Key Takeaways

• Your new PSHB plan might have unexpected costs that traditional Medicare doesn’t cover, such as certain prescription drugs, specialized treatments, or out-of-network services.

• Understanding these hidden expenses early can save you significant money and stress, helping you enjoy a more predictable and stable retirement.

1. Prescription Drug Surprises

When it comes to managing healthcare expenses, prescription drugs are often the biggest wildcard. As a USPS retiree transitioning to the Postal Service Health Benefits (PSHB) program in 2025, it’s critical to understand how prescription drug costs can sneak up on you.

Formularies Can Change

Every PSHB plan has what’s called a “formulary,” a list of medications that your plan covers. The medications included and the associated copayments or coinsurance amounts can change from year to year. Just because your current medication is covered today doesn’t mean it will always be.

It’s important to review your Annual Notice of Change (ANOC), which your PSHB provider sends each November. This document outlines any upcoming formulary adjustments, helping you anticipate and manage potential cost increases.

Specialty Drug Costs

Specialty medications for chronic conditions like rheumatoid arthritis, cancer, or multiple sclerosis can be extremely expensive under any insurance program. However, under PSHB, these medications can sometimes have particularly high copayments or coinsurance percentages, even after you meet your deductible.

• Tip: Always verify how specialty drugs are covered under your PSHB plan. Ask about caps, copayments, and coinsurance percentages during the Open Season, which typically occurs from November through December each year.

Limited Pharmacy Networks

Another hidden cost comes from pharmacy networks. Some PSHB plans may have restrictive pharmacy networks, forcing you to either travel further or pay higher prices at non-network pharmacies. If you regularly use prescription medications, always confirm your preferred pharmacy is within your plan’s network.

2. Out-of-Network Expenses

When considering healthcare costs, many USPS retirees assume that staying in-network will always be straightforward. However, out-of-network costs can catch you off guard.

Higher Deductibles and Coinsurance

Most PSHB plans distinguish clearly between in-network and out-of-network providers. While your plan might have manageable in-network deductibles ranging from about $350 to $500 annually, the out-of-network deductibles can easily triple, often reaching $1,000 to $3,000. Similarly, coinsurance rates for out-of-network services can jump from 10%–30% in-network to as high as 50% when you step out-of-network.

• Tip: Always verify the network status of your preferred doctors, specialists, hospitals, and clinics before scheduling services to avoid hefty out-of-network bills.

Emergency Care Exceptions

Many retirees mistakenly believe emergency services are universally covered at network rates. However, not all emergencies are treated equally. While immediate, life-threatening emergencies typically receive some protection from excessive out-of-network charges, other urgent care scenarios may leave you with surprise bills.

• Tip: Clearly understand what constitutes an emergency according to your PSHB plan documents, and clarify coverage during Open Season or by consulting with a licensed agent.

Balance Billing Risks

Balance billing occurs when an out-of-network provider charges you the difference between their rate and what your PSHB plan pays. This practice can add hundreds or even thousands of dollars in unexpected costs. Unfortunately, balance billing is common in certain specialties like anesthesiology, radiology, and pathology, especially if performed by out-of-network providers within an otherwise in-network facility.

• Tip: Always inquire whether all providers involved in a scheduled procedure are in-network, especially anesthesiologists, radiologists, and lab technicians.

3. Costs Related to Medicare Integration

As of 2025, Medicare integration is a core feature of the new PSHB landscape. While enrolling in Medicare Part B can help reduce your healthcare expenses significantly, there are still some hidden costs associated with Medicare integration that USPS retirees should be aware of.

Medicare Part B Premiums

Even if your PSHB plan works seamlessly with Medicare Part B, remember you still pay the standard Medicare Part B premium, which is $185 per month in 2025. This monthly expense can surprise retirees who may not have fully accounted for it in their budgets.

• Tip: Budget specifically for this monthly cost and consider it alongside your PSHB premiums, which typically range from $241 monthly for Self Only coverage to around $567 monthly for Self and Family coverage.

Late Enrollment Penalties

Failure to enroll in Medicare Part B when first eligible could result in lifelong penalties that permanently increase your monthly premiums. The penalty amounts to an additional 10% of the premium for each full 12-month period that you were eligible but did not enroll. This penalty remains with you for as long as you have Medicare coverage.

• Tip: Mark your calendar for the Initial Enrollment Period (IEP), which begins three months before your 65th birthday and extends three months after, to ensure timely enrollment and avoid penalties.

Incomplete Medicare Coordination

Even though many PSHB plans offer significant benefits, such as waived or reduced deductibles and copayments if you’re enrolled in Medicare Part B, not all costs are covered. Services such as routine dental, vision, or hearing care typically remain outside the purview of traditional Medicare and may only have limited coverage under PSHB plans. Expect to pay out-of-pocket or purchase supplemental insurance for these services.

• Tip: Closely review exactly what your PSHB plan offers in terms of Medicare integration. Knowing the specifics will allow you to anticipate gaps in coverage and budget accordingly.

Stay Alert to Hidden Expenses

Understanding hidden Medicare costs in your new PSHB plan is critical to managing healthcare expenses effectively during retirement. Prescription drug expenses, out-of-network fees, and Medicare integration costs can quickly add up, catching retirees off guard.

The best strategy to avoid surprises is to stay informed, regularly review plan documents, and proactively manage your enrollment decisions. Always take advantage of the PSHB Open Season, occurring annually between November and December, to review your coverage carefully. Additionally, seeking professional guidance from a licensed agent can help you navigate the complexities of your PSHB and Medicare choices.

If you have more questions or concerns about how hidden healthcare costs might impact your retirement planning, reach out to a licensed agent listed on this website for professional, personalized advice.