Key Takeaways

• Transitioning from the Federal Employees Health Benefits (FEHB) program to the Postal Service Health Benefits (PSHB) program may appear straightforward, but it includes fine print that significantly alters how your retirement health coverage works.

• Understanding differences in Medicare requirements, premium responsibilities, prescription drug integration, and ongoing cost-sharing can help you avoid unpleasant surprises in retirement.

Understanding the Context: From FEHB to PSHB

The Postal Service Health Benefits (PSHB) program officially replaces the Federal Employees Health Benefits (FEHB) program for Postal Service employees and retirees starting January 1, 2025. While this change was designed to streamline coverage and reduce costs across the system, it introduces critical distinctions in eligibility, Medicare integration, and plan structure.

If you are a USPS employee or retiree, you are now required to enroll in a PSHB plan to maintain your coverage unless you qualify for a rare exemption. This change affects not just your current premiums and copayments—but also your long-term healthcare planning.

What Stays the Same

Before diving into the differences, it’s helpful to know what doesn’t change:

• Federal Oversight: Both FEHB and PSHB plans are overseen by the U.S. Office of Personnel Management (OPM).

• Employer Contributions: The federal government continues to cover about 70% of plan premiums under PSHB, similar to the FEHB model.

• Access to Nationwide Plans: Plans under both systems offer broad national networks and remain portable even in retirement or if you move out of state.

1. Mandatory Medicare Part B Enrollment

One of the most significant differences between FEHB and PSHB lies in how Medicare integrates into your coverage.

If you’re Medicare-eligible and retired after January 1, 2025, PSHB requires you to enroll in Medicare Part B to maintain your PSHB health coverage. FEHB never required this. Under FEHB, retirees could choose to delay or even skip enrolling in Medicare Part B without losing their health coverage.

What This Means for You

• Additional Monthly Premiums: Medicare Part B in 2025 comes with a standard premium of $185 per month. If you were not planning to enroll under FEHB, this is an added cost.

• Reduced Out-of-Pocket Expenses: Many PSHB plans offer lower deductibles, waived copays, or enhanced coverage if you have Medicare Part B.

2. Prescription Drug Coverage Now Falls Under Medicare

Under FEHB, drug coverage was included in your plan and worked independently of Medicare Part D. That changes in PSHB for those eligible for Medicare.

As of 2025, PSHB prescription drug benefits are administered through a Medicare Part D Employer Group Waiver Plan (EGWP). This provides:

• A $2,000 out-of-pocket cap on annual drug costs under Medicare Part D.

• Coverage for insulin capped at $35 per month, regardless of deductible phase.

• Expanded pharmacy network access, both retail and mail order.

However, if you opt out of this integrated Medicare drug coverage, you will lose all prescription benefits under PSHB. Re-enrollment is limited and often only allowed under specific qualifying events.

3. Premium Contributions Change for Retirees

The employer share of premiums remains around 70%, but the absolute dollar amount you pay as a retiree under PSHB is different from what you might have paid under FEHB.

In 2025:

• Self Only plans average around $241/month for annuitants.

• Self Plus One plans run approximately $521/month.

• Self and Family plans reach around $567/month.

These amounts can be higher than what some retirees paid under FEHB, depending on their chosen plan and coverage level. It’s crucial to check your annuitant share rather than assuming similarity with past FEHB rates.

4. Timing and Enrollment Windows Are More Rigid

With FEHB, you had the flexibility to make changes during Open Season or after qualifying life events. The same applies to PSHB, but transition rules in 2025 are stricter.

Important Dates:

• Special Enrollment for Medicare Part B ran from April to September 2024.

• Initial PSHB Open Season occurred from November to December 2024.

• Ongoing changes will be allowed during future Open Seasons or upon qualifying life events, but transitioning out of PSHB is not permitted without losing coverage.

If you didn’t act during the required timeframes, you may now be locked into certain plan defaults or have limited ability to change your coverage.

5. Coordination with Other Federal Benefits

PSHB works alongside other federal benefit programs like FEDVIP (dental/vision), FEGLI (life insurance), and FLTCIP (long-term care). But you should know:

• FEDVIP and FEGLI remain unchanged. Your participation or eligibility in these programs is not affected by the shift from FEHB to PSHB.

• FSAs do not carry into retirement. If you are retiring in 2025, be aware that Flexible Spending Accounts end with your federal employment.

6. Out-of-Pocket Maximums Vary Widely

PSHB plans in 2025 include caps on out-of-pocket costs. For example:

• Self Only: up to $7,500 for in-network services.

• Self Plus One/Family: up to $15,000 in-network.

These limits are higher than what many experienced under FEHB and can vary by plan. Not all expenses count toward this cap, so it’s important to understand what’s excluded, like some out-of-network charges or services not covered.

If you are also enrolled in Medicare Part B, your PSHB plan may offer lower out-of-pocket limits or enhanced cost-sharing benefits.

7. You Cannot Revert Back to FEHB

Once you are transitioned into the PSHB system, you cannot go back to FEHB. That includes both retirees and active postal employees. This is not a reversible process. If you miss certain enrollment deadlines or don’t meet the eligibility criteria for your desired coverage, you may find yourself in a less-than-ideal position with fewer options moving forward.

PSHB is now your permanent system.

8. Survivor Coverage Still Requires Proper Election

As under FEHB, continuing health insurance for your spouse or dependents after your death requires electing a survivor annuity and choosing the appropriate PSHB enrollment type.

Failure to elect these options means your family could lose their health coverage even if you were enrolled up to the point of death.

This often-overlooked requirement remains just as critical under PSHB as it was under FEHB.

9. Foreign Residency Rules Can Affect Coverage

FEHB allowed retirees living abroad to maintain their coverage with limited restrictions. Under PSHB:

• If you live permanently overseas and are Medicare-eligible, you may not be required to enroll in Part B to keep your PSHB coverage.

• However, access to in-network services and prescription benefits can be severely limited depending on your location.

If you plan to retire abroad, your coverage options may be more constrained than they were under FEHB.

Why These Differences Matter in Retirement

At first glance, PSHB may seem similar to what you had under FEHB. But the mandatory Medicare enrollment, different premium structure, drug coverage model, and irreversible nature of the transition can all affect your retirement budget and healthcare experience.

What seems like a small administrative shift carries weighty consequences if you’re not paying attention to the fine print.

Your Next Steps Matter More Than You Think

If you’re already retired or approaching retirement in the Postal Service, now is the time to:

• Confirm your Medicare Part B status if you’re eligible.

• Understand the true out-of-pocket costs under your new PSHB plan.

• Review survivor benefit elections to protect your family’s future coverage.

• Ask how prescription coverage changes may impact you.

For clear, expert assistance tailored to your needs, reach out to a licensed agent listed on this website. They can help you make sure the PSHB plan you’re enrolled in—or considering—is aligned with your retirement healthcare goals.