Key Takeaways

• In 2025, PSHB enrollees who are eligible for Medicare must understand how their prescription drug coverage is automatically integrated with Medicare Part D through an EGWP, but opting out of this coverage could lead to serious coverage gaps.

• Although the PSHB-Medicare coordination appears to offer seamless drug benefits, not all costs or access concerns are addressed by the basic integration, especially when it comes to formularies, prior authorizations, and specialty drug limitations.

Prescription Drug Coverage Basics Under PSHB

The Postal Service Health Benefits (PSHB) Program launched in 2025 with distinct rules for Medicare-eligible annuitants and family members. For those enrolled in Medicare Part A and B, your PSHB plan includes prescription drug benefits through a Medicare Part D Employer Group Waiver Plan (EGWP). This EGWP is not optional if you want to keep drug coverage under your PSHB plan.

What Is the EGWP?

The EGWP is a type of Medicare Part D plan designed specifically for group coverage—such as that offered by an employer like the Postal Service. The plan is administered through your PSHB provider, and it works behind the scenes once you enroll in Medicare Part B.

This automatic integration provides:

• A $2,000 annual out-of-pocket cap on prescription drugs

• Coverage of medically necessary drugs listed in the plan’s formulary

• Access to a broad network of pharmacies

• Coordination between Medicare and your PSHB plan for reduced costs

However, this doesn’t mean every medication is covered or that costs will always be predictable.

The Hidden Gaps That Could Surprise You

Even though the EGWP provides substantial benefits, there are some limitations you should be aware of:

1. Formulary Restrictions

Each PSHB plan operating a Part D EGWP maintains its own list of covered medications (formulary). This means:

• A drug covered under your PSHB plan prior to Medicare integration may not appear on the Part D formulary.

• Certain drugs may require prior authorization or be placed on higher cost tiers.

• Brand-name medications could be excluded in favor of generics.

This formulary variance may create unexpected out-of-pocket costs if your medication is not preferred or covered at all.

2. Step Therapy and Prior Authorizations

Many drugs in Part D plans require step therapy or prior authorization. In 2025:

• Step therapy mandates that you first try less expensive medications before “stepping up” to more costly alternatives.

• Prior authorizations require provider documentation before coverage is approved.

These requirements can delay treatment and create administrative hurdles that many retirees are unprepared for.

3. Specialty Medication Challenges

High-cost specialty drugs for conditions like cancer, autoimmune disorders, or certain infections often fall under:

• Tier 4 or Tier 5 pricing

• Coinsurance-based payment (typically 25% to 33%) until the $2,000 out-of-pocket limit is met

Although the new $2,000 cap in 2025 helps reduce long-term expenses, the upfront costs for specialty drugs may still be burdensome.

What Happens If You Opt Out of the EGWP?

In 2025, opting out of the PSHB-integrated EGWP has significant consequences:

• You lose all prescription drug coverage under PSHB.

• You will not be automatically enrolled in any standalone Medicare Part D plan.

• You may not be able to re-enroll in the EGWP later unless you qualify for a Special Enrollment Period.

This could leave you exposed to:

• Full retail prices for medications

• Part D late enrollment penalties if you try to rejoin Medicare drug coverage later

• Limited coverage options unless you apply through a private Part D plan, which may not coordinate with your PSHB medical benefits

Enrollment Timing and Coordination With Medicare

To maintain PSHB prescription benefits:

• You must enroll in Medicare Part B when you become eligible, usually at age 65

• You must not opt out of the EGWP if you want your drug benefits to continue

Enrollment in Medicare triggers automatic enrollment in your plan’s EGWP. This coordination is managed by your PSHB provider and the Office of Personnel Management (OPM). No separate enrollment in Medicare Part D is needed—but if you are not enrolled in Part B, the EGWP will not activate.

It is crucial to enroll in Part B during your Initial Enrollment Period, which lasts for 7 months surrounding your 65th birthday. If you delay, you may:

• Miss automatic integration with the PSHB EGWP

• Face late enrollment penalties

• Experience lapses in prescription coverage

Comparing Pre-2025 FEHB Coverage With Current PSHB Options

Before the PSHB transition, many postal retirees relied on the Federal Employees Health Benefits (FEHB) program, which offered its own prescription benefits.

Now, in 2025:

• FEHB no longer covers active USPS workers or USPS retirees

• PSHB plans must be selected, and drug benefits are automatically linked to Medicare via the EGWP for Medicare-eligible individuals

• PSHB enrollees with Medicare Part B receive enhanced coordination and cost caps, while those without Part B risk coverage loss

This shift means it’s no longer enough to keep your old FEHB plan. You must actively manage your PSHB plan and Medicare status to maintain drug benefits.

How Cost-Sharing Really Works in 2025

The integration between PSHB and Medicare through EGWP impacts your cost-sharing structure:

• Deductible Phase: You may be responsible for up to $590 (the maximum Part D deductible in 2025) unless your PSHB plan waives it.

• Initial Coverage Phase: You typically pay a percentage of drug costs or flat copays based on the plan’s tier structure.

• Catastrophic Phase: Once you hit the $2,000 out-of-pocket cap, the plan pays 100% of your remaining costs for the year.

Even with these protections, the timing of when you hit that cap matters. If you need a costly drug early in the year, you could face high expenses upfront.

What You Should Check Each Year

Every year during the Open Season (November to December), review your plan’s Annual Notice of Change (ANOC) to understand:

• Any updates to the drug formulary

• Changes in prior authorization or step therapy policies

• Shifts in copayment or coinsurance amounts

• Tier placement of the drugs you regularly take

You should also compare how your PSHB plan coordinates with Medicare. Not all PSHB plans offer the same waivers or cost-sharing levels when paired with Part B.

The Importance of Accurate Information and Timing

There is no room for assumption in 2025 when it comes to your PSHB prescription coverage. You must stay proactive:

• Confirm you’re enrolled in Medicare Part B at the right time

• Do not opt out of your plan’s EGWP

• Track which medications are included in the formulary and how they’re classified

• Ask your doctor to help with appeals, authorizations, and alternative options if a drug is denied or delayed

If you wait until after an issue arises, you may not be able to correct it until the next Open Season, which could leave you with expensive out-of-pocket costs.

Why Your PSHB Drug Coverage Needs Monitoring—Even After Enrollment

While the EGWP offers solid support in 2025, you must remain vigilant:

• Formularies are updated annually

• Some drugs may be dropped or moved to higher cost tiers

• PSHB plan rules on drug coverage can differ between carriers

The appearance of having complete coverage can be misleading. Unless you confirm each year that your needs are being met by your current PSHB-Medicare combination, you might face unexpected costs.

Take a Closer Look at Your PSHB Prescription Coverage Today

Understanding how PSHB works with Medicare Part D is more than just checking a box. It requires thoughtful review of your plan’s coverage, timing, and costs. If you’re unsure whether your current plan aligns with your prescription needs, or if you’re considering changes during Open Season, now is the time to act.

Contact a licensed agent listed on this website to get personalized help reviewing your prescription drug coverage and PSHB plan options.