Employees who participate in the FEHBP for the five years immediately preceding their retirement may participate in the
FEHBP during their retirement. The Postal Service is required to pay the employer’s share of health insurance premiums for all retired postal employees and their survivors who participate in the FEHBP and who retire on or after July 1, 1971. Costs attributable to federal civil service before that date are not included.

In 2006, P.L. 109-435 created the PSRHBF, which is held by the U.S. Treasury and controlled by OPM, but funded by the Postal Service. P.L.109-435 established a ten-year schedule of Postal Service payments into the fund that average $5.6 billion per year. However, the 2009 scheduled payment was decreased from $5.4 billion to $1.4 billion due to the enactment of P.L. 111-68. This law affected only the 2009 payment and did not change the 2010 payment requirement of $5.5 billion or the payments scheduled from 2011 to 2016. Although P.L. 109-435 dictates the annual funding requirements through 2016, these amounts and the timing of funding could be changed at any time with passage of a new law or an amendment of existing law.

At September 30, 2010, scheduled payments to the PSRHBF are:

PSRHBF (dollars in millions)


P.L. 109-435 Requirement


$ 5,500









After 2015


Total PSRHBF Commitments

$ 33,900

These annual payments are in addition to the regularly allocated cost of premiums for current retirees, which continue to be payable through 2016. The law requires that not later than 2017, OPM will perform an actuarial valuation to determine if additional payments into the PSRHBF are required. If required, OPM will design an amortization schedule to fully fund any remaining liability by 2056. Starting in 2017, the Postal Services’ share of the health insurance premiums for current and future Postal Service retirees will be paid from the PSRHBF. Beginning in 2017, the Postal Service will also fund the actuarially determined normal cost. The Postal Service paid $5.5 billion, $1.4 billion and $5.6 billion into the fund in 2010, 2009 and 2008, respectively. At September 30, 2010, the balance in the fund was $42.5 billion.

Total retiree health benefits expenses were $7,747 million in 2010, $3,390 million in 2009 and $7,407 million in 2008. Components of retiree health benefits expense for the three years ended September 30, 2010, are as follows:

Retiree Health Benefit Expenses (dollars in millions)





Employer premium expense

$ 2,247

$ 1,990

$ 1,807

P.L. 109-435 Scheduled payment to PSRHBF




Total Retiree Health Benefit Expenses

$ 7,747

$ 3,390

$ 7,407

Because the amounts to be paid into the PSRHBF were set by legislation, our retiree health expense may not represent the full cost of the benefits earned by USPS employees. These costs are reflected as “Retiree health benefits” in the Statements of Operations.