Key Takeaways

• A Medigap plan’s premium is just one part of the picture. In 2025, the most important factors also include coverage details, rate increase history, and how the plan works with your Postal Service Health Benefits (PSHB) and Medicare.

• Focusing only on the cheapest plan might lead to higher out-of-pocket costs in the long run, especially if you overlook limits on coverage, provider access, or inflation-adjusted premium hikes.

Why Medigap Still Matters Under PSHB in 2025

As a Postal Service retiree or annuitant, you may already have access to strong benefits through the PSHB Program. But once you become Medicare-eligible, especially at age 65, you may wonder whether a Medigap plan is necessary—or even beneficial. The truth is, Medigap can still play a role in helping you manage out-of-pocket medical costs that Medicare Parts A and B don’t fully cover.

PSHB integrates with Medicare differently than traditional FEHB plans did. While many PSHB plans offer enhanced coordination with Medicare Part B—often lowering your cost-sharing—Medigap can still provide extra financial protection. However, choosing the right one in 2025 requires more than scanning a premium chart.

Understanding What Medigap Covers (and What It Doesn’t)

Medigap plans are standardized supplemental policies that fill the cost gaps left by Original Medicare. These gaps typically include:

• Part A hospital coinsurance beyond 60 days

• Part A hospice care coinsurance

• Part B coinsurance and copayments

• Skilled nursing facility care coinsurance

• The Part A deductible (some plans)

• Foreign travel emergency coverage (some plans)

However, Medigap does not cover:

• Prescription drugs (you’ll need separate Part D coverage or PSHB’s integrated drug coverage)

• Dental, vision, or hearing services

• Long-term custodial care

• Routine wellness benefits (beyond Medicare’s scope)

In 2025, these distinctions matter more than ever because some PSHB plans now offer these extra services—and you don’t want to double-pay or assume you’re covered when you’re not.

What Lower Premiums Might Be Hiding

It’s tempting to gravitate toward the Medigap plan with the lowest monthly cost. But premiums are only one aspect. Here’s what a lower premium might be hiding:

• Higher out-of-pocket exposure: Some Medigap plans (like Plan K or Plan L) offer lower premiums but only cover a portion of your cost-sharing.

• Increased rate hikes over time: Community-rated or issue-age-rated plans tend to increase more slowly than attained-age-rated plans. Choosing a plan based on low entry premiums could mean steep increases later.

• Provider limitations: While Medigap itself doesn’t restrict providers (as long as they accept Medicare), some insurers apply pre-authorization rules or operate with preferred networks for coordination.

• Customer service and claims support issues: A plan with a lower premium might also have poor support, which matters when disputes arise or paperwork piles up.

Premium Types and Their Future Impact

Understanding how your Medigap premium is structured can help you avoid surprises. In 2025, the three main pricing methods remain:

• Community-rated: Everyone in your area pays the same premium, regardless of age. Offers more price stability over time.

• Issue-age-rated: The premium is based on your age when you enroll. It doesn’t increase as you age, though inflation and other external factors may affect rates.

• Attained-age-rated: The premium starts low but increases as you age. These are often the most appealing initially but can become unaffordable over time.

If you plan to stay enrolled for decades—and many retirees do—community-rated and issue-age-rated policies are generally more predictable.

How PSHB Benefits Affect Your Medigap Decision

If you’re enrolled in a PSHB plan that integrates well with Medicare Part B, you may already enjoy benefits such as:

• Lower or waived deductibles

• Reduced cost-sharing for outpatient care

• Expanded drug coverage through integrated Part D

• Coverage for dental, vision, or hearing

• Part B premium reimbursements in some cases

In this case, adding Medigap may lead to duplication or unnecessary expense. But for retirees with basic PSHB coverage or higher out-of-pocket limits, a Medigap policy could offer peace of mind.

Here’s how to assess:

• Compare PSHB and Medigap coverage head-to-head

• Use your Medicare Summary Notice (MSN) to estimate actual costs Medicare doesn’t cover

• Evaluate your health needs and potential hospital stays

Enrollment Windows and Medical Underwriting

Medigap enrollment comes with specific timing rules. In 2025, your best opportunity remains the six-month Medigap Open Enrollment Period, which starts the first month you’re 65 and enrolled in Medicare Part B. During this time:

• You cannot be denied due to pre-existing conditions

• All available plans in your area must accept your application

If you wait until after this period, you may face medical underwriting, especially if you switch plans later. That means higher premiums or even denial based on your health status.

Keep in mind:

• Some states offer birthday rules or anniversary rules that allow annual plan switches without underwriting

• PSHB annuitants who move to a new state may trigger a Special Enrollment Period for certain Medigap options

What You Need to Review Beyond Premium

Before enrolling in any Medigap plan in 2025, review these additional elements:

• Rate increase history over the past 3-5 years

• Financial stability and rating of the insurer

• Ease of dealing with the plan: claims process, customer service, online access

• Coverage that complements, rather than duplicates, your PSHB benefits

• The plan’s ability to travel with you—especially if you relocate seasonally or permanently

The Role of Prescription Drug Coverage

Medigap plans do not include prescription drug coverage. That responsibility now falls to:

• A standalone Medicare Part D plan, or

• Your PSHB plan’s built-in Part D employer coverage (via an EGWP)

In 2025, most Medicare-eligible Postal retirees will receive prescription benefits automatically through PSHB. These plans include a $2,000 cap on out-of-pocket drug spending, and some offer the Medicare Prescription Payment Plan, which lets you spread costs over the year.

Be sure you don’t accidentally enroll in a standalone Part D plan if you’re already receiving drug benefits through PSHB—it could cause automatic disenrollment from that coverage.

Situations Where Medigap May Still Be Worthwhile

Even with robust PSHB coverage, Medigap can be a smart consideration if:

• You expect frequent hospitalizations and want peace of mind for inpatient costs

• Your PSHB plan has high coinsurance or a large out-of-pocket maximum

• You travel frequently outside the U.S. and need the foreign travel emergency benefit

• You prefer predictability over the managed care model

Conversely, if your PSHB plan already provides low cost-sharing and global coverage, Medigap may offer limited additional value.

Avoiding the Most Common Pitfalls in 2025

To make a better decision, steer clear of these mistakes:

• Focusing only on the cheapest premium without evaluating what’s actually covered

• Failing to coordinate your Medigap plan with PSHB and Medicare Part D

• Missing your guaranteed issue window and being stuck with underwriting hurdles

• Overlooking how premium pricing types affect your long-term affordability

• Assuming all Medigap plans are the same beyond letter types—plan standardization doesn’t mean insurer service is equal

Thinking Long-Term: What Happens 5, 10, or 15 Years From Now

In retirement, today’s budget decisions shape tomorrow’s healthcare outcomes. If you lock into a Medigap plan now, ask yourself:

• Can I afford this plan as the premiums rise over the next decade?

• How likely am I to face major health events?

• Will this plan still meet my needs if I move, lose my spouse, or change doctors?

It’s not just about 2025—it’s about preparing your benefits structure for the long road ahead.

Smart Choices Start With a Full Picture

Your PSHB benefits are an excellent foundation, but they aren’t one-size-fits-all. Adding Medigap might enhance your protection—or it might be unnecessary. By looking beyond premiums, reviewing plan fit, and evaluating long-term sustainability, you can make an informed decision that suits your health, lifestyle, and finances.

If you’re unsure which approach makes sense for your situation, speak with a licensed agent listed on this website for personalized, professional help.