Key Takeaways

• Even though PSHB plans include prescription drug benefits, you are automatically enrolled in a Medicare Part D Employer Group Waiver Plan (EGWP) if you’re eligible for Medicare. This integration is key to unlocking enhanced benefits, including new out-of-pocket protections.

• Opting out of Medicare Part D under PSHB can have serious consequences, including the loss of your prescription coverage and the inability to re-enroll until a future qualifying event or Open Season.

Medicare Part D and PSHB: How They Work Together

With the introduction of the Postal Service Health Benefits (PSHB) Program in 2025, your prescription drug benefits undergo a significant transformation. If you’re eligible for Medicare and enrolled in PSHB, your plan now includes a Medicare Part D component through an Employer Group Waiver Plan (EGWP). This is not just a technical change. It directly affects your costs, access to medications, and annual coverage structure.

PSHB prescription coverage and Medicare Part D are no longer separate silos. They’re integrated into one cohesive system designed to provide more predictable costs, better coverage, and streamlined access to medications. But to fully benefit, you need to understand how this integration works and what choices could put your coverage at risk.

Understanding the Role of EGWP in PSHB

If you are a Medicare-eligible annuitant or family member, your PSHB plan automatically includes an EGWP. This special type of Medicare Part D plan is administered by the PSHB insurer in coordination with Medicare. While you are not required to actively enroll in it, you must remain eligible and not opt out if you want to maintain drug coverage.

Key features of the EGWP under PSHB include:

• Automatic enrollment for Medicare-eligible annuitants and family members.

• Coordinated benefits that work with your Medicare Part B.

• Improved cost protections, including the $2,000 out-of-pocket cap for prescription drugs starting in 2025.

• Access to a broader pharmacy network and support programs for medication management.

This structure provides you with enhanced value, especially when dealing with high drug costs or chronic conditions requiring ongoing prescriptions.

What Happens If You Opt Out?

Choosing to opt out of Medicare Part D, or the EGWP under your PSHB plan, triggers more than just a loss of Part D benefits. It results in:

• Termination of your prescription drug benefits under PSHB.

• The inability to re-enroll in the EGWP until a qualifying life event or the next Open Season.

• Higher out-of-pocket expenses for medications if you attempt to obtain them without coverage.

While you retain your PSHB medical benefits, your prescription access becomes severely limited, and you may have to pay full retail price for your medications.

The Impact of the $2,000 Out-of-Pocket Cap in 2025

One of the most meaningful updates to Medicare Part D in 2025 is the introduction of a $2,000 annual out-of-pocket cap on prescription drug costs. If you are enrolled in the EGWP through PSHB, this cap applies to you.

Here’s how it works:

• Once your combined deductible, copayments, and coinsurance for covered drugs reach $2,000, the plan pays 100% of your covered drug costs for the rest of the year.

• This is not a plan-specific feature. It’s a standard Part D rule now in place under federal law.

• It protects you from unpredictable and potentially catastrophic medication costs.

This cap does not apply if you opt out of the EGWP, further reinforcing why you should stay enrolled.

Monthly Payment Option for High Drug Costs

Another key benefit introduced in 2025 is the Medicare Prescription Payment Plan. If your medication costs are high early in the year, you now have the option to spread those costs out evenly across the calendar year.

This helps you:

• Avoid large one-time out-of-pocket bills.

• Manage your cash flow month to month.

• Still qualify for the $2,000 cap once total expenses reach that amount.

This benefit is only available to those who are enrolled in a Medicare Part D plan, including those receiving drug coverage through a PSHB-linked EGWP.

Why PSHB Enrollees Still Need to Pay Attention to Part D Notices

Even though you’re automatically enrolled in Part D through your PSHB plan if you’re Medicare-eligible, you should still read the materials you receive, including:

• Annual Notice of Change (ANOC): Outlines any changes in formulary, copayments, or network pharmacies.

• Evidence of Coverage (EOC): Explains what drugs are covered, how the benefit is structured, and what you pay.

• Explanation of Benefits (EOB): Sent monthly, shows what you’ve paid, what the plan paid, and how close you are to reaching the out-of-pocket cap.

Being engaged with these documents helps you plan ahead and avoid surprises.

Coordination Between Medicare Part B and Part D in PSHB

Many medications are covered under Medicare Part B rather than Part D, such as:

• Injectable medications administered in a clinical setting

• Certain cancer treatments

• Vaccines like flu, pneumonia, and shingles

PSHB plans coordinate these benefits so that:

• Part B-covered drugs are handled under your medical benefit.

• Part D-covered drugs are billed under your EGWP.

This coordination ensures you receive the correct coverage and that your out-of-pocket costs are counted toward the right caps.

Medicare Enrollment Requirements and Their Consequences

For Medicare-eligible PSHB annuitants and family members, enrollment in Medicare Part B is typically required to maintain full PSHB coverage. Although Medicare Part D enrollment isn’t required by law, PSHB plans assume your participation through the EGWP.

If you refuse enrollment in Part B or opt out of Part D:

• Your PSHB plan may reduce or limit your benefits.

• You risk losing the integrated drug coverage that applies the $2,000 cap.

• You may face coordination issues that result in denied claims or higher costs.

To preserve your full benefits, ensure that you remain enrolled in both Medicare Part B and the included Part D coverage.

Common Mistakes to Avoid

Some enrollees unintentionally jeopardize their drug coverage by:

• Signing up for a standalone Medicare Part D plan that conflicts with PSHB EGWP enrollment.

• Enrolling in a Medicare Advantage plan that includes Part D, which can override your PSHB coverage.

• Declining the EGWP coverage when prompted, not realizing the implications.

Before making any changes related to Medicare Part D, consult with a licensed agent listed on this website. They can confirm whether a plan change will affect your PSHB benefits.

What If You’re Not Yet Medicare-Eligible?

If you are under age 65 or otherwise not eligible for Medicare, your PSHB plan still includes prescription drug coverage similar to what was offered under fehb. You do not need to worry about Medicare Part D until you become eligible.

However, once you become eligible for Medicare:

• Your PSHB plan will enroll you in the EGWP automatically.

• You will receive materials explaining the new coordination of benefits.

• You should not enroll in any other standalone Medicare Part D plan to avoid disrupting your PSHB drug coverage.

Advance preparation and awareness of these changes can help make the transition smooth.

Your Next Steps to Stay Protected

To ensure you receive the full value of your PSHB benefits in 2025 and beyond:

• Remain enrolled in Medicare Part B once eligible.

• Do not opt out of Medicare Part D unless you’re willing to lose PSHB drug benefits.

• Avoid enrolling in conflicting plans, such as standalone Part D or Medicare Advantage plans with drug coverage.

• Monitor your drug spending through monthly EOBs to track your progress toward the $2,000 cap.

• Use in-network pharmacies for the best cost-sharing benefits.

These steps protect your access to essential medications and ensure cost savings under the new system.

The Bigger Picture for Your Health and Finances

Medications can be a major source of financial pressure in retirement. The structure of the PSHB program in 2025, especially with the integrated Medicare Part D EGWP, is designed to relieve that pressure through automatic enrollment, reduced costs, and predictable limits.

But it’s only effective if you stay informed and make choices that align with how the system works. Missteps like opting out of Part D or enrolling in a conflicting plan can undo those protections.

If you’re unsure about your current situation or future Medicare eligibility, it’s time to get personalized guidance. Reach out to a licensed agent listed on this website. They can walk you through your options, help you avoid costly errors, and ensure you stay on track for full coverage.