Key Takeaways

• The new $2,000 annual out-of-pocket cap for Medicare Part D in 2025 offers meaningful financial relief to those who depend on expensive prescription medications, especially Postal Service retirees and family members enrolled in PSHB.

• Your PSHB drug coverage integrates with Medicare Part D through an EGWP (Employer Group Waiver Plan), which means you will automatically benefit from the cap if you’re enrolled in both PSHB and Medicare Part B.

A New Era for Prescription Costs Under Part D

If you depend on long-term or high-cost medications, the 2025 changes to Medicare Part D could significantly reshape your financial planning. For the first time, Medicare places a firm annual limit of $2,000 on out-of-pocket spending for prescription drugs. This change marks a shift from the older multi-phase structure, where costs escalated unpredictably over the year.

As a Postal Service annuitant or family member covered under the new Postal Service Health Benefits (PSHB) program, you’re automatically enrolled in a Medicare Part D EGWP once you have Medicare Part A and Part B. This means the new protections apply to you automatically, as long as you’re eligible and enrolled.

What the $2,000 Cap Really Means for You

Before 2025, Medicare Part D operated on a tiered structure: the deductible phase, the initial coverage phase, the coverage gap (often called the donut hole), and the catastrophic phase. You would continue paying a share of the costs even after reaching catastrophic coverage. That model is now gone.

Starting in 2025:

• Once your total out-of-pocket costs reach $2,000, you will pay nothing for covered drugs for the remainder of the year.

• The cap resets each calendar year, meaning you may still pay up to $2,000 annually, depending on your medication needs.

• Only Part D-covered prescription drugs count toward the cap, not over-the-counter medications or drugs covered under Part B (like chemotherapy or infused medications).

How It Works with PSHB Prescription Drug Benefits

The PSHB program automatically integrates your prescription benefits with a Medicare Part D EGWP once you’re Medicare-eligible. These plans are not off-the-shelf retail options; they’re tailored specifically for Postal Service retirees and family members.

Here’s how your coverage now aligns:

• No separate enrollment is required for the Part D benefit. If you’re eligible and enrolled in Medicare Part A and B, and your PSHB plan, you’re automatically in.

• Drug costs are coordinated between the PSHB plan and Medicare. Once you hit the $2,000 cap, the EGWP will absorb all additional costs for the rest of the year.

• Insulin remains capped at $35 per month even before reaching the $2,000 limit, based on earlier legislation.

Timing and Enrollment Details

This cap applies starting January 1, 2025. For those who are already enrolled in Medicare and a PSHB plan, there’s no action required. But here are key considerations to keep in mind:

• If you are turning 65 in 2025, your Initial Enrollment Period (IEP) spans seven months: three months before, the month of, and three months after your 65th birthday.

• To activate your Part D benefits under PSHB, you must enroll in both Part A and Part B. Without Part B, you won’t be enrolled in the Medicare-integrated PSHB drug plan.

• The PSHB Open Season from November to December each year allows you to change plans, but not to add Medicare. Medicare enrollment must occur through the Social Security Administration.

Monthly Payment Option for Cost Relief

A brand-new feature launching alongside the $2,000 cap is the Medicare Prescription Payment Plan. This allows you to spread your out-of-pocket costs across the calendar year instead of facing large bills early on.

Here’s how it works:

• If you opt in, your pharmacy costs will be billed monthly, with even installments.

• You may sign up once per year, either during enrollment or at the start of the year.

• This can be especially helpful for budgeting if you typically hit the $2,000 limit within the first half of the year.

PSHB enrollees using Medicare’s integrated drug coverage can take advantage of this feature through their EGWP plan.

What’s Not Covered by the Cap

While the $2,000 cap brings welcome financial protection, it’s important to understand its boundaries:

• Drugs administered in a clinical setting, such as infusions or injectable medications covered under Medicare Part B, are not included.

• Over-the-counter drugs, even those recommended by a doctor, do not count toward your cap.

• Non-Medicare enrollees, including some family members covered under PSHB who don’t yet have Medicare Part B, won’t benefit from this cap unless they qualify separately.

You should also know that private plans outside PSHB may have different structures. Your PSHB-integrated EGWP plan is built around Medicare’s rules and updates, ensuring that you automatically receive the cap if eligible.

Why the Cap Matters for PSHB Retirees

Postal retirees are more likely than the general population to have complex, long-term health conditions requiring consistent medication. The removal of the catastrophic cost phase and the introduction of a firm cap help you plan your budget more predictably.

Some of the benefits for you include:

• No more late-year surprises where medication costs surge after crossing a coverage threshold

• Better coordination between PSHB and Medicare to eliminate redundant costs

• More transparent out-of-pocket limits, helping you make decisions about other retirement expenses

This is especially helpful for high-utilization patients, such as those with diabetes, heart conditions, or chronic pain management needs.

What About the PSHB Drug Formulary?

Your PSHB plan will continue to provide a list of covered drugs (a formulary) each year. While the $2,000 cap helps limit what you’ll pay, it doesn’t guarantee that all medications will be covered or covered in the same way.

You should:

• Review your plan’s formulary during Open Season to ensure your drugs are included

• Compare tier placements for your medications; generics and preferred brands usually cost less than non-preferred options

• Contact a licensed agent listed on this website if you need help understanding your plan’s formulary or how changes might affect your drug costs in 2025

Coordinating with Medicare Part B

One important detail: Medicare Part D (and your PSHB-integrated drug plan) covers most self-administered drugs. But some drugs and therapies fall under Medicare Part B, such as:

• Injectable medications given in a doctor’s office

• Certain vaccines (like flu, pneumonia, and COVID-19)

• Infused drugs, chemotherapy, and dialysis-related treatments

These medications are not included in the $2,000 Part D cap. However, your PSHB medical plan may reduce your cost-sharing if you’re enrolled in both Part B and your PSHB plan.

How This May Influence Plan Selection

While most PSHB plans provide the same core Medicare Part D EGWP benefit, supplemental benefits, premiums, and copay structures may differ. During Open Season, consider:

• Whether your plan offers additional support, such as Part B premium reimbursement

• How much you pay out of pocket before you hit the $2,000 cap

• What network pharmacies your plan uses

It’s not just about the cap; it’s also about how quickly you reach it and what you pay on the way.

Why Timing Matters in 2025

If you’re eligible for Medicare in 2025 and delay enrolling in Part B, you risk losing access to your PSHB-integrated drug coverage altogether. The rule is clear: most Medicare-eligible PSHB annuitants and family members must be enrolled in both Part A and Part B to retain PSHB coverage.

That’s why it’s critical to:

• Enroll in Medicare on time through the Social Security Administration

• Respond promptly to PSHB plan notices or required documentation

• Consult with a licensed agent if you’re unsure of your eligibility or enrollment timeline

Missing key dates could delay your access to this valuable prescription drug benefit.

Making the Most of the $2,000 Cap

To get the full value of this cap in 2025, here’s what you should do:

• Track your prescription spending throughout the year

• Use preferred network pharmacies to minimize copays

• Enroll in the monthly payment option if high costs typically occur early in the year

• Check eligibility of all covered family members, especially those approaching Medicare age

Every dollar you spend on medications counts toward the cap. Understanding the rules helps you reach it sooner, which reduces your costs over time.

Your Prescription Drug Protection Has Evolved

The 2025 changes to Medicare Part D are designed to protect you from runaway prescription costs and offer greater budgeting predictability. For Postal Service retirees and family members under PSHB, this evolution is automatic—if you’re enrolled in Medicare Parts A and B.

Still, there are complexities in timing, formulary changes, and eligibility requirements that need your attention. Open Season remains your opportunity to reassess your plan. Medicare enrollment deadlines should never be missed.

To get clarity on how your prescription drug costs will look in 2025, speak to a licensed agent listed on this website. They can walk you through your plan’s drug coverage, what counts toward the $2,000 limit, and how to align your Medicare enrollment with your PSHB benefits.