Key Takeaways

  • Even though PSHB plans in 2025 include prescription drug coverage, your automatic enrollment into Medicare Part D can create unexpected overlaps.

  • Understanding how the integrated Part D EGWP coverage works alongside PSHB benefits is essential to avoid paying twice, opting out by mistake, or losing key protections.

When Part D and PSHB Coverage Meet

The Postal Service Health Benefits (PSHB) Program includes integrated prescription drug benefits for Medicare-eligible annuitants and family members. Starting in 2025, this includes automatic enrollment into a Medicare Part D Employer Group Waiver Plan (EGWP). But just because both PSHB and Part D provide drug coverage doesn’t mean they operate the same way or always align smoothly.

In fact, failing to understand how they overlap can leave you with redundant coverage, restricted access, or avoidable costs.

What Your PSHB Plan Covers for Drugs

All PSHB plans include prescription drug benefits. For those without Medicare, this drug coverage operates much like what you may have experienced under FEHB:

  • A standard formulary (list of covered medications)

  • Tiered copayments or coinsurance

  • Annual deductible and out-of-pocket limits

  • Retail and mail-order pharmacy access

However, once you become eligible for Medicare, your prescription drug coverage shifts. Your PSHB plan transitions you to a Medicare Part D EGWP option, administered through your PSHB carrier. While still part of your PSHB plan, this EGWP coverage follows Medicare Part D rules.

What the EGWP Part D Coverage Adds

The Medicare Part D Employer Group Waiver Plan that PSHB uses includes:

  • Enrollment into a Medicare-recognized Part D plan

  • A $2,000 annual out-of-pocket cap for prescription drugs in 2025

  • Enhanced coverage beyond standard Part D, such as lower copays or broader formularies

  • Coordination with Medicare to ensure compliance with federal drug coverage regulations

Unlike private Part D plans on the open market, you do not have to shop for this EGWP coverage separately. It is bundled with your PSHB plan, assuming you are enrolled in both PSHB and Medicare Part B.

Where the Overlaps Begin

While the EGWP is designed to integrate with PSHB, several areas of potential overlap or confusion exist in 2025:

1. Dual Drug Lists

Medicare Part D has its own approved formulary. Your PSHB plan may also maintain a legacy formulary list. The issue arises when:

  • A drug is covered under one formulary but excluded from the other

  • Tiers differ between the PSHB and EGWP listings

  • Prior authorization, step therapy, or quantity limits conflict

This mismatch can cause delays in filling prescriptions, surprise costs at the pharmacy, or denials that require appeals or doctor resubmission.

2. Confusion Over the Out-of-Pocket Cap

The new $2,000 out-of-pocket cap under Part D in 2025 sounds like a clear benefit, and it is—but only for drugs covered by the Medicare Part D formulary.

If your PSHB plan covers a drug that is not included in the Medicare Part D formulary, any cost-sharing for that medication may not count toward the $2,000 limit.

This means:

  • Some drugs might remain subject to separate PSHB cost-sharing rules

  • You may hit the cap under Part D, but still pay for other medications separately

3. EGWP vs. Non-EGWP Prescriptions

All Medicare-eligible PSHB members are enrolled in the EGWP plan unless they actively opt out. But if you decline the EGWP portion of the PSHB coverage (either deliberately or accidentally), you:

  • Lose your drug coverage under PSHB

  • Cannot enroll in a standalone Part D plan without disenrolling from PSHB entirely

  • Risk incurring late enrollment penalties if you rejoin Part D later

The overlap can be a trap: you might assume you’re covered under PSHB for prescriptions, but opting out of the EGWP segment removes the Part D portion, reducing or eliminating your access.

4. Premium Redundancy with Other Part D Plans

Some enrollees mistakenly enroll in a separate, individual Part D plan, not realizing that their PSHB EGWP already includes Part D coverage.

This causes two issues:

  • You cannot be enrolled in two Part D plans at the same time. Medicare will automatically disenroll you from one—usually the EGWP tied to your PSHB plan.

  • Losing the EGWP means losing integrated PSHB drug coverage and possibly paying full cost for prescriptions.

Always check your enrollment status before signing up for any separate Medicare drug coverage.

When Coverage Works Together

Despite the possible overlaps, PSHB and Part D EGWP are designed to function in tandem for most beneficiaries. Here’s how they align effectively:

  • Coordination of Benefits: Your prescriptions are adjudicated through the EGWP, with the PSHB plan offering enhancements like waived deductibles or reduced copays.

  • Single ID Card Use: Most plans let you use a single card at the pharmacy. Behind the scenes, systems coordinate billing between PSHB and Medicare Part D.

  • Insulin Cost Protections: The $35 insulin monthly cap under Part D applies through the EGWP, reducing insulin-related costs.

  • Automatic Catastrophic Coverage: Once you hit the $2,000 out-of-pocket limit in 2025, your plan pays 100% of covered drug costs for the rest of the year.

What to Watch For in 2025

Several developments in 2025 impact how PSHB and Part D interact:

  • Expanded Pharmacy Networks: Some PSHB EGWP plans offer broader pharmacy access compared to standard FEHB-era plans, which helps reduce conflicts.

  • Mid-Year Notifications: You will receive a “Mid-Year Enrollee Notification of Unused Supplemental Benefits” that may include information about unused drug benefits. This helps you identify if you’re missing out on key features.

  • Annual Notice of Change (ANOC): Every fall, your plan sends this document outlining what will change the following year. Always read it carefully, especially drug coverage changes.

  • Coordination with Part B: Many drugs administered in a clinical setting fall under Part B, not Part D. Understanding the boundary between the two is key to knowing what your PSHB and Medicare plans will pay.

How to Avoid Costly Mistakes

You can protect yourself from the hidden pitfalls of overlapping coverage by following a few best practices:

  • Confirm EGWP Enrollment: Don’t opt out unless you have a valid reason and understand the consequences.

  • Avoid Other Part D Plans: Enrolling in another drug plan will cancel your PSHB drug coverage.

  • Review Drug Formularies Annually: Check for any changes in tiering, exclusions, or utilization management that could affect you.

  • Understand Part B vs. Part D: Ask your doctor or pharmacist which part of Medicare a drug falls under before filling a prescription.

  • Track Your Out-of-Pocket Spending: Stay informed about what counts toward your $2,000 cap and what doesn’t.

Important Dates to Remember

Mark your calendar for these critical PSHB and Medicare timelines:

  • Every January: Your new EGWP coverage begins. New cost-sharing rules and caps take effect.

  • June 30 to July 31: Expect the Mid-Year Notification about unused benefits.

  • October 15 to December 7: Medicare Open Enrollment period. Use this time to review your PSHB plan and EGWP details.

  • November to December: PSHB Open Season. Make changes to your overall plan selection during this time if needed.

Missing one of these windows could lock you into suboptimal coverage or cost you eligibility for enhanced benefits.

Why Clarity Matters Now More Than Ever

With the shift to PSHB in 2025 and the integration of Medicare Part D through EGWP, prescription drug coverage is no longer as straightforward as it was under the old FEHB system.

You are now working within a framework that includes:

  • Federal oversight under Medicare rules

  • Employer coordination through the USPS and OPM

  • Annual cost changes and potential benefit modifications

  • The risk of plan disenrollment due to dual coverage conflicts

The key is staying informed. Treat your EGWP enrollment not as an optional perk, but as a required part of keeping your PSHB drug coverage intact.

Make Sure You’re Covered the Right Way

You deserve confidence in your prescription drug coverage. That means understanding how PSHB and Part D operate together, where they overlap, and where you need to stay alert. The system works best when you know how to use it.

If you’re unsure about your current enrollment or want to avoid costly missteps in the upcoming Open Season, get in touch with a licensed agent listed on this website. They can walk you through the details and help tailor your coverage to your needs.