Key Takeaways:

1. PSHB premiums and Medigap plans differ in cost structures and benefits, with key implications for postal workers comparing their healthcare options in 2025.

2. Medicare integration plays a significant role in determining out-of-pocket costs and the overall affordability of these plans.

Understanding PSHB Costs for Postal Workers

The Postal Service Health Benefits (PSHB) program is a cornerstone of health coverage for postal workers and retirees. In 2025, this program continues to serve as a specialized alternative to the broader Federal Employees Health Benefits (FEHB) system. It offers coverage tailored to the needs of postal workers while requiring Medicare integration for eligible retirees and their dependents.

Let’s start with the basics of PSHB costs:

• Premiums: Depending on your enrollment tier (Self, Self Plus One, or Family), PSHB premiums range from $120 to $550 per month. The federal government contributes about 70% of these premiums, making the program highly affordable for active employees and retirees.

• Deductibles: In-network deductibles vary from $350 to $2,000, depending on whether you choose a low-deductible or high-deductible plan. Out-of-network deductibles can go as high as $3,000.

• Coinsurance and Copayments: Coinsurance rates for in-network services are typically 10%-30%, while out-of-network services may incur higher rates of 40%-50%. Copayments for visits range from $20 for primary care to $150 for emergency room visits.

Medicare’s Role in PSHB Coverage

For retirees, Medicare integration is a vital part of the PSHB system. If you’re eligible for Medicare, you must enroll in Part B to maintain your PSHB coverage unless you qualify for specific exemptions. Here’s how Medicare impacts your costs:

• Reduced Deductibles and Coinsurance: Enrollees with Medicare Part B often benefit from waived or reduced deductibles and lower coinsurance rates.

• Prescription Drug Savings: Prescription costs are capped under Medicare Part D’s Employer Group Waiver Plan (EGWP), reducing out-of-pocket expenses.

This integration ensures comprehensive coverage and minimizes the financial burden on postal retirees.

A Closer Look at Medigap Premiums

Medigap, or Medicare Supplement Insurance, is designed to fill the gaps left by Original Medicare (Parts A and B). It’s available to Medicare beneficiaries, including postal retirees seeking to manage out-of-pocket costs. Medigap premiums are based on several factors:

• Age and Location: Older enrollees and those living in high-cost areas may face higher premiums.

• Plan Type: Medigap plans range from basic coverage to more comprehensive options, with costs increasing accordingly.

• Community vs. Attained-Age Rating: Some plans use a community rating (same premium for all enrollees) or an attained-age rating (premiums increase as you age).

On average, Medigap premiums are higher than PSHB premiums, particularly when factoring in Medicare Part B’s standard premium of $185 per month in 2025. However, Medigap plans often provide more extensive coverage for out-of-pocket costs, making them a valuable option for those who anticipate high healthcare needs.

Comparing PSHB and Medigap Costs

When weighing the cost differences between PSHB and Medigap, postal workers and retirees should consider:

• Total Monthly Premiums: PSHB premiums are generally lower, thanks to government contributions. Medigap premiums, combined with Part B costs, can be significantly higher.

• Out-of-Pocket Maximums: Medigap plans don’t have a defined out-of-pocket maximum, but they cover most or all of Medicare’s deductibles and coinsurance. PSHB plans, on the other hand, feature capped out-of-pocket costs, providing financial predictability.

• Prescription Drug Coverage: PSHB plans include integrated prescription drug benefits, whereas Medigap enrollees must purchase separate Part D plans.

Benefits Beyond Costs

It’s not just about the premiums and out-of-pocket costs. The type of coverage you choose can significantly impact your access to care and financial peace of mind. Here are some additional factors to keep in mind:

Provider Networks

PSHB plans often require you to use a network of providers to maximize benefits. Out-of-network care incurs higher costs, which can be a drawback for those who travel frequently or live in rural areas with limited provider options. Medigap plans, on the other hand, allow you to see any provider who accepts Medicare, offering greater flexibility.

Comprehensive Benefits

PSHB plans include supplemental benefits such as vision, dental, and hearing coverage. These extras can add significant value, especially for retirees who may require more frequent care in these areas. Medigap plans typically do not include such benefits, requiring separate coverage.

Financial Predictability

With PSHB, your out-of-pocket costs are capped, giving you a clear understanding of your maximum financial responsibility. Medigap plans can minimize unexpected expenses by covering Medicare’s deductibles and coinsurance, but the lack of an out-of-pocket cap can lead to variability in costs.

Factors to Consider When Choosing

Deciding between PSHB and Medigap comes down to personal preferences and circumstances. Consider these factors:

• Your Health Needs: If you anticipate high healthcare usage, the comprehensive coverage of Medigap may outweigh its higher premiums.

• Budget Constraints: PSHB’s government-subsidized premiums make it an attractive option for cost-conscious individuals.

• Medicare Eligibility: If you’re required to enroll in Medicare Part B for PSHB, the combined costs should be weighed against Medigap options.

• Family Coverage: PSHB plans cover eligible family members, making it a practical choice for those with dependents.

Making the Most of Your Coverage

Regardless of the plan you choose, optimizing your health benefits can help you save money and maximize coverage. Here’s how:

1. Review Your Annual Notices: Both PSHB and Medicare send out Annual Notices of Change (ANOCs), detailing updates to premiums, benefits, and coverage. Staying informed helps you make adjustments as needed.

2. Coordinate with Medicare: If you’re eligible for Medicare, ensure your PSHB or Medigap plan works seamlessly with Parts A, B, and D to avoid coverage gaps.

3. Use Preventive Services: Take advantage of the preventive care benefits offered under both PSHB and Medicare to maintain your health and catch issues early.

4. Explore Supplemental Benefits: PSHB’s vision, dental, and hearing benefits can provide significant value. For Medigap users, consider standalone plans to fill these gaps.

The Bottom Line on PSHB and Medigap

Choosing between PSHB and Medigap depends on your unique needs and priorities. While PSHB offers affordability and comprehensive benefits tailored to postal workers, Medigap provides the flexibility and extensive coverage that some retirees may prefer. By understanding the costs, benefits, and integration with Medicare, you can make an informed decision that supports your health and financial well-being.