USPS OIG Report: USPS Alternative Health Care Plan Proposal


The audit disclosed that the $63 billion in proposed savings was reasonable. However, the OIG found that management used an incorrect funding interest rate assumption to establish its future retiree health care obligation. Thus, management understated the adjusted original liability of $90.2 billion by $14.1 billion, when it should actually have been $104.3 billion. This, however, does not impact the overall $63 billion in cost savings. Subsequent to the review of the proposal, the Postal Service informed the OIG it removed from its proposal the plan to freeze the monthly premium amount it contributes to those retiring after January 1, 2014. Thus, the estimated savings associated with the proposal would be reduced by about 20 percent, or $11 billion due to this change. Finally, the OIG noted the Postal Service did not have access to its employee and retiree actual claimant data to ensure it has data available to run its plan.