Key Takeaways

  • Your monthly contribution to PSHB in 2025 is just one part of the total cost—the real picture includes government contributions and rising plan expenses.

  • Understanding how your premiums are split and where each portion goes can help you evaluate whether your plan still fits your healthcare needs.

Understanding PSHB Contributions in 2025

If you’re enrolled in the Postal Service Health Benefits (PSHB) Program, you’re probably familiar with your monthly premium payments. But what you may not realize is how much more is being paid on your behalf—and how that breakdown impacts your total healthcare costs. In 2025, PSHB contributions are split between employees or annuitants and the federal government. However, the formula, cost-sharing percentages, and increasing plan expenses reveal a more complex financial structure.

In this article, you’ll see how your contributions are calculated, how much the government pays, and where that money goes. You’ll also gain insight into why your out-of-pocket expenses can still rise even as your share of the premiums stays constant.

The Shared Contribution Model

The PSHB operates under a shared cost model. This means both you and the federal government contribute to the total premium. As of 2025, the federal government covers about 72% of the weighted average premium cost, while enrollees cover the remaining 28%. But these percentages apply to the weighted average of all available plans—not necessarily the one you’re enrolled in.

For plans that are priced above average, you may be paying more than 28% of the premium. That difference comes out of your paycheck or pension deduction each month.

Employee vs. Annuitant Share

  • Employees typically pay lower premiums because they are still working and enrolled under active employment terms.

  • Annuitants (retirees) pay more out of pocket, even though they receive the same percentage cost-sharing. Their plans are often more expensive due to older age demographics and increased medical needs.

In 2025, the average annuitant shares are approximately:

  • Self Only: $241.07 per month

  • Self Plus One: $521.06 per month

  • Self and Family: $567.02 per month

These costs represent your portion only. The full premium (your share plus the government’s) is significantly higher.

Where Your Premium Dollars Go

Every dollar you contribute to your PSHB premium supports several components of your health plan. It’s not just about doctor visits or prescription coverage. Here’s a closer look at where your money is allocated:

1. Medical Services

A substantial portion of your premium goes toward covering preventive care, specialist visits, hospital stays, and outpatient procedures. This also includes diagnostic services like labs and imaging.

2. Prescription Drug Coverage

All PSHB plans include pharmacy benefits. For Medicare-eligible annuitants, drug coverage is integrated with Medicare Part D through an Employer Group Waiver Plan (EGWP). In 2025, the annual out-of-pocket cap for drugs is $2,000. Some of your premium dollars help fund this structure.

3. Administrative Costs

Insurers and plan administrators use part of the premium to cover operating expenses like claims processing, customer service, and regulatory compliance. Though these are not directly related to your care, they are essential for the plan’s operation.

4. Risk Pooling and Reserve Funds

Premiums help maintain a balanced risk pool that spreads medical costs across all enrollees. Some funds are also held in reserve to prepare for unusually high claims years.

Government Contribution Breakdown

The federal government plays a major role in keeping PSHB coverage affordable. In 2025, the employer contribution (your share as a postal worker or annuitant) reflects a structured formula:

  • 72% of the weighted average premium of all plans within the same enrollment type (Self, Self Plus One, or Self and Family).

  • Up to 75% of your chosen plan’s premium. The cap ensures that no matter how expensive your plan is, the government’s share won’t exceed this threshold.

If your selected plan is significantly more expensive than the average, the additional cost becomes your responsibility. This is why many enrollees in high-cost plans experience higher payroll or pension deductions.

Cost Differences by Plan Type

Your contribution is determined by your enrollment type. The three types available under PSHB are:

  • Self Only: Coverage for you alone

  • Self Plus One: Coverage for you and one dependent (spouse or child)

  • Self and Family: Coverage for you and multiple eligible family members

In general, the cost rises significantly with each level due to expanded risk and higher projected usage. However, the per-person cost of Self and Family is often lower than Self Plus One when divided among all dependents.

Hidden Costs That Add Up

While the premium you see deducted each month is your primary cost, other expenses can accumulate over time. These include:

  • Copayments: Flat fees for specific services like primary care visits or urgent care.

  • Coinsurance: Percentage-based costs for hospitalizations, surgeries, or specialists.

  • Deductibles: Amounts you pay out of pocket before your plan begins to cover costs.

In 2025, coinsurance for in-network services typically ranges from 10% to 30%, while out-of-network coinsurance can be as high as 50%.

Deductibles can also vary based on your plan, ranging from $350 to $500 for in-network care and up to $3,000 for out-of-network.

Why Costs Keep Rising Despite Stable Contributions

You may wonder why your healthcare spending increases year after year even though the cost-sharing formula hasn’t changed. There are a few reasons:

Inflation and Medical Price Growth

Healthcare inflation typically outpaces general inflation. As providers raise prices, your plan has to pay more for services, and those costs eventually get passed on to enrollees through higher premiums or cost-sharing.

Age-Based Risk Pools

As retirees age, their healthcare needs grow. This increases the average cost of providing coverage, especially in the Self Plus One and Self and Family categories that include other older adults or dependents with complex conditions.

Legislative Requirements

New coverage mandates, drug pricing policies, and Medicare coordination rules influence PSHB expenses. For example, the requirement for Medicare-eligible annuitants to enroll in Part B can increase total costs but reduce direct out-of-pocket exposure for certain services.

Premiums vs. Total Cost of Care

It’s important to differentiate between what you pay as a premium and what you spend in total each year. Your premium is a fixed monthly payment, while your total cost of care includes:

  • Premium contributions

  • Copayments and coinsurance

  • Prescription drug expenses

  • Deductibles and maximum out-of-pocket limits

In 2025, the in-network out-of-pocket maximum under PSHB is $7,500 for Self Only and $15,000 for Self Plus One and Self and Family. That’s the ceiling on what you’ll pay for covered services, not including premiums.

Annual Open Season Considerations

Your contributions and plan selection are locked in for the year unless you experience a Qualifying Life Event (QLE). Each year from November to December, you have the opportunity to:

  • Review changes in premiums

  • Compare plan benefits

  • Adjust your coverage tier

This is the best time to examine whether your current plan still fits your medical needs and financial situation. Higher premiums might be worth it if your plan reduces out-of-pocket expenses elsewhere. Conversely, a lower-cost plan may leave you with higher coinsurance or deductibles.

Are You Paying for Benefits You Don’t Use?

One way to evaluate your contribution value is to consider whether you’re using the benefits you’re paying for. If you consistently:

  • Don’t meet your deductible

  • Rarely visit specialists

  • Avoid high-cost medications

Then you may be overpaying for a plan that provides more coverage than you need. During Open Season, it’s wise to compare lower-premium options with slightly higher cost-sharing, especially if your healthcare usage is minimal.

Getting More Value from Your Contributions

To maximize the value of your contributions in 2025, you should:

  • Coordinate with Medicare: If you’re eligible, enroll in Part B to gain cost-saving benefits built into many PSHB plans.

  • Use preventive services: Many are covered at no extra cost and can help detect issues early.

  • Stay in-network: Out-of-network charges can escalate quickly and are not capped in the same way.

  • Track your medical spending: Use online tools or statements to understand where your money is going.

How to Get Help Understanding Your Plan

If you find the breakdown of your contributions confusing, you’re not alone. Many enrollees are surprised to learn how much is paid on their behalf or how cost-sharing adds up over the year. Working with a licensed agent listed on this website can help you:

  • Compare available PSHB plans

  • Understand premium formulas

  • Estimate total yearly costs

  • Prepare for changes in 2026 and beyond

Your 2025 Contributions Deserve Clarity and Strategy

Understanding how your PSHB contributions are calculated and where the money goes empowers you to make better enrollment decisions. With costs continuing to rise, it’s not enough to assume your current plan is still the best fit. Take advantage of Open Season to assess your options, project your yearly expenses, and align your benefits with your actual healthcare usage.

If you’re unsure how to evaluate your plan or need help navigating the breakdown of contributions and cost-sharing, get in touch with a licensed agent listed on this website for personalized assistance.