Key Takeaways

• Medigap (Medicare Supplement Insurance) is generally unnecessary when you’re enrolled in a PSHB plan, especially if you also have Medicare Parts A and B.

• Paying for both PSHB and Medigap can lead to duplicate coverage with little to no added value, resulting in wasted premiums.

Understanding the Role of Medigap in Medicare

Medigap plans are designed to fill the gaps in Original Medicare. These include expenses like deductibles, coinsurance, and copayments not covered by Medicare Part A or Part B. There are 10 standardized Medigap plans available in most states, each with different levels of supplemental coverage. People usually consider Medigap when they are enrolled in Original Medicare but not in a broader health plan that already provides this supplemental coverage.

But what happens when you’re a postal worker or retiree with Postal Service Health Benefits (PSHB)? Does Medigap still make sense? In most cases, the answer is no—and here’s why.

What PSHB Already Covers

PSHB plans offer more comprehensive coverage than Original Medicare alone. When you enroll in both PSHB and Medicare Parts A and B, the two programs work together to reduce your out-of-pocket costs:

• Medicare pays first for services it covers.

• PSHB pays second, covering much of what Medicare doesn’t.

This coordinated approach means many of the expenses Medigap would normally cover are already absorbed by PSHB. You might see very little to no added benefit from also having a Medigap plan—but you would still be responsible for the premiums.

When Overlap Becomes a Problem

If you’re enrolled in a Medigap plan while also having PSHB and Medicare Parts A and B, you’re paying for duplicate coverage. Here are the areas where overlap is common:

• Hospital coinsurance (Medicare Part A)

• Medical coinsurance (Medicare Part B)

• Blood coverage (first 3 pints)

• Skilled nursing facility coinsurance

• Part A deductible

Your PSHB plan already handles these costs once Medicare pays its share. As a result, your Medigap coverage often has nothing left to pay. Yet your premium doesn’t go away.

What You Should Know About Coordination of Benefits

When you have more than one type of health coverage, it’s essential to understand the order in which they pay:

• Medicare is the primary payer once you reach age 65 and enroll in Part A and Part B.

• PSHB becomes the secondary payer, covering some or all of what Medicare doesn’t.

• Medigap is not designed to work with other group insurance plans, including PSHB.

Unlike PSHB, Medigap plans don’t coordinate benefits with other insurers. That means if your PSHB plan pays the remaining balance after Medicare, your Medigap plan may not have any approved charges left to cover.

Timeline: When to Reconsider Medigap

If you enrolled in a Medigap plan before becoming eligible for PSHB as a retiree, you may want to reassess. Here’s a general timeline to keep in mind:

• At age 65, most retirees become eligible for Medicare Parts A and B.

• When you retire from USPS, you become eligible to enroll in PSHB.

• If you have both Medicare and PSHB, it may be the right time to cancel your Medigap plan.

In 2025, Medicare-eligible annuitants and their eligible family members must be enrolled in both PSHB and Medicare Part B (with some exceptions). This change increases the importance of evaluating your need for Medigap.

Reasons People Keep Medigap Unnecessarily

Many people continue paying Medigap premiums simply because they think more coverage must be better. But that’s not always the case.

Here are common reasons why people hang on to their Medigap plans longer than they should:

• They don’t know PSHB becomes their secondary payer.

• They fear losing benefits if they cancel Medigap.

• They misunderstand how coordination of benefits works.

• They want peace of mind, even if it’s redundant.

The reality is, if you have PSHB and Medicare, you are already protected from most out-of-pocket costs Medigap would cover.

Situations Where Medigap May Still Be Relevant

While rare, a few scenarios exist where Medigap could make limited sense. These include:

• You decline PSHB coverage entirely.

• You are temporarily between PSHB enrollment and Medicare eligibility.

• You live abroad and use Medigap plans with foreign emergency benefits.

Even in these cases, it’s critical to weigh the premiums against the actual value of the added coverage. For most PSHB enrollees, these situations are exceptions rather than the rule.

Financial Impact of Double Premiums

Let’s be clear: Medigap premiums are not low. Paying for both PSHB and Medigap in retirement could cost you thousands of unnecessary dollars each year. This is especially wasteful if your Medigap plan rarely pays out any claims because your PSHB plan already picks up the balance after Medicare.

What you’re left with is a high monthly expense and no practical return on investment.

In contrast, PSHB plans may offer:

• Reduced or waived deductibles when coordinated with Medicare

• Lower prescription drug costs via integrated Part D coverage

• Additional benefits like hearing, vision, and wellness services

All of these are already part of your PSHB package, with Medicare acting as the first payer. Medigap adds little in this scenario.

Medigap Enrollment Rights and Restrictions

If you’re thinking about dropping Medigap, it’s smart to know the rules:

• You may not be able to re-enroll easily later. Medigap plans are guaranteed issue only during specific periods, such as when you first become eligible for Medicare.

• Outside of that window, you can be subject to underwriting.

• You could be denied based on health conditions.

This is why the decision should be timed wisely. But when you already have comprehensive PSHB and Medicare coverage, the likelihood of ever needing to re-enroll in Medigap is low.

How the PSHB and Medicare Integration Changed the Game in 2025

As of January 1, 2025, the PSHB program officially replaced FEHB for postal workers and retirees. With this transition came tighter Medicare integration:

• Part B enrollment is now required for many annuitants and family members to keep PSHB coverage.

• Prescription drug coverage is integrated through a Medicare Part D Employer Group Waiver Plan (EGWP).

• Plans often waive deductibles and reduce coinsurance when Medicare pays first.

This setup means Medigap is no longer necessary to fill coverage gaps. The PSHB plan, paired with Medicare, already achieves that goal.

Smart Steps to Take If You Still Have Medigap

If you’re currently paying for a Medigap plan and you have both PSHB and Medicare:

1. Review your recent Explanation of Benefits (EOB) statements. You may notice your Medigap plan hasn’t been covering much.

2. Contact your Medigap insurer to ask about recent claims paid and whether the plan has coordinated with PSHB.

3. Evaluate your premiums against the benefits you’re actually using.

4. Consult a licensed agent to understand your rights if you choose to disenroll.

5. Document everything before making a change, especially if you plan to cancel the policy.

Where Your Focus Should Be in 2025

If you’re a postal retiree with Medicare, your best financial strategy likely lies in managing your PSHB plan effectively, not layering on more coverage. With stronger Medicare integration, improved prescription drug protections, and secondary coverage built into PSHB, there’s little room for Medigap to offer something new or better.

Get help reviewing your current coverage and projected expenses. A licensed agent listed on this website can help you walk through the numbers, so you can stop wasting premiums and keep your benefits streamlined.