Key Takeaways

• While PSHB plans advertise broad retiree health coverage, the actual benefits may depend on critical factors like Medicare enrollment, provider networks, and coverage exclusions.

• Understanding how PSHB coordinates with Medicare Parts A and B is essential in retirement. Overlooking these interactions can lead to unexpected out-of-pocket costs.

What PSHB Claims to Offer You

On the surface, the Postal Service Health Benefits (PSHB) Program sounds like a robust and modernized healthcare solution for postal employees and retirees. With its 2025 implementation, PSHB has promised:

• Streamlined plan choices tailored to USPS employees

• Federal premium contributions

• Comprehensive medical, hospital, and prescription drug coverage

• Improved coordination with Medicare for eligible retirees

These claims seem appealing—and they are. But if you plan to rely on these benefits into retirement, you must understand what those promises actually translate to once you retire. The language used in official brochures can mask the fine print.

Medicare Enrollment Isn’t Just a Suggestion

One of the most important truths behind PSHB is this: if you’re Medicare-eligible in retirement, enrolling in Medicare Part B is no longer optional for most annuitants. As of January 1, 2025, unless you qualify for one of the exceptions, you must enroll in Part B to maintain your PSHB coverage.

This means:

• You’ll pay a separate monthly premium for Medicare Part B, which in 2025 is $185.

• If you don’t enroll in time, you may lose your PSHB medical coverage altogether.

• PSHB plans assume you are enrolled in Medicare. If you’re not, you may face full out-of-pocket costs for services Medicare would have paid first.

Many retirees assumed their federal coverage would stand alone. But with the PSHB transition, Medicare Part B acts as a foundation, not a supplement.

Prescription Drug Coverage Is Now Medicare-Based

Another unexpected shift under PSHB is how drug benefits work. All Medicare-eligible PSHB retirees are automatically enrolled in a Medicare Part D Employer Group Waiver Plan (EGWP).

What this means for you:

• You no longer receive drug benefits solely from your PSHB plan; they come through Medicare Part D via the EGWP.

• You may be subject to new formularies and pharmacy rules under Medicare’s oversight.

• If you opt out of this Medicare drug plan, you lose your prescription coverage under PSHB entirely.

This was not the case before 2025. fehb enrollees could rely on their plan’s standalone drug coverage. Now, PSHB retirees must deal with Medicare regulations, drug tiers, and utilization management rules.

What Your Copayments and Deductibles Might Actually Look Like

Many PSHB brochures highlight low copayments and annual out-of-pocket limits. But these numbers can vary widely depending on your plan option, provider network, and Medicare status.

If you are enrolled in Medicare Part A and B:

• Your PSHB plan typically serves as secondary coverage.

• You may enjoy waived deductibles and lower cost-sharing, depending on the plan.

If you are not enrolled in Medicare:

• You will be subject to the full in-network deductible (ranging from $350 to $1,500 depending on your plan type).

• Copayments and coinsurance may be much higher.

Out-of-pocket maximums under PSHB plans can reach up to $15,000 for family coverage. And remember, these figures usually apply to in-network services. If you venture out-of-network, your costs could be significantly higher.

Network Limitations Could Shrink Your Access

Another area where advertised benefits clash with real experiences is provider access. While PSHB plans claim to offer broad national networks, the reality depends heavily on:

• Whether your provider accepts Medicare assignment

• Whether your provider participates in your specific PSHB plan’s network

• Whether your provider is in-network both with Medicare and your plan (for coordination of benefits)

Some providers may accept Medicare but not your PSHB plan—or vice versa. This disconnect can leave you stuck with out-of-network rates, or even denied coverage altogether.

If you move in retirement, the new region may have fewer in-network providers. That’s a major factor to consider if you expect your current provider relationships to continue uninterrupted.

Dental and Vision Coverage Isn’t Included

Despite common assumptions, PSHB plans do not automatically include dental and vision coverage for retirees. These benefits must be obtained separately through FEDVIP (Federal Employees Dental and Vision Insurance Program).

Here’s what to keep in mind:

• You must enroll in FEDVIP during Open Season or after a qualifying life event.

• Premiums are entirely paid by you; there is no government contribution.

• Coverage levels and provider networks vary greatly between plans.

So while PSHB advertises “comprehensive” coverage, it does not include these areas unless you take additional steps—and pay extra.

Out-of-Network and Overseas Care Comes With Catches

You might think your PSHB coverage follows you anywhere. But that’s not always true. Some surprises you may face include:

• Out-of-network providers often charge higher coinsurance (40% or more).

• Overseas care is typically reimbursed rather than paid upfront.

• Emergency care abroad may be covered, but follow-up or routine services are usually not.

PSHB plans aren’t standardized in how they treat international claims. This matters especially if you plan to travel in retirement or live abroad part-time.

Your Plan Selection Still Matters a Lot

It’s easy to assume PSHB is one-size-fits-all. In reality, there are still significant differences between plans when it comes to:

• Premiums

• Deductibles

• Out-of-pocket maximums

• Specialist visit copays

• Access to telehealth or chronic care programs

If you choose a high-deductible PSHB plan, you may be responsible for thousands in out-of-pocket costs before coverage kicks in—even if you’re enrolled in Medicare.

Review each plan’s brochure carefully. Marketing materials may not highlight the practical differences that affect your wallet the most.

Coordination of Benefits Is Crucial

Once you retire and become Medicare-eligible, the PSHB-Medicare coordination becomes your reality. In most cases:

• Medicare pays first (primary payer)

• PSHB pays second (secondary payer)

But this only works well if you:

• Are properly enrolled in both Medicare Part A and B

• Use providers that accept both Medicare and your PSHB plan

• Understand the claims filing process

If you’re not enrolled in Part B, PSHB becomes your only payer—and pays less, leaving you with higher costs. This is one of the most misunderstood aspects of the new system.

You May Not Be Automatically Enrolled in the Right Plan

While there is an automatic transition to a PSHB plan for current FEHB enrollees, that default plan may not be right for your specific health or budget needs. If you don’t actively review your options during the Open Season (each November–December), you could end up with:

• A high-deductible plan when you need frequent care

• A limited provider network in your area

• Poor coordination with Medicare

Being passively enrolled might simplify the process, but it rarely guarantees the best outcome. You need to assess your own situation and make an informed choice.

Plan Details Can Change Every Year

Even after you select the right PSHB plan, it’s not a set-it-and-forget-it situation. Plans may change annually in:

• Premiums

• Copayments

• Covered services

• Drug formularies

The PSHB system is updated every year, with changes taking effect on January 1. You’ll receive an Annual Notice of Change (ANOC) from your plan. Reviewing this document is critical to ensure your plan still meets your needs.

Don’t Let the Marketing Gloss Over the Gaps

In 2025, PSHB offers many strengths—but it also introduces new rules, costs, and conditions. The promotional materials often skip over the essential fine print:

• Automatic Medicare Part D enrollment isn’t optional

• Medicare Part B is effectively mandatory unless exempted

• Drug coverage rules differ from traditional FEHB

• Network limitations can affect care access

• Out-of-network and overseas care often involves higher costs

If you’re counting on PSHB to carry you through retirement, treat it as a partnership with Medicare—not a standalone solution.

Read Between the Lines Before You Retire

Many of the surprises PSHB retirees face in 2025 stem from assumptions—not facts. Now more than ever, you need to:

• Confirm your Medicare Part B enrollment status and timeline

• Review your PSHB plan’s coverage for in-network vs. out-of-network care

• Understand your drug coverage under the Medicare EGWP model

• Assess your total expected premiums, deductibles, and copayments

And most importantly, don’t rely on general statements in marketing materials. Review plan brochures, provider networks, and the fine print.

If you’re unsure about what PSHB actually covers in retirement, speak with a licensed agent listed on this website to get accurate, personalized advice.