Key Takeaways

• Relying exclusively on Medicare Part D for prescriptions under the PSHB program may leave you with higher out-of-pocket costs or limited coverage if you overlook coordination rules.

• In 2025, your PSHB prescription benefits are directly tied to Medicare Part D through an Employer Group Waiver Plan (EGWP), and opting out may reduce your overall coverage.

Your PSHB Plan and Part D Are Not Separate Anymore

If you’re a Postal Service retiree or annuitant who’s eligible for Medicare, 2025 is not the year to treat Medicare Part D as a standalone solution. This year marks a full shift to the new Postal Service Health Benefits (PSHB) program, replacing FEHB coverage. What makes 2025 different is that PSHB plans now incorporate Medicare Part D coverage directly through an EGWP—a group plan designed specifically for Medicare-eligible annuitants and family members.

That means if you’re enrolled in Medicare and also covered by a PSHB plan, you’re already getting your prescription drug coverage through Part D. But this isn’t just a default setting—it’s a critical feature of your plan. Opting out or misunderstanding how it works can come with financial consequences.

Why PSHB Ties Itself to Medicare Part D in 2025

OPM introduced this integration to align retiree coverage with Medicare’s prescription drug model while preserving employer group bargaining power. This structure:

• Automatically enrolls Medicare-eligible members into a Part D EGWP when they enroll in a PSHB plan.

• Provides extra benefits beyond standard Part D plans, including potential cost-sharing reductions.

• Allows retirees to benefit from new 2025 protections like the $2,000 annual out-of-pocket cap on covered prescription drugs.

In short, it combines the negotiating leverage of group insurance with the standardized protections of Medicare Part D.

You’re Automatically Covered—Unless You Actively Opt Out

If you’re eligible for Medicare and have a PSHB plan, you don’t need to enroll in a separate Medicare Part D plan. Your PSHB plan handles that by enrolling you in its associated EGWP.

However, you can choose to opt out of the prescription drug coverage portion. This may sound appealing if you’re comparing premiums or want to avoid what looks like duplicate coverage—but it’s rarely advisable. Why?

• You lose drug coverage under your PSHB plan entirely if you opt out.

• You may be unable to re-enroll later, except during specific qualifying events.

• You will forfeit enhanced cost-sharing benefits that come from the integrated structure.

In essence, what might look like flexibility could result in major gaps.

What the $2,000 Cap Really Means

One of the most talked-about 2025 updates to Medicare Part D is the new $2,000 annual out-of-pocket cap on covered prescription drugs. On paper, it’s a welcome protection—particularly for retirees managing chronic conditions or high-cost medications.

Here’s how it applies under PSHB:

• The $2,000 cap applies only to covered Part D drugs within your PSHB EGWP.

• It resets annually on January 1.

• Once you hit the cap, your plan pays 100% of your covered drug costs for the rest of the year.

But don’t assume this cap covers everything:

• It does not apply to drugs excluded from the Part D formulary, even if they’re medically necessary.

• Some drugs may still require prior authorization or quantity limits, which can delay access.

• Over-the-counter medications and certain supplies aren’t included under Part D at all.

You still need to check your plan’s formulary and understand the rules tied to each tier of medication.

The Hidden Cost of Opting for a Standalone Part D Plan

If you decide to go outside your PSHB plan and enroll in a separate, standalone Medicare Part D plan, you risk forfeiting key elements of your health benefits. For PSHB members in 2025, this isn’t just a side decision—it’s a structural conflict.

Here’s why:

• You can’t keep your PSHB prescription drug coverage if you’re enrolled in another Part D plan.

• You may inadvertently trigger disenrollment from the PSHB drug benefit.

• Your medical coverage and drug coverage could become misaligned, creating higher costs and confusion.

What appears to be freedom of choice can dismantle the coordination that PSHB plans are designed to deliver.

Additional Benefits You May Lose If You Opt Out

Part of the reason the PSHB prescription structure is valuable is because it offers more than just a drug formulary. Integrated EGWP coverage often includes:

• Waived or reduced deductibles for those enrolled in both Medicare and PSHB.

• Lower copayments when using in-network pharmacies or mail-order services.

• Expanded pharmacy networks, including national chains and independent options.

• Simplified claims processing, since all your data flows through one system.

Opting out removes access to these efficiencies, and any financial savings could be short-lived if you end up needing non-routine or brand-name medications.

Enrollment Restrictions Can Limit Your Choices Later

If you opt out of your PSHB EGWP prescription coverage in 2025, it’s not always easy to return. Outside of Open Season (which typically runs November through December) or qualifying life events, you won’t have the opportunity to rejoin until the next Open Season.

Additionally, re-enrollment may come with complications:

• You may need to wait months for your coverage to begin again.

• Your medication history may reset, affecting prior authorization or step therapy requirements.

• Certain copay waivers may no longer apply upon re-enrollment.

The safest approach is to stay enrolled unless you have a clear, strategic reason to opt out—and a licensed agent can help you make that call.

How PSHB Prescription Plans Compare to FEHB Drug Coverage

If you retired under the old FEHB system, you might remember different rules. Unlike FEHB, which had no direct integration with Medicare Part D, PSHB drug benefits in 2025 are structured around that Part D relationship.

Major differences include:

• Mandatory Medicare Part B enrollment for most PSHB annuitants in order to retain full drug coverage.

• Automatic enrollment into EGWP Part D drug coverage when you remain in PSHB.

• Loss of drug coverage if you opt out of the Part D portion.

While FEHB offered continuity without forcing Medicare coordination, PSHB is built to synchronize the two systems—and that synchronization can work in your favor if used correctly.

How to Get Support for Plan Decisions

Your prescription needs are not generic, and neither are the consequences of the decisions you make about Part D. If you’re unsure how your PSHB plan interfaces with Medicare or what happens if you opt out, don’t guess.

The PSHB program offers resources, including:

• Plan brochures detailing prescription benefits

• A dedicated PSHB Navigator Help Line (1-833-712-7742)

• Online comparison tools through OPM’s website

But for personalized advice based on your actual prescriptions and medical history, it’s best to speak with a licensed agent listed on this website.

Make the Most of Your PSHB Drug Coverage in 2025

Medicare Part D is no longer something you choose separately from your PSHB plan—it’s embedded, automatic, and structured to work in your favor if you use it correctly. But understanding how it fits with your PSHB benefits is essential.

Before you consider opting out, compare:

• What you’d lose in cost-sharing benefits

• What drugs are covered or excluded

• What timing restrictions might delay access to care

Coordinating your Medicare and PSHB coverage is a long-term strategy, not a one-time enrollment. Talk with a licensed agent listed on this website to ensure you’re not overlooking benefits or walking away from valuable coverage.