Friday, August 19, 2011

There is a Precedent for a Federal Entitity Not Having Federal Benefits

The Postal Service has recently made a proposal to take over its benefit plans.  Well are there Federal or quasi-federal entitities that have their own benefit plans?  Yes

Here is TVA's Benefit Plan as Described on the TVA website.  The TVA has its own Health Benefits, Life and Disability Insurance Benefits, and Retirement Benefits.  So there is precedent.

Health Care Benefits
Many employees consider health-care coverage their most important benefit. It gives them the security of knowing they can take care of their own health needs and those of their families. There are different options to meet employees’ varying needs and employees can change plans during an enrollment period each fall.

Medical Plan

TVA offers a choice of three preferred-provider plans with varying levels of coverage. All the options include preventive care, hospital, physician, and prescription drug benefits, and two of the options include vision coverage as well.

Dental Plan

Three options are available for dental coverage. Each provides 100% coverage for preventive care services. All options also cover basic and major services at varying levels of reimbursement, and one includes orthodontic benefits for dependent children.

Health Care Flexible Spending Account

No matter which health-care plan employees choose, they will have some out-of-pocket expenses for things like deductibles and co-payments. This flexible spending account allows them to use before-tax dollars to pay for certain of these expenses.

Healthcare Assistance Program

This program provides easy access to information on health maintenance, illness and disease, and other health topics in a voluntary and confidential setting. The program is available to most employees, retirees, and their dependents. Services offered may include a 24-hour nurse line to answer health questions, a Web site for health-information access, and care-management services for those with chronic conditions


Core Benefits Provided By TVA

TVA provides all annual employees with certain benefits at no cost. Employees have $10,000 in life insurance and long-term disability benefits equal to 30 percent of their high three-year average salary.

Federal Employees’ Group Life Insurance (FEGLI)

Most TVA employees are eligible for this term life insurance plan, which is offered to all Federal employees. FEGLI offers varying levels of coverage for employees and dependents.

Optional Term Life Insurance

Employees may choose coverage ranging from one to five times their base annual salary. Dependent life insurance coverage is also available under this plan.

Accidental Death and Dismemberment Insurance

TVA offers employees an accidental death and dismemberment policy, with options of one to five times their salary for individual coverage. Employees can also purchase coverage for their spouses in an amount equal to one-half of their own coverage. Dependent coverage of $5,000 or $10,000 per eligible child is also available.

Optional Short-Term Disability

Employees have the option of purchasing Short-term Disability Insurance to replace a portion of their salary during a period of unexpected accident or illness. This plan can help provide financial security and peace of mind.

Optional Long-Term Disability

In addition to the core disability coverage provided by TVA, full-time annual employees may purchase additional disability coverage. This supplement to the core long-term disability plan may provide an additional 35 percent of income, based on the employee’s high three-year average salary.

Long-Term Care Plan

TVA employees are eligible to enroll in a long-term care insurance plan offered to all Federal employees and retirees by the U.S. Office of Personnel Management. This plan helps with the costs of nursing-home and assisted-living care, in-home care, and other services not covered by medical plans. This plan also offers employees the chance to buy coverage for their spouse, adult children, parents, and spouse’s parents.

Critical Illness Insurance

Because many expenses incurred as a result of a critical illness, such as a heart attack, stroke, or cancer are indirect, non-medical related expenses, TVA employees can purchase a Critical Illness Insurance plan to supplement the medical and disability plans.hronic conditions.

Retirement Benefits
For more information please visit

TVA-Funded Pension Benefit

The Cash Balance Benefit Structure provides a TVA-funded pension benefit where pay credits equal to 6 percent of base compensation are made each pay period during employment. This account also receives interest credits each month at a minimum annual interest rate of 6 percent. At retirement, members with at least five years of cash balance service are eligible to have this account balance converted to a monthly payment.

Supplemental Benefit

This monthly benefit may be used by eligible retirees and eligible surviving spouses to help with the cost of medical insurance. The amount of this vested benefit is based upon the length of time spent as a member in the TVA Retirement System.

401(k) Savings and Deferral Plan

There are numerous investment options available through TVA’s 401(k) plan, with varying degrees of potential returns and associated risks. TVA provides matching contributions of 75 cents for each dollar contributed on a before- and/or after-tax basis, with maximum matching contributions of 4.5 percent of fiscal year-to-date base compensation. In order to receive the maximum matching contributions, a member must contribute at least 6 percent of their fiscal year-to-date base compensation. A member must have three years of Cash Balance service to be vested in the TVA matching contributions.

Fixed and Variable Funds

In addition to the 401(k) Plan, TVA offers two after-tax investment options consisting of member contributions and earnings on those contributions. The Fixed Fund earns a specified interest rate with interest credited on a daily basis. The Variable Fund is invested in a publicly traded stock index fund which reports its net asset value on a daily basis.

1 comment:

Anonymous said...

Bad analogy.

TVA only employs individuals in a limited number of states and, as such, uses TN Blue Cross to administer 2 PPO plans, and a catastrophic option -- not quite the breadth of the USPS national footprint.

TVA self-insures its health program; I am not quite sure that USPS is in a position to self-insure. If it does not self-insure, it may be subject to insurance taxes by each state in which it has beneficiaries.

It is unclear how pre-Medicare eligible retirees are "rated" by TVA. However, TVA's Medicare-eligible retirees must enroll in Medicare Part B, etc., and pay those premiums, because TVA only offers its 65-and-over retirees a Medigap Plan. The USPS would have to deal with this issue, possibly "buying" its retirees in Medicare Part B, etc.

Finally, I doubt that the USPS will be permitted to "dump" its current retirees in FEHBP, while only insuring current employees and future retirees.

As far as retirement goes, so many postal employees have military and non-Postal federal employment that disentangling the postal retirees from FERS and TSP would be problematic. The absence of the TVA from CSRS/FERS does not have significant impact on the CSRS/FERS; however, you can bet that the size of the USPS employment -- even with a smaller workforce -- would.

Another interesting factoid about TVA is that it pays taxes to the states in which it generates, transmits and distributes power. I don't believe that the USPS can shoulder that expense. In sum, TVA is not an acceptable prototype for the USPS.