Key Takeaways

• If you’re a USPS retiree or nearing retirement, understanding the shift from FEHB to PSHB in 2025 is crucial for your health coverage decisions.

• While both PSHB and FEHB offer robust benefits, some retirees may prefer PSHB due to Medicare integration, while others might stick with FEHB for broader flexibility.

The Big Picture: FEHB vs. PSHB in 2025

If you’ve spent years working for the Postal Service, you’ve probably been enrolled in the Federal Employees Health Benefits (FEHB) Program. But starting in 2025, there’s a new player in town: the Postal Service Health Benefits (PSHB) Program. This program is now your primary route for health insurance as a USPS employee or retiree.

The transition from FEHB to PSHB affects all Postal Service employees, annuitants, and their eligible family members. The move is mandatory unless you qualify for specific exemptions.

So, how do these two programs really stack up? Let’s dig into the key differences, similarities, and what makes one more attractive than the other—depending on your situation.

What Both Programs Offer

Before comparing, let’s talk about what FEHB and PSHB have in common:

• Government-backed coverage with access to a wide range of health plans.

• Nationwide and regional options depending on your location.

• Premium contributions from the government, typically covering about 70% of the plan cost.

• Access to family, self-only, and self-plus-one coverage tiers.

• Open Season enrollment period every year from November to December.

These shared features give you peace of mind knowing that, regardless of which system you fall under, you’re getting comprehensive health benefits supported by a federal framework.

1. Enrollment Isn’t Optional Anymore

In 2025, if you’re a Postal Service retiree (or employee), you’re no longer eligible to stay in FEHB. You’re automatically moved into a PSHB plan unless you fall into one of the following categories:

• You retired from the Postal Service on or before January 1, 2025, and you’re not entitled to Medicare Part A.

• You are currently covered as a family member under someone else’s FEHB plan.

If you qualify for an exemption, you can stay in FEHB, but otherwise, PSHB is now your home base for health coverage.

2. Medicare Part B Comes Into Play

Here’s where PSHB really stands apart. Starting in 2025, if you’re eligible for Medicare Part B and retired from the Postal Service, you must enroll in Part B to maintain your PSHB coverage—unless you’re exempt.

This requirement can be a major factor in deciding whether PSHB is a good fit for you:

• Pro: If you’re enrolled in both PSHB and Medicare Part B, your out-of-pocket expenses could be significantly reduced. Many PSHB plans waive deductibles and lower copayments for Medicare-enrolled retirees.

• Con: You’ll have to pay the Part B premium, which adds to your monthly expenses.

3. Prescription Drug Coverage Looks Different

Under FEHB, prescription drug coverage is included with your plan. With PSHB, if you’re Medicare-eligible, you’ll automatically be enrolled in a Medicare Part D Employer Group Waiver Plan (EGWP). This comes bundled with your PSHB plan.

Why this matters:

• You’ll get enhanced drug coverage compared to standard Part D plans.

• There’s a $2,000 annual out-of-pocket cap for prescription drugs in 2025 under Part D, which gives you predictable cost control.

If you’re not enrolled in Medicare, you’ll still get drug coverage through your PSHB plan, similar to how it worked under FEHB.

4. Premium Sharing and Government Contributions

FEHB and PSHB are both cost-shared between you and the government. In both cases, the government typically pays around 70% of the premium. What’s different now is the way plans are structured in PSHB.

PSHB plans are tailored to Postal Service populations, which could mean better-negotiated rates due to a more uniform risk pool. While your share of the premium depends on your coverage level and specific plan, retirees under PSHB might see different premium costs than what they were used to under FEHB.

However, if you’re coordinating PSHB with Medicare Part B, you might save on deductibles and coinsurance, potentially offsetting premium differences.

5. Out-of-Pocket Costs and Coverage Generosity

Here’s the part that really affects your wallet.

• PSHB + Medicare Part B: You may benefit from lower deductibles, fewer copays, and capped drug costs. It’s a more integrated system, designed for retirees.

• FEHB (if you remain eligible): Offers robust coverage, but lacks the automatic coordination with Medicare that PSHB provides.

You should review the out-of-pocket maximums, which are plan-specific. In 2025, some PSHB plans cap in-network out-of-pocket spending at $7,500 for Self Only and $15,000 for Self Plus One or Self and Family.

6. More Streamlined Plan Choices

Because PSHB is exclusively for Postal Service employees and retirees, the number of plans available to you is more limited compared to FEHB. This might sound like a downside, but it could actually work in your favor:

• Plans are easier to compare side by side.

• Fewer options mean you’re less likely to get overwhelmed.

• PSHB plans are built with Postal retirees in mind, so benefits are often more relevant to your lifestyle.

That said, if you prefer a broader selection, FEHB still offers more variety—if you’re one of the rare few who can remain in it.

7. Changing Plans in the Future

Both PSHB and FEHB let you make changes during the Open Season or if you experience a Qualifying Life Event (QLE), like marriage or loss of other coverage. The process works similarly in both systems, but PSHB will now be the default route for future plan changes if you’re a Postal retiree.

So once you’re in PSHB, that’s where your plan adjustments will take place every November through December.

8. Family Member Coverage: Still Intact

Worried about how your spouse or dependents will be covered? Don’t be. PSHB still allows for family coverage:

• Self Only

• Self Plus One

• Self and Family

Spouses and eligible dependents can stay covered as long as they meet plan requirements. And if your spouse becomes eligible for Medicare, the same Medicare Part B enrollment rule applies for them to maintain PSHB coverage.

What Should You Do Now?

If you’re already retired and not entitled to Medicare Part A, you’ll likely stay in FEHB. Everyone else—including active USPS employees and most annuitants—should expect automatic enrollment into a PSHB plan.

You should:

• Review your PSHB options before Open Season.

• Check if you’re required to enroll in Medicare Part B.

• Compare out-of-pocket costs and how each plan coordinates with Medicare.

Even if you’re automatically enrolled, it’s smart to log in and confirm that the plan you’re placed in still meets your needs.

Making the Best Choice for Your Health in 2025

Choosing between FEHB and PSHB isn’t really a choice for most Postal retirees—it’s more about understanding what PSHB offers and how to use it to your advantage. If you plan ahead and enroll in Medicare Part B, PSHB can actually provide better cost savings, more coordinated care, and improved drug coverage.

On the other hand, if you’re one of the few who can stay in FEHB, you may prefer its wider plan variety and the familiarity of the system.

Whichever group you fall into, the key is making sure you understand how these programs work together with Medicare and what that means for your retirement budget.

Need help understanding your options? Talk to a licensed agent listed on this website to get personalized advice that fits your retirement goals.