Key Takeaways

• While the Postal Service Health Benefits (PSHB) program replaces FEHB for USPS workers and retirees in 2025, it doesn’t replicate everything that made FEHB so valuable.

• Understanding what may be missing in PSHB compared to FEHB helps you make better coverage decisions and avoid gaps in care or costs.

The Foundation of FEHB: What Made It So Trusted

For decades, the Federal Employees Health Benefits (FEHB) program served as the health coverage standard for federal workers, including those in the U.S. Postal Service. Its core appeal came from its nationwide plan availability, employer contributions, consistent structure across agencies, and its ability to work well with Medicare in retirement.

Under FEHB, you may have grown accustomed to:

• Broad plan selection with national and regional options

• Uniform rules across all federal agencies

• Lifetime continuation into retirement with no loss of federal contribution

• Coordination with Medicare without mandatory enrollment in Part B

• Automatic coverage for eligible family members without added restrictions

That legacy of consistency is now shifting under the PSHB program, which takes full effect on January 1, 2025.

How PSHB Reshapes That Familiar Coverage Landscape

The Postal Service Health Benefits (PSHB) program is exclusive to Postal Service employees, annuitants, and eligible family members. While it still operates under the oversight of the Office of Personnel Management (OPM), the structure is no longer shared with the broader federal workforce.

This separation brings distinct differences, especially in the following areas:

1. Mandatory Medicare Part B Enrollment

Unlike FEHB, PSHB requires certain annuitants and family members to enroll in Medicare Part B to maintain full benefits. This mandate applies to:

• Annuitants entitled to Medicare Part A who retired after January 1, 2025

• Eligible family members also entitled to Part A, unless exempt

While some retirees in FEHB voluntarily enrolled in Part B, PSHB makes it a condition for keeping full medical coverage under the new system unless you meet exemption criteria such as being age 64 or older on January 1, 2025, or retired before that date.

This change may significantly affect your monthly costs and your flexibility in how you approach Medicare.

2. Loss of FEHB’s Uniform Federal Workforce Advantage

FEHB allowed Postal employees to share the same plans and benefits as employees of other federal agencies. With PSHB, you are now part of a Postal-only pool.

That means:

• Plan negotiations and premium settings are based solely on Postal Service demographics and usage patterns

• You no longer benefit from the large risk-sharing pool that included millions of other federal workers

• Future legislative protections for the federal workforce may no longer extend to PSHB enrollees

While PSHB still receives government contributions toward premiums, the independent structure introduces the possibility of diverging benefits, costs, and protections over time.

3. Plan Availability and Regional Variation

FEHB offered a wide array of plans, many of which were national. Under PSHB, while there are still numerous options, not every FEHB plan has transitioned to PSHB. You may find that:

• Your previous plan is no longer available under PSHB

• New regional plans have taken its place

• Coverage networks and provider access vary more than they did under FEHB

If you moved between states or preferred using out-of-state providers, PSHB’s plan selection may feel more limited or fragmented.

4. Prescription Drug Coverage Integration

Under PSHB, Medicare-eligible annuitants and their Medicare-eligible family members are automatically enrolled in an Employer Group Waiver Plan (EGWP) for Part D prescription drug benefits. This is a change from FEHB, where prescription drug coverage was integrated into the main plan regardless of Medicare status.

Key differences you may experience:

• Coordination of benefits now happens separately through Medicare Part D

• If you opt out of the EGWP, your PSHB plan may not cover prescriptions

• Re-enrollment is restricted if you leave the EGWP without a qualifying exception

This introduces a layer of complexity for those used to the seamless nature of FEHB drug coverage.

5. Timing and Enrollment Restrictions

Under FEHB, you could make changes during any Open Season or after a qualifying life event. PSHB follows similar rules but introduces distinct limitations tied to Medicare enrollment and its integration.

Specifically:

• If you become Medicare-eligible and do not enroll in Part B (and are not exempt), you may lose certain benefits

• The window to enroll in Medicare Part B if you missed it in the past (Special Enrollment Period) closed on September 30, 2024

• Going forward, late enrollment may bring penalties or loss of plan benefits under PSHB

The stakes are higher if you miss critical deadlines.

6. Differences in Cost Sharing Structures

Many enrollees are surprised to find that coinsurance, copayments, and deductibles under PSHB can differ from what they had under FEHB—even if the plan names sound similar. While government contributions still cover a substantial portion (around 72%) of total premiums, out-of-pocket costs now depend more heavily on:

• Whether you’re enrolled in Medicare Part B

• Whether you use in-network versus out-of-network care

• The specific PSHB plan you choose

For example, in-network coinsurance can range from 10% to 30%, while out-of-network costs can climb to 50%. Deductibles in some PSHB plans exceed $1,500 annually for high-deductible options.

These differences can impact your decision to seek care or delay treatment, especially if you’re managing chronic conditions.

7. Impact on Family Coverage

FEHB’s structure allowed relatively straightforward inclusion of family members. Under PSHB, family coverage rules remain, but additional Medicare-related complexities arise when:

• A covered family member becomes Medicare-eligible

• One member of a Self Plus One or Self and Family plan is exempt from Medicare while another is not

These dynamics could affect:

• Premiums

• Eligibility for prescription drug benefits

• Required enrollment actions

Careful coordination among family members is now more essential than ever.

What Stays the Same: Shared Foundations of FEHB and PSHB

Despite the changes, there are still important similarities between FEHB and PSHB. These include:

• Continued premium support from the federal government (averaging 70%–72%)

• Coverage of major medical services, preventive care, hospitalizations, and outpatient care

• Annual Open Season from November to December for changing plans

• Eligibility for FEDVIP (dental and vision), FEGLI, FSAFEDS, and other federal benefits not impacted by the PSHB shift

You’re not left without structure. But the shift requires a higher degree of personal awareness and planning than what you may have grown accustomed to under FEHB.

A New Era of Responsibility for Enrollees

If you were used to the consistency and flexibility of FEHB, the new PSHB system may feel like a sharp shift. That’s not to say PSHB doesn’t offer robust coverage—it does. But it places more responsibility on you to:

• Understand your eligibility and requirements, especially regarding Medicare

• Review plan documents closely for changes in provider networks and cost-sharing

• Meet enrollment deadlines to avoid coverage gaps

The transition is not just administrative; it’s financial and practical.

Don’t Assume It’s the Same System

The biggest risk in 2025 is assuming PSHB works just like FEHB did. While there are shared roots, the systems are now governed and structured differently. If you don’t adapt to that shift, you could end up:

• Paying higher premiums than necessary

• Losing access to drug coverage

• Facing Medicare penalties

• Selecting a plan that no longer serves your needs

Stay proactive. Review every detail of your PSHB plan, especially if you’re nearing or already eligible for Medicare.

PSHB Requires a Strategic Approach to Coverage in 2025

You may have gained long-term security, broad plan access, and flexible Medicare coordination under FEHB. With PSHB, the structure is narrower, and the requirements are stricter—but not insurmountable.

What you lose in standardization, you can regain with attention, planning, and timely action. Start by confirming your Medicare status, evaluating plan documents side by side, and consulting a licensed agent listed on this website to help guide your choices for 2025 and beyond.