Key Takeaways

• Even modest increases in PSHB contribution rates can add up significantly over time, especially for annuitants on fixed incomes.

• Understanding your plan structure and monitoring annual rate adjustments can help you make more cost-effective long-term health coverage decisions.

Why Small Contribution Changes Deserve Your Full Attention

When it comes to your Postal Service Health Benefits (PSHB), it’s easy to overlook small shifts in contribution rates. A few dollars extra per pay period might not feel like much in the short term. But over a full year—or several years—those increases compound. Whether you are still working or are retired and paying as an annuitant, these small changes can influence your budget and long-term affordability in a noticeable way.

What makes PSHB contributions different from other health benefits is how they are tied to both government contributions and market trends. The PSHB system does not have fixed premiums. Instead, plan costs are reviewed annually and adjusted based on a variety of economic and actuarial factors. That means your share of the cost isn’t guaranteed to stay the same, even if you don’t change your coverage.

Understanding How Contributions Are Set

Each year, the Office of Personnel Management (OPM) calculates the total premium for PSHB plans. The government pays approximately 70% of the total premium cost, while you pay the remaining 30%, subject to plan selection.

Here’s how this unfolds:

• If your plan’s overall premium increases by 10%, your 30% share will also rise proportionally.

• If you choose a more expensive plan with higher coverage tiers, your out-of-pocket contributions grow accordingly.

For 2025, annuitant contributions range from roughly $241 per month for Self Only plans to over $560 per month for Self and Family plans, depending on the specific plan you selected. Even a 5% increase across the board could add $150–$300 annually to your health budget.

Compound Impact Over Time

Annual increases rarely look threatening on their own. A 2%–5% jump may not alarm you—especially if it equals just $10 more per month. But over the course of 10 years, these small changes can result in:

• Thousands of dollars in added premium costs.

• Shrinking room in your retirement budget for other necessities.

• A need to adjust plan coverage or consider shifting to a less expensive option.

Let’s look at this across a 10-year span. If your annuitant premium is currently $4,800 per year and increases just 3% annually, by the tenth year you would be paying over $6,400 annually—a 33% rise in cost. This growth is subtle year by year but significant in the long term.

Rate Increases Are Often Uneven Across Plan Types

Not all PSHB plans are affected equally. Some Self and Family options may see higher premium increases than Self Only options. High-deductible plans may fluctuate differently than low-deductible or comprehensive plans. This means the plan you choose today may become disproportionately more expensive than other options down the road.

That’s why reviewing your Annual Notice of Change every fall is critical. Open Season, which occurs each year from November to December, gives you a limited window to assess how much more you’ll be paying next year and whether your current plan still fits your needs.

Budgeting for Year-Over-Year Contribution Growth

In 2025, with healthcare costs continuing to rise nationally, building in a buffer for annual increases is more important than ever. You should:

• Estimate a 3%–5% yearly increase when planning your retirement budget.

• Reassess plan costs during Open Season, even if you’re happy with your current coverage.

• Avoid defaulting into automatic re-enrollment without checking changes in premiums, deductibles, and benefits.

Being proactive can save you from unpleasant surprises and keep your healthcare spending predictable.

Retiree Contributions Can Shift After Medicare Enrollment

If you’re an annuitant and become eligible for Medicare, your PSHB plan may coordinate with Medicare Part B. This integration can reduce your out-of-pocket costs for services—but not always your plan contributions.

In fact, some plans offer incentives such as:

• Waived or reduced deductibles.

• Lower copayments or coinsurance.

• Part B premium reimbursements.

However, these benefits depend on plan design. The base contribution you pay to the PSHB plan might stay the same even after Medicare kicks in. That’s why it’s essential to understand how your PSHB plan works with Medicare and whether the benefits offset the cost of both Part B and the PSHB premium.

Small Changes Are Harder to Spot Without Yearly Review

One of the biggest risks you face is passive enrollment. Many Postal retirees let their coverage roll over year after year, assuming nothing has changed. But behind the scenes, plans may have:

• Adjusted premium amounts.

• Increased specialist copays.

• Changed drug formularies or preferred providers.

Even if your monthly contribution hasn’t increased dramatically, rising cost-sharing can still hit your budget. An extra $20 per doctor visit or $15 per prescription over the course of a year could mean hundreds more in health expenses.

Family Size and Coverage Tiers Affect Long-Term Affordability

If you’re covering a spouse or dependents, any increase is multiplied across the board. The difference between Self Only, Self Plus One, and Self and Family plans isn’t just about premium—it’s about how those increases compound over time.

For example:

• A Self Plus One plan may have a smaller per-person cost than Self and Family, but contribution hikes still scale.

• Children aging out of coverage or spouses becoming Medicare-eligible can reduce your needed coverage level, but you’ll need to initiate changes during Open Season.

Staying on top of your household’s changing needs is key to avoiding unnecessary contribution costs.

Consider the Tradeoff Between Premium and Cost-Sharing

Sometimes, plans with lower monthly contributions come with higher out-of-pocket costs when you actually use care. These high-deductible options can make sense if you use very little healthcare, but they may cost more in a high-need year.

If you’re choosing solely based on contribution rates, you may overlook the long-term tradeoffs:

• Lower premiums often come with higher deductibles and coinsurance.

• Higher premiums may offer more predictable cost-sharing and fewer unexpected bills.

Run the numbers during Open Season. Look at both what you’ll pay in contributions and what you’re likely to spend on actual care.

You Can’t Assume the Government’s Share Will Stay the Same Forever

While the government currently covers about 70% of total premium costs, this percentage is not legally fixed. Legislative changes in future years could impact how much support the federal government offers toward your PSHB premium.

In 2025, proposals have circulated in Congress suggesting:

• Shifting to a flat voucher system instead of a percentage-based model.

• Capping government contributions, regardless of market premium increases.

These policy changes could significantly alter your expected contribution burden. Staying informed through official communications and working with a licensed agent helps you adjust if such shifts occur.

Taking Control of Your Contribution Path Now

There are several steps you can take this year to ensure your PSHB contributions remain manageable in the long run:

• Compare all available plans during Open Season instead of sticking with your current choice.

• Forecast your healthcare usage and budget not just for the next year, but for the next five to ten years.

• Consider how aging, Medicare eligibility, and family changes will affect your plan needs.

• Track each year’s rate increases and factor them into your retirement projections.

Small decisions now—like shifting to a more cost-effective tier or choosing a plan with better Medicare coordination—can prevent larger financial strain down the road.

Don’t Let Gradual Increases Catch You Off Guard

You may not notice a $10 increase per month. But over time, that adds up to hundreds—or thousands—more per year, especially if you’re on a fixed income. Monitoring your PSHB contributions, comparing plan options annually, and factoring in upcoming life changes can help you stay ahead.

To make the most informed decision, speak with a licensed agent listed on this website who can walk you through current options and projections for next year’s cost increases.