Program |
| Dental and vision insurance | Federal Employees Dental and Vision Insurance Program (FEDVIP) |
| Group life insurance | Federal Employees' Group Life Insurance (FEGLI) Program |
| Health benefits for annuitants and family members | Postal Service Health Benefits (PSHB) Program |
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What You'll Learn
Postal Service Health Benefits (PSHB) Program
The Postal Service Health Benefits (PSHB) Program is a new coverage program administered by the Office of Personnel Management (OPM). Starting on January 1st, 2025, PSHB will replace FEHB health insurance coverage for eligible Postal Service employees, annuitants, and their family members.
The PSHB program is a new benefits program within the Federal Employees Health Benefits (FEHB) program, which has provided coverage to postal workers since 1945. The FEHB program offers flexibility and excellent coverage with most of the cost paid by the Postal Service. There are many plans available, including Fee-For-Service, Health Maintenance Organizations (HMOs), and High Deductible & Consumer-Driven Health Plans.
PSHB will provide the same or similar coverage to FEHB plans but will have a different set of premiums to reflect the postal-only risk pool. Postal annuitants and employees will no longer be eligible to enroll or continue enrollment in an FEHB plan as of January 1, 2025, and must enroll in a PSHB plan to maintain health coverage through the Postal Service.
Eligible Postal Service employees and annuitants must enroll in a PSHB plan during the PSHB Program Open Season period, from November 11, 2024, to December 9, 2024. PSHB plan options and premium information were made available in October 2024. Employees and annuitants currently enrolled in FEHB plans who do not enroll in a new PSHB plan during Open Season in 2024 will automatically be enrolled in a PSHB plan on January 1, 2025.
Postal service retirees can view resources at KeepingPosted.org, like the Guide to Understanding the Postal Service Health Benefits (PSHB) Program. They can also make use of their USPS employee portal, LiteBlue, which provides access to webinars and other informational resources.
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Federal Employees Retirement System (FERS)
The Federal Employees Retirement System (FERS) is a retirement plan that covers almost all Federal civilian employees hired after 1983. Congress created FERS in 1986, and it came into effect on January 1, 1987, replacing the older Civil Service Retirement System (CSRS).
FERS is a three-part retirement plan, comprising a Basic Benefit Plan, Social Security, and the Thrift Savings Plan (TSP). The Basic Benefit Plan and Social Security require employees to contribute a percentage of their salary each pay period, through payroll deductions. The TSP part of FERS is an account set up automatically by the employee's agency. Importantly, two parts of FERS (Social Security and TSP) can be transferred to a new job if an employee leaves the Federal Government before retirement.
The contribution rate for FERS has changed over time, with Executive Branch employees experiencing changes to the amount they contribute, rather than the pension system itself. For example, employees hired on or after January 1, 2014, typically contribute 4.4% of their salary to the pension system, whereas those hired before January 1, 2013, contribute 0.8%.
FERS also includes provisions for survivor benefits, with monthly or lump-sum payments made to survivors when a Federal employee dies. Additionally, military service can be added to civilian service to increase annuity payments for civilian service.
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Civil Service Retirement System (CSRS)
The Civil Service Retirement System (CSRS) originated in 1920 and has provided retirement, disability, and survivor benefits for most civilian employees in the Federal Government. CSRS is the older defined-benefit pension program for federal workers, which was replaced by a new federal pension program, the Federal Employees Retirement System (FERS), in 1987. When the Postal Service was created from the Post Office Department on July 1, 1971, postal workers continued participating in the CSRS program.
CSRS has traditionally been a single-benefit retirement plan. Employees have had one payroll deduction for the plan and, after retirement, receive one check from CSRS each month for the rest of their lives. CSRS employees may also contribute to the Thrift Savings Plan (TSP) to receive additional retirement income. CSRS employees can contribute up to 5% of their basic pay each pay period and receive a tax break.
CSRS retirement benefits are computed based on rules showing the civilian and military service that can be used to determine benefits. Employees can increase their annuity for civilian service when no CSRS retirement deductions were withheld or refunded, or for military service after 1956.
When planning for retirement, employees can refer to OPM’s The Civil Service Retirement System booklet (RI 83-1) for additional information about CSRS retirement.
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Federal Employees Health Benefits (FEHB)
The Federal Employees Health Benefits (FEHB) Program is a health care benefits program for over eight million federal civilian employees, retirees, and their families. It is the most diverse employer-sponsored health benefits program in the United States, with 276 plan options in 2021. The actual number of plans available to each employee depends on their geographic location.
The FEHB Program offers a wide range of plan options, including Fee-For-Service, Health Maintenance Organization (HMO), High Deductible, and Consumer-Driven Health Plans. There are three enrollment types available: Self Only, Self Plus One, and Self and Family. The program provides excellent coverage and flexibility, with most of the cost paid by the relevant federal agency. Employee premium contributions are not subject to most taxes, making health insurance more affordable.
The Postal Service is one of the federal agencies that participate in the FEHB Program. The Service offers its employees a range of plans, including Fee-For-Service, Health Maintenance Organizations (HMOs), and High Deductible & Consumer-Driven Health Plans. While the Postal Service covers most of the cost, employees can also participate in the Flexible Spending Accounts (FSA) Program after one year of service. This allows them to make tax-free contributions to cover out-of-pocket health care and dependent care expenses.
The Defense Civilian Personnel Advisory Service (DCPAS) develops and oversees civilian human resource plans, policies, and programs for more than 900,000 Department of Defense employees worldwide. DCPAS provides guidance and resources on FEHB, including information on enrollment types, plan options, and benefits. They also offer training and credentialing programs in Employee Benefits and Injury Compensation to ensure that HR Practitioners are well-equipped to assist employees with their health benefits inquiries.
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Federal Employees' Group Life Insurance (FEGLI)
The Federal Employees Group Life Insurance (FEGLI) Program was established by the Federal Government on August 29, 1954. It is the largest group life insurance program in the world, covering over 4 million federal employees, retirees, and their family members. The Office of Federal Employees' Group Life Insurance (OFEGLI), a private entity with a government contract, processes and pays claims under the FEGLI Program.
Most federal employees are eligible for FEGLI coverage, which includes Basic life insurance coverage and three additional options. Employees are automatically covered by Basic life insurance, with premiums deducted from their paychecks, unless they waive this coverage. The Basic coverage amount is equal to the annual basic pay rate (rounded to the next $1,000) plus $2,000, or $10,000, whichever is greater. There is also an Extra Benefit for employees under 45, with double life insurance benefits until age 36, decreasing by 10% annually until age 45.
The three forms of optional insurance under FEGLI are:
- Option A - Standard: $10,000 of coverage, which doubles in the case of accidental death.
- Option B - Additional: One to five multiples of pay.
- Option C - Family: Insures an employee's eligible family members, with each multiple equal to $5,000 upon the death of a spouse and $2,500 upon the death of an eligible child.
Employees must have Basic insurance to elect any of the optional coverages, and they must specifically elect the desired optional insurance within 31 days of becoming eligible. FEGLI life insurance benefits are paid in addition to any workers' compensation, Social Security, retirement system survivor benefits, or savings plan payments.
In the case of a federal employee's death, monthly or lump-sum benefits may be payable to survivors, following a statutory order of precedence. This includes the employee's children, parents, appointed executor or administrator of the estate, and next of kin. FEGLI also includes Accidental Death and Dismemberment coverage for employees, but not retirees.
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Frequently asked questions
Postal pensions are insured by the Federal Employees Retirement System (FERS), which was created in 1986 and came into effect on January 1, 1987. FERS provides benefits from three sources: a Basic Benefit Plan, Social Security, and the Thrift Savings Plan (TSP).
The Thrift Savings Plan (TSP) is a retirement savings and investment plan for civil service employees and members of the uniformed services, including the Ready Reserve. TSP offers the same types of savings and tax benefits that many private corporations offer their employees under "401(k)" plans.
Two of the three parts of FERS (Social Security and the TSP) can be taken with you to your next job if you leave the federal government before retirement.
FERS provides a range of benefits, including survivor benefits, military retired pay, and service credit. It also offers flexibility in terms of eligibility requirements, computation of retirement benefits, and planning and applying for retirement.
Yes, the postal service offers coverage through the Federal Employees' Group Life Insurance (FEGLI) Program. The cost of basic coverage is fully paid by the Postal Service, with the option to purchase additional coverage through payroll deductions.
