Key Takeaways

• The shift from FEHB to PSHB in 2025 introduces structural changes that affect premiums, deductibles, and Medicare coordination for Postal Service retirees.

• While many benefits remain familiar, PSHB imposes mandatory Medicare Part B enrollment for most eligible annuitants and changes the way prescription drugs are covered.

Why You’re Now in PSHB Instead of FEHB

Beginning January 1, 2025, all eligible Postal Service employees, annuitants, and their families transitioned from the Federal Employees Health Benefits (FEHB) Program to the newly created Postal Service Health Benefits (PSHB) Program. This change is part of the Postal Service Reform Act of 2022, which aimed to stabilize USPS finances while aligning health benefits with Medicare for eligible retirees.

You didn’t need to enroll manually if you already had FEHB coverage. Your plan auto-transferred into a comparable PSHB plan unless you chose a different option during the Open Season held from November to December 2024. While much remains the same on the surface, it’s the details beneath that may affect your future healthcare decisions.

What Stayed the Same

To start with, some key aspects of your previous FEHB experience continue in the PSHB structure:

• Plan options: Most of the same plan names are available under PSHB, offering similar coverage and benefits.

• Government contributions: The federal government still covers roughly 70% of your total premium cost.

• Open Season timing: You’ll still make changes during the annual Open Season period.

• Access to FEDVIP and FSAFEDS: These remain unchanged and continue independently of PSHB.

But beyond those basics, you’ll find that the transition introduces real shifts—especially once Medicare eligibility and prescription drugs come into play.

1. Mandatory Medicare Part B Enrollment for Most

One of the most significant differences with PSHB in 2025 is that Medicare-eligible Postal Service annuitants and family members are generally required to enroll in Medicare Part B in order to retain full PSHB coverage. This requirement applies unless you fall under certain exceptions, such as:

• You retired on or before January 1, 2025.

• You were aged 64 or older as of January 1, 2025.

• You reside overseas.

• You are covered by Veterans Affairs or Indian Health Services.

If you’re newly reaching age 65 or become Medicare-eligible after January 1, 2025, you must enroll in Medicare Part B when first eligible—or risk losing parts of your PSHB coverage, especially related to prescription drugs and provider access.

2. Prescription Drug Coverage Now Runs Through Medicare Part D

Unlike FEHB, the PSHB Program integrates prescription coverage for Medicare-eligible participants through a Medicare Part D Employer Group Waiver Plan (EGWP). This shift alters how medications are managed and paid for:

• A $2,000 annual cap is now in place for out-of-pocket drug costs under Medicare Part D.

• Insulin costs are limited to no more than $35 per month.

• Automatic enrollment into the PSHB Part D plan occurs when you enroll in both PSHB and Medicare Part B.

While this transition is designed to offer cost savings, if you opt out of the Part D component, you lose drug coverage under PSHB and cannot re-enroll later without a new qualifying event.

3. Premiums Shift Slightly for Some, Stay Comparable for Most

Although the government still covers about 70% of total premium costs, annuitants pay slightly different shares depending on their plan and tier. For 2025, monthly annuitant contributions vary but typically fall in these ranges:

• Self Only: Around $240

• Self Plus One: Around $520

• Self and Family: Around $565

These figures reflect the national average, and your actual cost depends on the plan and location. FEHB premiums had already been rising, and PSHB rates continue that trend, particularly for plans with integrated Medicare benefits.

4. Out-of-Pocket Costs Come With New Dynamics

Deductibles, copayments, and coinsurance under PSHB largely mirror FEHB structures—but with several important differences for Medicare enrollees:

• Some plans waive or reduce deductibles if you’re enrolled in Medicare Part B.

• Lower copayments and coinsurance discounts may apply if you coordinate PSHB with Medicare.

• In-network out-of-pocket maximums are capped at $7,500 for Self Only and $15,000 for Self Plus One and Self & Family.

Because cost-sharing varies widely by plan, Medicare integration can significantly affect how much you pay in retirement. Simply put, the more aligned your coverage is with Medicare, the more potential savings you’ll unlock.

5. Network Access May Expand—or Narrow

One subtle but important distinction lies in provider access. Under PSHB, if you’re enrolled in Medicare Part B, you can generally see any provider that accepts Medicare. This can increase your access, especially in retirement when you may move or travel more frequently.

However, for those not enrolled in Medicare, you may find PSHB plans less flexible than your prior FEHB experience—particularly regarding out-of-network coverage or specialty providers.

6. Enrollment Opportunities Are More Limited

In the FEHB program, you could make plan changes during Open Season or due to Qualifying Life Events (QLEs). While this remains true under PSHB, the new Medicare Part B requirement introduces a unique wrinkle: If you decline Part B and later change your mind, your ability to re-enroll in the PSHB plan’s full benefits—including drug coverage—could be restricted.

It’s important to evaluate your Medicare decision carefully at the time of eligibility. Delaying enrollment beyond your Initial Enrollment Period could mean facing penalties and reduced PSHB options.

7. Coordination With Other Federal Benefits

Your PSHB coverage does not affect your eligibility for other federal benefits:

• FEDVIP dental and vision plans remain available to you as a retiree.

• FEGLI life insurance continues unaffected.

• Flexible Spending Accounts are still available for active employees through FSAFEDS.

What’s new is the tighter integration between PSHB and Medicare—which creates better value for some but more complexity for others.

8. Medicare Reimbursement Offers Vary by Plan

Another PSHB feature that didn’t exist widely under FEHB: some plans now offer partial Medicare Part B premium reimbursements. This benefit is available only if you are enrolled in both PSHB and Medicare Part B.

Plans that provide this feature typically apply monthly credits toward your premium or reimburse through a separate payment. However, not every PSHB plan offers this, and the reimbursement amount is plan-dependent.

This makes it even more important to compare PSHB plan brochures carefully before each Open Season to see if this benefit applies to your selection.

9. Automatic Enrollment Rules Apply in Most Cases

If you had an FEHB plan in 2024 and did nothing during the 2024 Open Season, you were automatically enrolled in a similar PSHB plan for 2025. While this default setting protected your coverage, it may not have optimized your costs, Medicare coordination, or access to benefits like drug coverage or Part B reimbursement.

This is why Open Season in future years becomes critical. Comparing plan options annually—especially once Medicare becomes part of the equation—will help you avoid overpaying or missing out on better benefits.

Making Smart Choices With PSHB Going Forward

Now that you’re in the PSHB system, the changes are permanent—and understanding them gives you more control over your healthcare and retirement finances.

• Review plan brochures each year before Open Season.

• Evaluate whether Medicare enrollment applies to you and plan for it well in advance.

• Track your total out-of-pocket costs, not just your premiums.

• Consider switching plans if your healthcare needs or Medicare status change.

While PSHB aligns with FEHB in many ways, the shift toward Medicare integration and the prescription drug structure introduces new trade-offs. If you’re unsure whether your current plan is still the best fit, professional guidance can help.

Understand the New System Before It Costs You

Switching to PSHB isn’t just a paperwork shuffle—it affects your healthcare access, your budget, and your Medicare decisions. If you’re a current annuitant or nearing retirement, it’s worth reviewing your plan selection now, rather than waiting until costs pile up unexpectedly.

To get personalized assistance tailored to your Medicare and PSHB eligibility, connect with a licensed agent listed on this website.