Key Takeaways

• Pairing Medigap with your PSHB coverage may lead to duplicated benefits and unnecessary costs in 2025.

• Understanding how Medicare Part B works with PSHB is essential before adding supplemental insurance like Medigap.

What Medigap Is Designed For

Medigap, also known as Medicare Supplement Insurance, is designed to fill the gaps left by Original Medicare Parts A and B. These policies help cover out-of-pocket expenses like deductibles, coinsurance, and copayments.

However, if you are a Postal Service annuitant enrolled in a Postal Service Health Benefits (PSHB) plan and have Medicare, your PSHB plan already acts like supplemental insurance. In many cases, it covers the same out-of-pocket costs that Medigap would.

That’s where the overlap begins.

How PSHB and Medicare Coordinate Benefits in 2025

The PSHB program, introduced in 2025, automatically integrates with Medicare for annuitants who are enrolled in both. When you have Medicare Part A and B along with your PSHB plan, Medicare becomes the primary payer, and PSHB is the secondary payer.

That means:

• Medicare pays first for eligible services.

• Your PSHB plan covers many of the remaining out-of-pocket costs.

This coordination makes Medigap unnecessary in most cases. In fact, most PSHB plans waive deductibles and reduce copayments when Medicare is also in effect.

Where You Could Be Paying Twice

Adding a Medigap plan on top of your PSHB plan typically means paying two premiums for benefits that serve the same purpose.

• Medigap Premiums: These are monthly costs you pay in addition to your Medicare Part B premium.

• PSHB Premiums: As a Postal Service annuitant, you continue paying your share of PSHB premiums.

Since both Medigap and PSHB fill the same coverage gaps left by Medicare, having both does not enhance your benefits—it simply duplicates them.

In short, you are paying two premiums for one level of coverage.

No Coordination Between PSHB and Medigap

Medigap policies are designed to coordinate only with Original Medicare. They are not intended to coordinate with PSHB plans or any other group health plans.

Here’s what this means:

• If you submit a claim to Medicare, it will pass the remaining balance to your PSHB plan, not to your Medigap insurer.

• Your Medigap insurer may deny payment or request a coordination of benefits that is not possible due to system incompatibility.

This results in confusion, delays, and even rejected claims.

What You’re Getting from PSHB Alone

In 2025, most PSHB plans offer robust secondary coverage when paired with Medicare. You get:

• Waived or reduced deductibles

• Lower copayments and coinsurance

• Automatic enrollment in a Medicare Part D drug plan through the PSHB carrier

• Access to nationwide provider networks

The PSHB program is structured to ensure that Medicare-eligible annuitants do not need additional supplemental coverage.

Enrollment Rules and Premium Commitments

If you add Medigap, you’re not just signing up for extra coverage—you’re locking into a new set of enrollment rules.

• Guaranteed Issue Rights: You may not have these unless you qualify for special circumstances. This means underwriting may apply.

• Premium Increases: Medigap premiums typically increase with age.

• No Part D Included: Unlike PSHB, Medigap plans do not include drug coverage. You would need to buy a standalone Part D plan, adding yet another premium.

With PSHB already including integrated Part D drug coverage for Medicare enrollees, this makes Medigap even more redundant.

What Happens to Your PSHB Benefits if You Keep Medigap

Your PSHB benefits remain active whether you have Medigap or not. However, you don’t get any coordination advantage by keeping both.

• Your PSHB plan continues to be the secondary payer after Medicare.

• Your Medigap plan essentially has no role in the billing sequence.

In effect, you’re paying for an insurance policy that doesn’t get to perform its intended job.

Medicare Part B and PSHB Are the Only Requirements

Under the 2025 PSHB rules, Medicare Part B enrollment is mandatory for certain annuitants and their family members to maintain PSHB coverage. There is no such requirement or incentive to add Medigap.

If you were retired on or before January 1, 2025, you may be exempt from the Part B mandate, but even in those cases, adding Medigap still doesn’t provide extra value if you keep PSHB.

Cost Sharing: PSHB vs. Medigap

When Medicare is paired with PSHB, most of the high-cost items that Medigap would cover are already addressed:

• Deductibles: Waived in many PSHB plans

• Coinsurance: Significantly reduced or eliminated

• Hospital Costs: Covered through both Medicare and PSHB, with minimal to no out-of-pocket expense

With Medigap, the same costs are theoretically covered—but you’re already getting that through PSHB. This is what leads to double coverage without double benefit.

Misunderstanding the Role of Medigap

Many retirees believe Medigap is a necessary layer for complete coverage. That’s true for those with only Original Medicare. But if you have PSHB, it already acts as that supplemental layer.

This misunderstanding is common and often leads to:

• Over-insurance

• Unnecessary expenses

• Complex coordination issues that yield no financial or service benefit

When Might Medigap Be Useful?

There are limited scenarios where Medigap might make sense:

• If you voluntarily cancel your PSHB plan and rely solely on Medicare and Medigap

• If you move to a state where providers heavily favor Medigap over federal group plans (uncommon)

But even in these cases, you would need to carefully weigh the total premium costs, Part D coverage gaps, and provider network access.

Questions to Ask Before You Add Medigap

Before adding any new layer of insurance, consider the following:

• Does my PSHB plan already cover these costs?

• Will Medigap coordinate with my PSHB coverage?

• What is the total monthly premium outlay?

• Am I getting any additional benefit, or am I duplicating coverage?

• Do I need separate drug coverage if I choose Medigap?

These questions help you avoid paying for insurance that doesn’t add value.

Official Guidance in 2025

As of 2025, the Office of Personnel Management (OPM) does not recommend or support pairing Medigap with PSHB for annuitants who are enrolled in Medicare. Their guidance reinforces that PSHB, when combined with Medicare Part B, is designed to be comprehensive.

This structure already includes pharmacy benefits and reduced cost-sharing. Adding Medigap creates overlap, not enhancement.

Avoid the Temptation to “Double Up” on Coverage

In health insurance, more is not always better. Especially when your existing coverage already fills the gaps you’re worried about.

Double coverage sounds like security, but in practice, it often leads to:

• Redundant premium costs

• Denied claims due to coordination conflicts

• Confusion over which insurer pays what

Instead, your best strategy is to thoroughly understand what PSHB and Medicare already provide together.

Take Time to Review During Open Season

Each year from November to December, you get the opportunity to review and change your PSHB enrollment. This is also your chance to evaluate whether any supplemental insurance adds value.

Before adding Medigap during this period, review:

• The benefits your PSHB plan provides when combined with Medicare

• Total monthly and annual premium costs

• How prescription coverage is included

You may find that your current setup is more than adequate without any need for additional insurance.

Better Decisions Come from Better Information

Health coverage decisions can affect both your healthcare access and financial stability in retirement. When you’re part of the PSHB program and enrolled in Medicare, you’re already in a strong position. Adding more layers might feel safer, but often just adds cost.

To ensure you’re getting the most value without overpaying, speak with a licensed agent listed on this website. They can walk you through your specific PSHB plan, Medicare coordination, and whether any supplemental options actually make sense for you.