Key Takeaways

• Even with the new 2025 out-of-pocket cap under Medicare Part D, your drug costs can still fluctuate based on usage patterns, pharmacy choices, and whether you’re enrolled in Medicare or a PSHB plan alone.

• Postal retirees should understand how Medicare Part D integrates with their PSHB coverage in 2025 to avoid gaps in prescription drug benefits and unanticipated out-of-pocket expenses.

Why Drug Costs Remain a Problem, Even in 2025

At first glance, the $2,000 annual out-of-pocket cap under Medicare Part D in 2025 sounds like a relief. But for many Postal Service annuitants and Medicare beneficiaries, that figure only tells part of the story. Costs can add up quickly before you ever hit the cap—and depending on how your PSHB plan is structured, the integration with Medicare Part D may create unexpected trade-offs.

Medicare Part D is not automatic for all. While your PSHB plan may include Part D coverage, how it’s applied—and whether you receive the benefits of the out-of-pocket limit—depends on whether you’re properly enrolled in both PSHB and Medicare.

Let’s break down where surprises often appear.

1. Not All Prescriptions Count Toward the $2,000 Cap

One of the biggest misconceptions is that every dollar you spend on prescription drugs will count toward the $2,000 cap. But that’s not always true.

• Only drugs that are covered under your Part D plan—and purchased at in-network pharmacies—contribute toward the cap.

• Over-the-counter medications, non-formulary drugs, or medications filled at out-of-network pharmacies generally don’t count.

• If you’re not enrolled in Medicare Part B and your drug is typically covered under Part B (such as certain injectables), it won’t count toward your Part D total at all.

Even if you’re part of a PSHB plan that includes Part D through an Employer Group Waiver Plan (EGWP), some drugs may still fall outside the boundaries of that $2,000 protection.

2. You Still Have to Pay a Deductible First

The $2,000 cap in 2025 doesn’t erase the deductible. The deductible is the first stage of Medicare Part D drug coverage—and in 2025, it can be as high as $590.

You’ll need to cover this amount out of pocket before the plan begins cost-sharing. That means:

• Early in the year, your pharmacy costs could be at their highest.

• If you need a brand-name drug in January or February, you might be surprised at how much you owe up front.

• Your PSHB plan may help cover some of this cost—but only if Medicare is properly coordinated with your plan.

3. Tiered Copayments Still Apply Before You Hit the Limit

Even after you move past the deductible, you’re not immediately free of out-of-pocket costs. The initial coverage phase of Part D still includes tiered copayments or coinsurance.

Depending on the drug tier and plan design:

• Generic medications may have low copayments,

• Preferred brand-name drugs may have moderate copayments,

• Specialty or non-preferred medications could involve high coinsurance rates.

If your prescriptions fall into higher tiers, you may reach the $2,000 limit sooner—but not without spending significantly on the way there.

4. Part B Coverage Affects Your Drug Cost Protections

Some injectable drugs, infusions, and medications administered in a clinical setting fall under Medicare Part B, not Part D.

Here’s why that matters:

• If you’re not enrolled in Medicare Part B—even if you have Part D—your PSHB plan may deny coverage or shift more cost-sharing to you.

• The $2,000 cap only applies to Part D drugs—not to medications billed under Part B.

This distinction can lead to confusion, especially for drugs that you take both at home and in a clinical setting. Always confirm which part of Medicare the drug falls under.

5. Timing Your Enrollment Impacts Drug Coverage

If you delay Medicare Part B or Part D enrollment beyond your Initial Enrollment Period and don’t qualify for a Special Enrollment Period, you may face late penalties—or worse, a gap in coverage.

• Late enrollment penalties for Part D are permanent and added to your premium.

• A lapse in drug coverage can leave you responsible for the full cost of medications until the next enrollment window.

PSHB enrollees who are Medicare-eligible but miss the Part B or Part D requirements in 2025 may lose access to integrated drug benefits within their PSHB plan.

6. Some Plans Offer Help—but Only If You’re Enrolled in Medicare

In 2025, many PSHB plans coordinate drug benefits through an EGWP, which allows you to receive Medicare Part D protections like the $2,000 cap. But these protections only apply if:

• You are enrolled in both PSHB and Medicare Part B,

• You do not opt out of the EGWP coverage,

• You follow the plan’s rules for using in-network and preferred pharmacies.

Without Medicare enrollment, your PSHB plan may revert to less generous drug benefits.

7. Pharmacies Matter More Than You Think

Where you fill your prescriptions has a direct impact on your cost.

• Preferred pharmacies usually offer lower copayments and more coverage.

• Standard in-network pharmacies may still be covered but cost more.

• Out-of-network pharmacies may not count toward your deductible or out-of-pocket max at all.

If you use a mail-order pharmacy or an independent local pharmacy, be sure it’s in your plan’s preferred network. Otherwise, you could be paying full price without realizing those costs don’t apply toward the $2,000 limit.

8. You Could Hit the Cap Sooner Than You Expect

For individuals who take specialty medications or brand-name drugs monthly, the $2,000 cap may be reached early in the year.

But this doesn’t mean the rest of the year is entirely cost-free:

• The cap covers only drugs under Part D.

• Other costs, such as premiums, Part B drugs, or excluded medications, still apply.

• The Medicare Prescription Payment Plan allows you to spread drug costs over the year, but you must opt in.

It’s wise to track your spending throughout the year and confirm when you’ve reached the limit.

9. Retirees Under PSHB Need to Coordinate Carefully

For Postal retirees, 2025 is the first full year of the PSHB program. While many plans integrate well with Medicare, this coordination requires action on your part:

• You must enroll in Medicare Part B and Part D (or accept the automatic EGWP enrollment through PSHB).

• You must not opt out of Medicare drug coverage if you want the $2,000 cap and associated cost-sharing protections.

• If you’re exempt from the Medicare requirement due to retirement timing or age, you may not get these protections unless you enroll voluntarily.

Ignoring Medicare Part D doesn’t just impact drug costs—it can limit your entire plan’s effectiveness.

10. Annual Reviews Remain Critical

Each year, Medicare and PSHB plans update their formularies, copayments, and cost-sharing rules.

For 2025, the Medicare Open Enrollment period runs from October 15 to December 7. If you’re enrolled in PSHB, you should also review your plan options during the November to December PSHB Open Season.

Make sure to:

• Review your Annual Notice of Change,

• Compare your medications against next year’s formulary,

• Use the PSHB resources available to help you compare plans and understand your drug cost exposure.

Your needs may change annually, and so might your plan’s offerings.

Staying Informed Helps You Avoid Costly Gaps

Even with the protections in place for 2025, Medicare Part D is still a complex piece of the puzzle for PSHB enrollees. It offers strong protections—but only when paired correctly with the rest of your benefits. Gaps, missteps, or delayed enrollments can turn a predictable benefit into a financial burden.

To stay ahead:

• Enroll in Medicare Part B and Part D on time.

• Don’t opt out of PSHB-integrated drug coverage.

• Use preferred pharmacies when possible.

• Track your out-of-pocket expenses closely.

• Review your plan options every fall.

If you’re unsure about any of these decisions, it’s worth speaking with a licensed agent listed on this website for personalized guidance.

Get the Help You Need Before Your Drug Costs Do More Damage

Planning ahead is your best protection against unwanted surprises. As a Postal Service retiree or employee looking toward Medicare coordination in 2025, making the right enrollment choices early can significantly reduce your overall healthcare burden.

For professional advice tailored to your situation, speak with a licensed agent listed on this website.