Key Takeaways

• Your PSHB premium alone doesn’t reflect your full health coverage costs in retirement—Medicare Part B adds a substantial monthly expense.

• While Medicare can lower your out-of-pocket expenses under PSHB, failing to factor in the total cost of both can lead to financial surprises.

The Real Price of PSHB in 2025 Isn’t on the Brochure

When you look at the Postal Service Health Benefits (PSHB) Program premiums for 2025, the numbers might appear manageable. But that’s only part of the story. If you’re Medicare-eligible, you’re not just paying for PSHB—you’re also paying for Medicare Part B. And when you combine the two, the costs can look significantly different than what’s shown in your plan brochure.

Understanding the full financial picture is essential. Here’s how the combination of PSHB and Medicare affects your wallet in 2025.

Why Medicare Part B Matters More Than Ever

For many postal retirees, Medicare Part B is no longer optional. Under the PSHB program, if you’re Medicare-eligible and not exempt, you’re required to enroll in Part B to maintain your PSHB coverage. This rule applies to most annuitants and family members who turned 65 before or during 2025.

Key Medicare Part B Costs in 2025:

• Standard Monthly Premium: $185

• Annual Deductible: $257

These amounts are in addition to what you already pay for your PSHB plan. While the PSHB brochure may show a moderate premium, your actual monthly health insurance cost includes both premiums combined.

What the PSHB Premium Covers—And What It Doesn’t

PSHB premiums in 2025 are often lower than they were under many FEHB plans. But they don’t tell the whole story, especially if you’re Medicare-enrolled. The PSHB premium gives you access to your chosen health plan, which may offer enhanced benefits when Medicare is also in effect. These enhancements typically include:

• Lower copayments for services

• Reduced or waived deductibles

• Broader provider access with Medicare coordination

• Automatic drug coverage under a Medicare Part D Employer Group Waiver Plan (EGWP)

However, to access these cost reductions, you must maintain active Medicare Part B enrollment. Without it, your PSHB benefits may be significantly reduced—or unavailable.

Dual Premiums Can Be Deceptive

Many retirees glance at their PSHB monthly premium and feel reassured. But when you add the Medicare Part B premium, the total cost can come as a shock.

Here’s how the numbers add up for 2025:

• If your PSHB premium is $250 per month, and your Medicare Part B premium is $185 per month, you’re actually paying $435 per month just in premiums.

That number doesn’t include copayments, coinsurance, prescriptions, or other out-of-pocket expenses. And for high-income retirees, IRMAA (Income-Related Monthly Adjustment Amount) may push your Medicare Part B premiums even higher.

How Medicare Lowers Your Out-of-Pocket Costs—But at a Price

PSHB plans are designed to work hand-in-hand with Medicare. The goal is to reduce your cost-sharing for things like:

• Hospital stays

• Outpatient procedures

• Durable medical equipment

• Preventive services

With Medicare as your primary and PSHB as secondary, many services are covered almost entirely. Some PSHB plans even waive deductibles and lower coinsurance rates when Medicare is involved.

But the price for these perks is your consistent payment into the Medicare system. Skipping Part B could mean you lose these enhancements, and worse, lose your PSHB eligibility altogether.

IRMAA Can Make Medicare Even More Expensive

If your income exceeds a certain threshold, you’ll pay more for Medicare Part B through IRMAA. In 2025, the income threshold for IRMAA begins at:

• $106,000 for individuals

• $212,000 for couples filing jointly

If you’re over this limit, your monthly Part B premium could be substantially more than $185. And that extra cost continues every month.

Planning ahead is key. If you’re selling property, withdrawing from retirement accounts, or receiving delayed income in 2023 (the year SSA uses to calculate your 2025 premium), you might unknowingly trigger a higher premium.

You Still Have to Pay for Prescription Drugs

Your PSHB plan in 2025 includes automatic enrollment in a Medicare Part D Employer Group Waiver Plan (EGWP). This is a good thing—it means:

• You don’t have to enroll in a separate Part D plan.

• You’ll benefit from the $2,000 out-of-pocket drug cap introduced in 2025.

• You may get expanded pharmacy access and reduced copays.

But it’s not free. Some PSHB plans pass on part of the drug coverage cost to you in the form of higher plan premiums or separate prescription cost-sharing structures. And if you opt out of the Part D EGWP coverage, your PSHB plan may not include any drug coverage at all.

Total Health Costs in Retirement Go Beyond Premiums

When evaluating your PSHB and Medicare combination, don’t just look at premiums. Consider the following:

• Annual deductible amounts for both PSHB and Medicare

• Copayments for office visits, specialists, and urgent care

• Coinsurance rates for hospital services or outpatient care

• Prescription drug tiers that vary in pricing

• Out-of-pocket maximums, which can be as high as $7,500 for Self Only coverage in-network

All of these add to your total annual health care expense.

Dropping Medicare Could Cost You More

Some retirees consider skipping Medicare Part B to save money. But that decision could be more costly than it seems.

If you don’t enroll in Medicare Part B when required:

• You may lose access to the enhanced PSHB plan benefits.

• You risk losing your PSHB plan altogether if you’re subject to the 2025 requirement.

• You’ll pay a lifetime late enrollment penalty if you enroll in Part B later.

These penalties grow the longer you delay and can stick with you for the rest of your life.

What About High-Deductible PSHB Plans?

Some PSHB options offer high-deductible structures with lower premiums. These plans may seem appealing for healthy retirees, especially when paired with a Health Savings Account (HSA) before age 65. However, these plans may not coordinate well with Medicare, and once you enroll in Medicare, you can no longer contribute to your HSA.

Also, higher deductibles and coinsurance might end up costing you more—especially if you end up needing more care than anticipated.

Making an Informed Choice During Open Season

Every year from November to December, you have a chance to evaluate your PSHB plan and make changes. Don’t just compare premiums. Use this time to consider:

• Your current and expected health care needs

• Whether your provider participates in both Medicare and your PSHB network

• Total costs including Medicare premiums, deductibles, and out-of-pocket limits

• Whether your prescription drugs are covered and at what tier

The brochure is only the beginning—your total cost depends on your personal situation.

Putting the Numbers Together—And Getting Help When You Need It

In 2025, the reality is simple: PSHB costs can look affordable at a glance, but when Medicare enters the equation, your total monthly health expense can double. Being aware of all the moving parts—PSHB premiums, Medicare costs, and your own health needs—can help you make smarter choices.

To avoid surprises, get in touch with a licensed agent listed on this website. They can walk you through what your full costs might look like and help you choose the right PSHB plan for your situation.