NARFE Federal Benefits Update & Institute Insights 2025

NARFE Federal Benefits Update Nicole Blackstone Program Manager, Policy & Programs 6/22/2025 1

NARFE Federal Benefits Institute Resources for NARFE Members Webinars Guidance, tips and tools on federal benefits topics Live Q&A with experts Benefits Briefs Short, instructive articles on specific topics White Papers Explainers on broad benefit topics Magazine Q&A Helpful answers to complicated federal benefits questions FEDERAL BENEFITS EXPERTS 2

NARFE Federal Benefits Institute Personal Assistance to NARFE Members Federal benefits specialists Provide personal answers to individual questions (fedbenefits@narfe.org) FedHub NARFE s online community Seek advice and feedback from other members, experts Partnering with the best experts around Free consultation, discounts on financial planning from advisors who know intricacies of federal benefits. Connection to federal benefit advisors when more in-depth consultation required. FEDERAL BENEFITS EXPERTS 3

NARFE Federal Benefits Institute What s New? 2024 FEHB Open Season OPM permitted the use of Prescription Drug Plan EGWPs, with auto- enrollment Eligible FEHB members who were auto-enrolled may choose to opt out as FEHB members are not required to enroll in Medicare Part D. Rationale: Accrue benefits (including subsidies to enable those benefits) available through coordination with Medicare o Drug manufacturer discounts o Drug price negotiation (by DHS) o Limits on drug price increases o Limits on out-of-pocket expenses o Limits on cost-sharing for catastrophic expenses o Caps price of insulin at $35 per month FEDERAL BENEFITS EXPERTS 4

NARFE Federal Benefits Institute What s New? Medicare Prescription Drug Plans No additional premium cost, unless subject to IRMAA surcharge IRMAA surcharges for Part D range from $13 per month to $81 per month based on income Expected to lower out-of-pocket expenses for prescription drugs for most BUT, some issues: Possible loss of drug company discounts Possible change in tier classification, coverage FEDERAL BENEFITS EXPERTS 5

NARFE Federal Benefits Institute FEHB Medicare Prescription Drug Plans (MPDPs) Introduced in 2024 Open Season But FEHB Medicare Advantage (MA) add-ons were previously available Why OPM Encouraged Plans Allow cost savings through Part D integration option to gain benefits, including new ones from Inflation Reduction Act: Drug manufacturer discounts Cap on insulin prices Caps on drug price inflation Caps on out-of-pocket, catastrophic coverage expenses Drug price negotiation by Department of Health and Human Services NARFE Priorities Maintain choice for retirees re: Medicare Part B and Part D enrollment Lower costs FEDERAL BENEFITS EXPERTS

NARFE Federal Benefits Institute FEHB Medicare Prescription Drug Plans Automatic Enrollment and Opt-Out/Opt-In Expectation that MPDPs lower costs for most/all Plan variation on opt-out/opt-in Why Opt Out? Income Related Monthly Adjustment Amount (IRMAA) Change in Tier Classification Inability to Use Drug Company Discounts & Insurance Coverage Simultaneously FEDERAL BENEFITS EXPERTS

NARFE Federal Benefits Institute FEHB Medicare Prescription Drug Plans 2025 Call Letter In all instances language added to equal to or greater drug coverage directive FEHB annuitants enrolled in an EGWP must have formulary access to all drugs covered under the corresponding FEHB formulary at the same or lower cost-share than they would have otherwise been responsible for if they enrolled solely in the FEHB plan. Member transparency tools Seamless, customer friendly opt-out process FEDERAL BENEFITS EXPERTS

NARFE Federal Benefits Institute What s New? Postal Service Health Benefits Program Starts in January 2025 PSHB plan options and premium information will be available in October 2024 All postal employees and annuitants 32 different carrier options Parallel set of plans to current FEHB Plans must have equivalent benefits and cost sharing requirements to FEHB plans (except related to Part D integration) FEDERAL BENEFITS EXPERTS 9

NARFE Federal Benefits Institute Postal Service Health Benefits Program All postal employees and annuitants must enroll in health benefits through PSHB Alters FEHB risk pool Previous OPM actuarial analysis indicated this would have slight downward impact on FEHB premiums Plans must have equivalent . . . benefits and cost sharing requirements, except for as necessary for Part D integration Expect health plans sponsored by postal unions to continue to offer coverage to federal employees and retirees, but not officially confirmed Future postal retirees required to enroll in Part B Proposed rule would essentially require Part D enrollment NARFE commented that the statute does not direct or authorize that FEDERAL BENEFITS EXPERTS

NARFE Federal Benefits Institute What s New? Postal Service Health Benefits Program Waiver of Part B requirement No requirement for current postal annuitants and postal employees age 64 and older as of 1/1/25, plus eligible family members of such, not already enrolled in Part B Special Enrollment Period for Part B 6 months starting 4/1/24 Eligible if not enrolled in Part B as of 1/1/24 Waiver of late enrollment penalties Medicare Part D integration If Medicare eligible, must be in your plan s Medicare Prescription Drug Plan FEDERAL BENEFITS EXPERTS 11

NARFE Federal Benefits Institute What s New? Planning for Long Term Care webinar on September 26th at 2 pm ET with Tammy Flanagan and Mark Keen Federal Long Term Care Insurance Program FLTCIP application suspension will end this December 2024, unless extended OPM renewed contract with John Hancock for FLTCIP for 7 more year in 2023 Previous increases as high as 25 percent (2009), 126 percent (2016) 2023 saw increases as high as 86 percent or more FEDERAL BENEFITS EXPERTS 12

NARFE Federal Benefits Institute What s New? Thrift Savings Plan Catch- up contributions Roth vs IRA in 2024 Limits increased in 2025 (SECURE Act 2.0) o Spillover method for contributions will not be impacted Required Minimum Distributions (RMDs) Increasing the start age for RMDs from 72 to 73 starting on January 1, 2023, and then further increasing the start age to 75 starting on January 1, 2033. Roth balances will no longer be subject to RMDs prior to the participant s death. FEDERAL BENEFITS EXPERTS 13

NARFE Federal Benefits Institute To B or Not to B NARFE Webinar on Topic on October 17 at 2 pm with Tammy Flanagan Enrollment Basics Initial enrollment period: 3 months before and after the month you turn 65 General enrollment period: January 1 to March 31 Late enrollment penalty = 10 percent of standard premium for every year you could have signed up for Part B but didn t Special enrollment periods: Avoids late enrollment penalty Qualify if still working (or spouse still working( and covered by FEHB based on employment 8-month period after you or spouse stop working FEDERAL BENEFITS EXPERTS

NARFE Federal Benefits Institute To B or Not to B Should you enroll? Cost Part B premium - $174.70/month in 2024 IRMAA? $69.90 to $419.30 per month, depending on income Benefit Lower (or no) additional out-of-pocket costs (deductibles, coinsurance, copayments) Considerations If enrolling in Part B, may save by switching to lower cost FEHB plan Some FEHB plans offer partial reimbursement of Part B premiums If no Part B, may want plan with more comprehensive coverage FEDERAL BENEFITS EXPERTS

Questions? 6/22/2025 FEDERAL BENEFITS EXPERTS 16

Thank you! 6/22/2025 FEDERAL BENEFITS EXPERTS 17