Key Takeaways

  • PSHB is a distinct program from FEHB, not just a name change. It comes with its own eligibility rules, integration with Medicare, and enrollment procedures tailored for USPS employees and retirees.

  • If you’re a Postal Service annuitant or family member, your health coverage in 2025 depends on understanding and meeting specific PSHB requirements, especially regarding Medicare Part B enrollment.

What PSHB Replaces—and Why It Matters

The Postal Service Health Benefits (PSHB) Program officially replaces the Federal Employees Health Benefits (FEHB) Program for U.S. Postal Service employees, retirees, and their eligible family members starting January 1, 2025. On the surface, it may look like a continuation of federal health benefits. In reality, it operates under a different legal structure, with separate administration and new rules that matter in critical ways.

The PSHB Program is established under the Postal Service Reform Act of 2022, which mandated a new health benefits system exclusively for USPS personnel. That means even though some plan options may appear similar to what you previously had under FEHB, they’re administered separately, and coverage terms, integration with Medicare, and eligibility can vary significantly.

Who Needs to Pay Attention in 2025

If you are currently employed by the Postal Service, are retired, or are covered as a family member under a USPS annuitant’s plan, you are affected by the switch. Everyone under these categories must enroll in a PSHB plan during the transition period to maintain coverage in 2025 and beyond.

If you miss this enrollment requirement, your current FEHB coverage will not simply carry over as it used to. In most cases, you will be automatically assigned to a comparable PSHB plan, but there are caveats:

  • Automatic enrollment applies only to those currently enrolled in FEHB and eligible for PSHB.

  • You will not be automatically enrolled if you are covered under a non-USPS federal employee’s FEHB plan.

  • If you are Medicare-eligible and decline to enroll in Part B when required, you may face loss of PSHB coverage or reduced benefits.

PSHB and Medicare: Coordination Rules Are Stricter

One of the biggest changes in the PSHB system is the mandatory coordination with Medicare Part B for certain retirees and family members.

If you are a Postal Service annuitant (or a family member of one) and eligible for Medicare as of January 1, 2025, then:

  • You must enroll in Medicare Part B to maintain full PSHB benefits.

  • Exceptions are granted only if you retired on or before January 1, 2025, are living abroad, or are covered under VA or Indian Health Services.

This is not a casual recommendation. If you do not meet these requirements, your PSHB plan may not provide full medical coverage, and in some cases, you may not be enrolled at all.

For those already enrolled in Medicare Part A and B, your PSHB plan will coordinate with Medicare to reduce out-of-pocket costs through waived deductibles or lower copayments, depending on the plan structure.

Pharmacy Coverage Also Looks Different

Prescription drug coverage under PSHB plans in 2025 is integrated with Medicare Part D through what’s called an Employer Group Waiver Plan (EGWP). This is another fundamental difference from FEHB.

What this means for you:

  • If you’re Medicare-eligible, you will be automatically enrolled in the PSHB’s Medicare Part D EGWP plan.

  • Opting out of this prescription drug plan results in loss of drug coverage under PSHB.

  • The plan includes a $2,000 annual out-of-pocket maximum for prescription medications, in line with the 2025 Medicare Part D changes.

  • There is a $35 monthly cap on insulin, and an expanded pharmacy network is available.

This integrated drug coverage is separate from what you may have experienced under FEHB, where some enrollees chose to add Part D on their own. Under PSHB, the coordination is built-in, and opting out limits your future re-enrollment options.

Enrollment Isn’t One-and-Done

Your initial enrollment into PSHB likely occurred during Open Season from November to December 2024. But PSHB enrollment isn’t a set-it-and-forget-it system.

Going forward, you will:

  • Need to review your plan each Open Season to confirm it still meets your needs.

  • Be responsible for making changes based on life events (known as Qualifying Life Events or QLEs).

  • Use separate portals: USPS employees will use LiteBlue, and annuitants will use KeepingPosted.org to manage health benefits.

Remember, PSHB and FEHB are administered separately. Mistakes made on the wrong portal or misunderstanding QLE deadlines can result in lost or delayed coverage.

Premiums and Contributions: The Federal Share Still Applies

One similarity you’ll notice is that the government continues to pay a substantial portion of your health plan premium. In 2025, this contribution averages about 72% of the total cost of coverage, similar to FEHB.

However, due to the new plan structure and pricing models:

  • Your premium shares may differ from what you paid in FEHB.

  • Monthly costs vary by plan type (Self Only, Self Plus One, or Self and Family).

  • Medicare coordination can influence your premium burden depending on the plan you choose and your Medicare status.

You may also notice different pricing tiers, since PSHB plans operate with their own rating structure based on the USPS population instead of the larger federal employee base used by FEHB.

Out-of-Pocket Protections Work Differently

Out-of-pocket maximums under PSHB are capped at different levels than under FEHB. For 2025, the caps for in-network services are:

  • $7,500 for Self Only

  • $15,000 for Self Plus One or Self and Family

These protections matter especially when you’re dealing with high-cost medical services. Some plans within PSHB may also provide:

  • Lower in-network copayments

  • Waived deductibles for Medicare enrollees

  • Reduced coinsurance if Medicare is your primary payer

It’s important to understand these thresholds, as they play a significant role in how your actual yearly healthcare costs accumulate.

You Can Still Keep Dental and Vision—But Separately

PSHB does not absorb or replace FEDVIP (Federal Employees Dental and Vision Insurance Program). If you currently have dental or vision coverage under FEDVIP, it remains a separate election and billing process.

Key points:

  • You do not automatically lose FEDVIP when switching to PSHB.

  • You must actively enroll or maintain coverage through BENEFEDS.

  • PSHB changes have no direct effect on your FEDVIP eligibility.

This separation helps retain coverage continuity, but it also requires you to manage two systems if you want full medical, dental, and vision benefits.

FLTCIP and FSAFEDS Remain Unchanged

Other benefits that many federal retirees use—such as the Federal Long Term Care Insurance Program (FLTCIP) and Flexible Spending Accounts (FSAFEDS)—are not affected by the PSHB transition.

  • FLTCIP remains available, but enrollment is currently suspended to new applicants as of 2022.

  • FSAFEDS applies only to active employees, not annuitants, and continues unchanged.

These benefits are administered under different authorities and are not integrated with PSHB or FEHB.

Expect Changes to Continue in Future Years

2025 is the first year of PSHB implementation, but the system will likely evolve. The Office of Personnel Management (OPM) will continue to issue updates, guidance, and adjustments as new regulations, cost trends, and Medicare rules affect the system.

You’ll need to stay alert for:

  • Annual changes in premiums and cost-sharing

  • Updates to Medicare integration and prescription coverage

  • Adjustments to eligibility rules based on federal legislation

  • New resources and portals designed to support PSHB enrollees

Staying informed and engaged with your benefits will help avoid costly surprises, especially if you’re planning retirement or experiencing life changes.

Why Understanding PSHB Rules Now Can Save You Trouble Later

If you still view PSHB as just a rebranded FEHB plan, you risk missing deadlines, misinterpreting Medicare requirements, or underestimating out-of-pocket costs.

The new program comes with its own infrastructure, coordination rules, and compliance standards. Understanding the rules now will help you:

  • Secure the correct coverage

  • Avoid lapses in care

  • Reduce total healthcare expenses

  • Stay compliant with mandatory Medicare enrollment where applicable

For help reviewing your plan options and understanding how PSHB fits into your retirement or family situation, reach out to a licensed agent listed on this website.