The Postal Service Reform Act of 2022 (PSRA) contains several provisions designed to affect the Postal Service’s finances and operations. One of the most significant changes in the law has to do with the Postal Service’s requirement to fund its retirees’ health benefits costs out of its revenues. The PSRA removed the requirement for USPS to fully prefund this obligation by making multi-billion dollar advance payments into a dedicated fund each year to cover premium payments for retirees that might be decades in the future. The Postal Service though is still ultimately responsible for covering the cost of these premium payments when they are due. In general, individual federal agencies are not responsible for prefunding or paying for these costs.

PSRA makes two changes that should result in cost savings for USPS and the Government. It creates a Postal Service Health Benefit program within the Federal Employees Health Benefits (FEHB) program. It also requires most new retirees from USPS and their families to enroll in Medicare Part B when they are eligible in order to keep their retiree health coverage. These changes will start in 2025.

PSRA also has provisions intended to improve the transparency of how USPS reports its service performance. In response to requirements in the law, the Postal Service has introduced a new service performance dashboard. Other PSRA provisions include the regulator reviewing the methodologies used to attribute USPS costs and examining how USPS can process flat mail — items like newspapers and magazines — more efficiently.

There are many other important parts of PSRA, including requiring USPS have an integrated network to deliver letter, flats, and parcels, as well as mandating six-day-a-week delivery.

One PSRA change that affected us here at the OIG is that it made us the Inspector General of the Postal Regulatory Commission.

To read more about the provisions in the law and how they could impact the Postal Service, please read our Primer on Postal Reform.