Key Takeaways

• While both PSHB and FEHB offer extensive health coverage, PSHB is specifically tailored to suit the long-term needs of Postal retirees, including better integration with Medicare.

• Understanding differences in eligibility, premium contributions, and prescription drug coverage under PSHB can help you make a more informed decision during retirement planning.

Understanding the Shift: Why PSHB Now Stands Apart

In 2025, the Postal Service Health Benefits (PSHB) Program officially replaces FEHB coverage for eligible Postal Service employees, retirees, and family members. This shift, mandated by the Postal Service Reform Act, is more than just a rebranding. PSHB is built with the specific financial and healthcare realities of Postal retirees in mind.

On the surface, PSHB and FEHB may seem similar—they’re both administered by the U.S. Office of Personnel Management (OPM) and offer familiar coverage structures. But the long-term impact on retirees can differ significantly.

Retiree Eligibility Requirements Aren’t Identical

FEHB has historically applied to a broad federal workforce, including Postal Service members. However, as of January 1, 2025, all eligible Postal retirees are now required to enroll in a PSHB plan instead of FEHB, unless they qualify for certain exemptions.

You’re exempt from transitioning to PSHB only if:

• You retired on or before January 1, 2025

• You’re enrolled in Medicare Part A and not Part B

• You’re 64 or older as of January 1, 2025

• Or you’re living abroad without access to Medicare Part B

Otherwise, your FEHB coverage ends, and continuing health coverage means enrolling in PSHB during the appropriate enrollment window.

Medicare Part B Enrollment Becomes Mandatory for Most

This is a major departure from FEHB’s approach, where Medicare Part B enrollment was optional for retirees.

Now, under PSHB, if you’re a Medicare-eligible annuitant or covered family member, you must be enrolled in Medicare Part B to maintain full PSHB coverage—unless you qualify for one of the exceptions noted above.

This mandatory integration with Medicare helps reduce your overall out-of-pocket expenses because:

• PSHB plans waive or reduce deductibles and copayments for enrollees with Medicare

• Many PSHB plans offer benefits like Part B premium reimbursement

Still, this means you must budget for Medicare Part B premiums, which are currently $185 monthly in 2025, plus any income-based adjustments.

Drug Coverage Works Differently Under PSHB

With FEHB, prescription coverage was built directly into your plan. Under PSHB, it’s still included—but if you are Medicare-eligible, your drug coverage comes from an integrated Medicare Part D plan known as an Employer Group Waiver Plan (EGWP).

Key distinctions:

• Automatic enrollment into this Part D coverage if you have Medicare

• Annual $2,000 out-of-pocket cap in 2025 for covered prescriptions

• Ability to spread drug costs monthly through the Medicare Prescription Payment Plan

You can opt out of this coverage, but doing so eliminates your prescription benefit under PSHB altogether, which may not be reversible.

Premium Contributions Are Calculated Differently

You’re likely familiar with FEHB’s shared premium model—about 70% paid by the government and the rest by you. PSHB keeps a similar structure, but with updated rates specific to the Postal workforce.

Here’s where it gets critical: premium contributions under PSHB can differ from what you previously paid under FEHB. For 2025, annuitants’ share of monthly premiums are:

• Self Only: around $241

• Self Plus One: around $521

• Self and Family: around $567

Even if your PSHB plan name matches your old FEHB plan, the premium structure is redefined. You must reassess whether your plan still meets your cost and coverage expectations.

Out-of-Pocket Costs Could Be Lower—But Only If Coordinated Well

PSHB is designed to work in tandem with Medicare. If you’re enrolled in both Part A and Part B, your out-of-pocket costs can drop significantly thanks to waived deductibles and reduced copayments.

However, without Medicare Part B:

• Some PSHB plans may impose higher deductibles

• You may pay more for services like specialist visits or inpatient care

Review how each plan’s cost-sharing changes with and without Medicare enrollment. These details often hide in plan brochures, not marketing summaries.

Annual Enrollment Windows Still Apply—But There’s More at Stake Now

You still get an annual Open Season from November to December to:

• Review your PSHB plan options

• Add or remove eligible family members

• Adjust your coverage level

However, the stakes are now higher if you don’t make active choices:

• If you don’t enroll in Medicare Part B when required, you risk losing full coverage

• If you opt out of the integrated Part D drug plan, you lose pharmacy coverage

This means reviewing your Annual Notice of Change (ANOC) is not optional—it’s essential.

Provider Networks Might Not Stay the Same

Though some PSHB plans look like their FEHB counterparts, the provider network might not be identical. This is particularly important in retirement, when continuity of care matters more.

Check with your providers to confirm they accept your PSHB plan, especially if it integrates with Medicare. Dual coordination is common—but not universal.

Family Coverage Rules Require Special Attention

FEHB allowed many retirees to cover spouses and dependents easily. PSHB maintains this option, but coordination with Medicare becomes more complicated.

If your spouse or dependent is also Medicare-eligible, they’ll also need to enroll in Part B to keep full PSHB coverage. If they aren’t yet Medicare-eligible, they can still be covered, but premiums and cost-sharing will reflect that mixed status.

Plan accordingly so that:

• Your family members remain continuously covered

• You understand how age and Medicare eligibility affect cost

Survivors’ Rights and PSHB

Another key difference in retirement is how survivor coverage works under PSHB.

To ensure your surviving spouse keeps coverage:

• You must elect a survivor annuity

• They must be enrolled in your PSHB family coverage at the time of your death

These are the same basic requirements as FEHB, but failure to follow through can mean permanent loss of coverage for your survivors.

Some Plans May Offer Medicare-Based Incentives

A unique PSHB feature in 2025 is the emergence of incentives tied to Medicare enrollment. While exact offerings vary, common perks include:

• Partial or full reimbursement of your Medicare Part B premium

• Lower out-of-pocket maximums if you’re dual-enrolled

• Extra benefits not available to non-Medicare enrollees

Again, you won’t see these benefits if you skip enrolling in Medicare Part B. And you won’t know what’s available unless you compare PSHB plan brochures carefully.

Making PSHB Work for Your Retirement Future

PSHB introduces structural changes designed to serve Postal retirees better, especially when combined with Medicare. But it also places more responsibility on you to:

• Stay informed

• Compare plans annually

• Coordinate coverage wisely

You can no longer assume that the plan you had under FEHB will serve your needs the same way in retirement. Even subtle differences in copayments, deductibles, and drug coverage can have a major financial impact over time.

Aligning Your PSHB Plan With Your Retirement Strategy

The most important takeaway? PSHB isn’t just a switch—it’s a new system with retirement-specific rules, requirements, and advantages.

Your needs in retirement—especially with Medicare involved—are different than when you were working. Take time to:

• Review the PSHB plan booklet each year

• Ask how your providers coordinate with PSHB and Medicare

• Understand your cost-sharing with and without Medicare

• Ensure your spouse’s and dependents’ needs are also met

If you’re unsure about next steps, speak to a licensed agent listed on this website who can help you match your health coverage to your retirement strategy.