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At the end of 2002, we estimate our total liability for future workers’
compensation costs, excluding Post Office Department (POD) liability,
at $6,525 million. At the end of 2001, this liability was $5,804 million.
In 2002, we recorded $1,511 million in workers’ compensation expense,
compared to the $970 million we recorded in 2001 and the $911 million
we recorded in 2000. Our liability for future workers’ compensation costs
for POD claims was $185 million in 2002 and $172 million in 2001. In 2002,
we recorded an expense of $13 million for POD, compared to the $9 million
we recorded in 2001 and $14 million in 2000.
In 2000, we refined our methodology used to estimate the present value
of the total amounts we expect to pay for current Postal Service workers’
compensation claims. The major refinement is the use of a life table that
reflects long-term experience with a disabled population to estimate mortality
rates of our permanently disabled population. Previously, we had used
a life table that reflected experience with the general United States
population. In management’s opinion, the refinements result in a better
estimation of our liability for future outlays on behalf of Postal Service
workers’ compensation claimants. The effect of the refinements was a reduction
of $423 million in the 2000 compensation and benefits expense.
Career employees of the Postal Service are covered by the U.S. government
health plan, the Federal Employees Health Benefits Program (FEHBP). The
Office of Personnel Management administers the program and allocates the
cost of the program to the various participating employers. Our portion
of the cost is based upon the average premium cost of the various employee
coverage choices and the specific coverage choices made by our employees.
The employees of the Postal Service pay for 16.5% of the cost, and we
pay the remainder.
Employees of the Postal Service who participate in the FEHBP for at least
the five years immediately before their retirement may participate in
the FEHBP during their retirement. The Omnibus Budget Reconciliation Act
of 1990 requires us to pay the employer’s share of health insurance premiums
for all employees, and their survivors, who participate in the FEHBP and
who retire on or after July 1, 1971. However, we do not include the costs
attributable to Federal civilian service before that date.
We account for post-retirement health benefits as a participant in a multi-employer
plan arrangement in accordance with FAS Statement No. 106, Employers’
Accounting for Postretirement Benefits Other Than Pensions. Our FEHBP
costs amounted to $987 million in 2002, $858 million in 2001 and $744
million in 2000. We include these costs in our compensation and benefits
expense.
Under the Postal Reorganization Act, as amended by Public Law 101-227,
we can issue debt obligations. However, we are limited to net annual increases
of $2 billion in our debt for capital improvements and to $1 billion for
operating expenses. Our total debt cannot exceed $15 billion.
Debt is due as follows (dollars in millions):
Cash outlays for interest were $339 million in 2002, $339 million in 2001
and $263 million in 2000.
At year-end, the current estimated market value of our debt is $11,991 million
in 2002 and $11,650 million in 2001 (Note 2). All notes payable to the Federal
Financing Bank (FFB) may be repurchased at current value at any time with
five days’ notice of intent to do so. 
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