Key Takeaways

• Even with 2025 Postal Service Health Benefits (PSHB) coverage, you may face out-of-pocket costs that Medigap (Medicare Supplement) plans can help reduce.

• Medigap isn’t just for those without group health insurance—it can complement PSHB for Medicare-enrolled annuitants who want fewer cost surprises and broader provider access.

PSHB in 2025: A Brief Overview

The Postal Service Health Benefits (PSHB) Program officially replaces FEHB for USPS workers and retirees in 2025. While the transition was automatic for most enrollees, reviewing your actual benefits under PSHB is more important than ever—especially if you’re already enrolled in Medicare or will be soon.

For Medicare-eligible annuitants and their covered family members, PSHB plans are required to integrate with Medicare Part B. That means:

• You must be enrolled in Medicare Part B unless you’re exempt.

• Most PSHB plans offer reduced cost-sharing if you also have Medicare Part A and Part B.

• Prescription drug coverage is typically handled through an Employer Group Waiver Plan (EGWP), which functions under Medicare Part D rules.

So, why consider Medicare Supplement (Medigap) plans if PSHB already works with Medicare? Let’s explore the gaps you might not realize are still there.

How Medigap Fits Into the Picture

Medigap plans are designed to cover expenses that Original Medicare doesn’t fully pay for. These include:

• Part A and Part B deductibles

• Coinsurance and copayments

• Emergency care while traveling outside the U.S.

PSHB plans may reduce many of these costs—but not always completely. In some cases, a Medigap plan can provide a buffer for expenses PSHB doesn’t absorb.

You may want to think of Medigap as an optional financial shock absorber that works in the background. Even if you rarely use your benefits, the point is protection from unexpected medical bills.

What PSHB Doesn’t Always Cover

Even with robust integration, there are certain healthcare costs where PSHB and Medicare combined may still leave you exposed:

1. Out-of-Network and Non-Medicare Providers

Some PSHB plans use preferred provider networks. If you get care from a provider that doesn’t accept Medicare and isn’t in your PSHB plan’s network, you may pay more—or everything.

Medigap can help reduce or eliminate those costs if the provider accepts Medicare assignment.

2. Deductibles That Still Apply

Medicare Part A has a deductible of $1,676 per benefit period in 2025, and Part B has an annual deductible of $257. While many PSHB plans waive or reimburse these, not all do. Medigap policies typically cover these deductibles.

3. Foreign Travel Emergency Coverage

Neither PSHB nor Medicare offers robust emergency coverage for travel outside the U.S., aside from limited exceptions. Several Medigap plans offer foreign emergency coverage (with conditions).

Medigap Plan Enrollment: What You Should Know in 2025

In 2025, Medigap rules continue to favor timely enrollment:

• You have a six-month Medigap Open Enrollment Period beginning the month you’re both 65 or older and enrolled in Medicare Part B.

• Outside that window, you may be subject to medical underwriting, meaning your application can be denied or priced higher based on health status.

If you already passed that window, you still might qualify for guaranteed issue rights if you lose other coverage, but that depends on the reason and timing.

It’s important to know that Medigap policies are individual. Even if you’re under a family PSHB plan, each Medicare enrollee must apply separately for their own Medigap coverage.

Cost Factors to Consider

Medigap plans do require a separate monthly premium. While costs vary by age, location, and insurer, it’s worth noting that this premium is in addition to:

• Your Medicare Part B premium (standard is $185 in 2025)

• Your PSHB premium (which varies based on plan and coverage tier)

However, if your PSHB plan doesn’t fully cover your deductibles or coinsurance, the cost of a Medigap plan could actually save you money over time—especially in years when you need more care.

Scenarios Where Medigap May Be Worth Adding

Not every PSHB enrollee will need a Medigap policy. But you might consider one seriously if:

• You see specialists who charge above Medicare-approved amounts.

• You expect frequent hospital visits or chronic condition management.

• You want predictable costs and minimal out-of-pocket exposure.

• You travel regularly outside the U.S. and want emergency coverage.

These aren’t just theoretical advantages. In real budgeting terms, eliminating a potential $400 or $800 out-of-pocket surprise can mean peace of mind.

Common Misunderstandings About Medigap and PSHB

Let’s clear up a few misunderstandings that could lead to costly decisions:

Medigap and PSHB Are Not the Same

Your PSHB plan is a group health plan managed by the government in coordination with Medicare. Medigap is a private supplement to Medicare.

You can’t use Medigap to supplement PSHB-only services or to reduce PSHB premiums. It only applies to Medicare-approved charges.

Medigap Doesn’t Include Prescription Coverage

Medigap policies sold after 2005 don’t include drug coverage. Since PSHB already incorporates Medicare Part D through EGWP, this isn’t a major problem. But it means you can’t rely on Medigap for pharmacy benefits.

You Must Have Original Medicare to Use Medigap

Medigap does not work with Medicare Advantage (Part C) plans. If you’re considering Medicare Advantage instead of Original Medicare, Medigap won’t be an option. For PSHB annuitants, Part C generally isn’t the preferred route because it complicates coordination.

Coordinating All Three: PSHB, Medicare, and Medigap

If you’re enrolled in PSHB and Original Medicare, adding Medigap creates a three-part system:

• Medicare pays first.

• Medigap pays second.

• PSHB pays third (if applicable).

This can significantly reduce or even eliminate most out-of-pocket costs, depending on your providers and coverage structure. However, it also means you’re juggling three premiums.

Coordination works best when:

• All providers accept Medicare.

• You understand each plan’s role and claim order.

• You review each year’s benefits to reassess value.

Timing Your Decision Around Enrollment Windows

You should review your options each year during the Medicare Open Enrollment Period (October 15 to December 7) and PSHB Open Season (November to December).

You cannot sign up for Medigap during PSHB Open Season unless you’re also eligible for a special or open Medigap enrollment window.

Consider starting your Medigap research well before October to ensure you don’t miss critical deadlines. If you’re turning 65 or newly enrolling in Medicare Part B, your six-month Medigap window will begin then—don’t waste it.

Where to Get Help

Because this decision involves layers of federal and private insurance coordination, it helps to get expert guidance. While PSHB and Medicare give you powerful protection together, only a licensed agent listed on this website can walk you through whether Medigap adds worthwhile protection in your specific case.

This is especially true if you:

• Want to project costs based on your health profile

• Aren’t sure if your PSHB plan covers Medicare deductibles fully

• Need clarity on the effect of foreign travel coverage gaps

Think Beyond Just Having Coverage—Think About What Isn’t Covered

Having PSHB and Medicare in place is a strong foundation. But what you may not see until the bills arrive are the gaps neither one fills completely. Medigap can serve as your final line of defense—especially in a healthcare system where even minor procedures can carry major costs.

As you weigh your next steps, don’t assume more coverage equals redundancy. Sometimes, it means strategic reinforcement.

For a personalized look at how Medigap could work alongside your PSHB and Medicare coverage, get in touch with a licensed agent listed on this website. They can help assess your needs and timing, and whether Medigap would protect you from the blind spots you didn’t know existed.