The U.S. Postal Service will run out of money to pay for its retirees’ health care in 12 years if Congress does not take action to address the funding shortfall, according to a new audit of the benefit program.
Funding for former postal employees has long been a sticking point in the fight to get the mailing agency’s finances back on firmer footing, and for the last 10 years USPS has faced a requirement to prefund the benefit for future retirees. USPS has defaulted on many of those payments and the Government Accountability Office now describes the financial outlook of the Postal Service Retiree Health Benefits Fund as “poor.” About 500,000 retirees rely on the program, GAO said, and current law has no contingency plan for what would happen if the agency runs out of money to pay for their care.
The Postal Service has missed $38 billion in required prefunding payments into the retiree health fund since 2010. Congress instituted the mandate as part of the 2006 Postal Accountability and Enhancement Act, though the payments quickly became unsustainable after the bottom fell out on first-class mail use and the economic recession hit. In 2017, the Office of Personnel Management began tapping the fund to pay for the USPS share of retirees’ health care and payments going out exceeded the interest the agency collected.