Key Takeaways

• In 2025, the U.S. government covers about 70% of the total premium cost for most PSHB enrollees, while retirees and employees contribute the remaining 30%, which can still be substantial depending on the plan and enrollment type.

• Understanding the PSHB contribution split helps you accurately project your monthly and annual healthcare expenses, especially in retirement when fixed income planning becomes essential.

Why Understanding the PSHB Contribution Split Matters in 2025

As a postal worker or retiree, you rely on the Postal Service Health Benefits (PSHB) program for your healthcare coverage. But just having coverage isn’t enough—you need to understand who pays what. While it may seem like the government covers most of your premium, the reality of your monthly contributions, copayments, and deductibles can significantly impact your budget, especially in retirement.

In 2025, the PSHB program continues the cost-sharing structure previously seen in FEHB, but with new rules and requirements. The cost split between what the government pays and what you pay deserves a closer look—because the real numbers affect your paycheck or annuity check more than you might realize.

The General Contribution Formula: 70/30 in Theory

At the core of PSHB contribution logic is a general 70/30 formula. The federal government covers approximately 70% of the total premium, while you pay the remaining 30%. But that formula isn’t fixed. Here’s what you need to know:

• The 70% government share is capped based on a government-wide average premium, not on your specific plan’s premium.

• If your plan costs more than that average, you’ll pay more than 30%.

• If your plan costs less than the average, your share might be less than 30%—but the coverage may also be more limited.

This formula applies whether you’re still working or already retired, although how you pay your share differs depending on your employment status.

How Contributions Work for Current Employees

If you’re actively employed by the Postal Service in 2025, your premium share is deducted from your paycheck on a pre-tax basis. This provides a significant advantage:

• Pre-tax deductions lower your taxable income, reducing your overall tax burden.

• Your contributions are generally predictable, with biweekly deductions.

As a current employee, you also have more plan flexibility and access to wider cost-sharing options, especially if you’re younger and anticipate lower healthcare usage.

What Retirees Pay Under PSHB in 2025

If you’re retired, you don’t get the same pre-tax treatment. Your contributions are deducted from your annuity payments after taxes, which increases your effective healthcare cost.

In 2025, the average monthly premium contribution retirees pay under PSHB for a Self Only plan is approximately $241, while Self Plus One and Self & Family plans can run from $521 to $567 per month, depending on plan selection. These figures are your share after the government contribution.

And remember:

• Retiree premiums are often higher than what active employees pay.

• PSHB premiums are subject to annual adjustments, so your share may increase over time.

• Medicare coordination can reduce certain out-of-pocket costs, but not the premium itself unless your plan offers specific reimbursement features.

Medicare’s Role in Changing the Cost Equation

Starting in 2025, Medicare-eligible PSHB enrollees face new integration requirements. If you are eligible for Medicare Part B and don’t enroll, you could lose access to PSHB drug benefits unless you qualify for an exemption.

For those who do enroll in Medicare:

• Some PSHB plans offer reduced cost-sharing (such as waived deductibles or lower copayments) when you also have Part B.

• However, you still pay the full Part B premium ($185 in 2025), and that is in addition to your PSHB premium.

This means your total monthly healthcare cost is not just your PSHB contribution. It includes Medicare premiums and potentially other out-of-pocket expenses.

The Premium Breakdown by Enrollment Type

Your PSHB premium share depends heavily on your enrollment category. Here’s how it looks in 2025:

• Self Only: Lowest premium tier. Best for single retirees or workers without dependents.

• Self Plus One: Often more expensive than Self and Family, depending on the plan.

• Self and Family: Covers more people, but due to tiered pricing, the government contribution also increases proportionally.

Regardless of your category, your contribution reflects the balance between plan costs and the government’s capped share.

Contribution Variability by Plan Choice

Not all PSHB plans cost the same. The government’s contribution is based on a weighted average across all plans, not your individual selection. So:

• Choosing a high-cost plan means you’ll pay more than 30%.

• Choosing a low-cost plan might reduce your contribution, but you should carefully evaluate the benefits and limitations.

That’s why it’s essential to read plan brochures and compare out-of-pocket costs, not just monthly premiums. The plan with the lowest premium might have the highest deductibles or least coverage.

How Contributions Are Adjusted Over Time

PSHB contribution amounts are reviewed annually, typically aligned with the Open Season in November. At this time:

• The Office of Personnel Management (OPM) releases premium rates for the coming year.

• Any adjustments to the government contribution cap are applied.

• Your share may increase due to healthcare inflation, new plan costs, or changes in your enrollment type.

Planning for these increases helps you avoid surprises in retirement.

The Impact of Cost Sharing Beyond Premiums

Your PSHB contribution isn’t the only cost you face. You’re also responsible for:

• Deductibles, which range from a few hundred dollars to over $1,500 annually.

• Coinsurance, which can be 10%–30% for in-network care.

• Copayments, which can be $20–$75 for various services.

• Out-of-pocket maximums, which can reach $7,500 (Self Only) or $15,000 (Self and Family).

All of these costs affect your annual healthcare spending and should be factored into your retirement planning. Even if your premium seems affordable, cost-sharing can push total costs much higher.

Budgeting Strategies for Managing Your Share

Understanding what you pay now and what you’ll pay later is key to long-term planning. Consider these strategies:

• Estimate your total annual healthcare cost, not just your premium.

• Set aside funds monthly to cover high-cost months or unexpected procedures.

• Coordinate with Medicare where applicable to reduce cost-sharing burdens.

• Use Open Season each year to reevaluate your plan based on health needs and financial outlook.

Being proactive about these decisions can save you thousands over time.

Why the Split Feels Different in Retirement

While the government still contributes the majority in retirement, the real-world experience can feel much heavier:

• Your contributions are no longer pre-tax.

• You may have lower or fixed income.

• Out-of-pocket expenses often increase with age.

The 70/30 formula may technically remain in place, but its financial impact changes with your life stage.

Evaluating Your Costs Before and After Retirement

It’s useful to compare your PSHB cost projections while you’re working versus after you retire. This allows you to:

• Identify major cost shifts

• Anticipate Medicare integration effects

• Build accurate retirement budgets

If you’re retiring soon or already retired, this analysis is even more critical for avoiding financial strain.

Getting the Full Picture of Your PSHB Share

Ultimately, understanding what you’re responsible for paying under PSHB in 2025 is more than just glancing at the premium table. It involves:

• Reading OPM’s annual updates

• Considering Medicare requirements

• Assessing all forms of cost-sharing

• Evaluating plan options holistically

This gives you a complete, realistic view of how much of the PSHB puzzle you’re truly funding.

Make Sure You’re Not Overpaying or Underprepared

Understanding the PSHB contribution split empowers you to make smarter financial decisions as you navigate your postal career or retirement. Don’t leave your healthcare budgeting to guesswork—evaluate the true costs annually and reassess how the government’s share affects your own.

To ensure you choose the most cost-effective coverage for your situation, get in touch with a licensed agent listed on this website who can help you assess your options and avoid common missteps.