Key Takeaways

  • Adding a Medicare Supplement (Medigap) plan to your PSHB coverage in 2025 may result in redundant coverage and unnecessary out-of-pocket costs.

  • PSHB plans already coordinate with Medicare, making many Medigap benefits duplicative and not cost-effective.

Understanding the PSHB and Medicare Relationship

As a Postal Service annuitant or eligible employee, you now receive health coverage through the Postal Service Health Benefits (PSHB) Program. With the shift away from the Federal Employees Health Benefits (FEHB) system starting January 1, 2025, your plan options, cost-sharing details, and integration with Medicare may have changed.

PSHB plans are specifically designed to coordinate with Medicare for those who are eligible. If you are 65 or older and enrolled in Medicare Part A and Part B, your PSHB plan typically acts as secondary coverage. This coordination alone offers significant financial protection. Many PSHB plans waive deductibles, copayments, and coinsurance when paired with Medicare Part B.

But this raises a critical question: if your PSHB plan already functions as secondary insurance to Medicare, does it make sense to buy a Medicare Supplement (Medigap) policy on top of it?

What Medigap Plans Are Designed to Do

Medigap policies are intended to fill the gaps in Original Medicare, specifically:

  • Covering Medicare Part A and B deductibles and coinsurance

  • Reducing or eliminating out-of-pocket costs for hospital and outpatient care

  • Providing coverage for services like foreign travel emergency care

They are private insurance plans that work only with Original Medicare. Medigap does not coordinate with Medicare Advantage (Part C), and it generally does not factor in employer-sponsored retiree plans like PSHB.

In most cases, if you have a Medigap policy, it pays after Medicare pays its share. But PSHB plans already do that. This overlap can be wasteful and expensive.

Why Adding Medigap to PSHB Often Doesn’t Make Financial Sense

If you’re enrolled in both Medicare and PSHB, your PSHB plan becomes secondary to Medicare. That means the plan picks up most or all of the leftover costs after Medicare pays. This includes:

  • Your 20% coinsurance for outpatient services

  • Hospital deductible and coinsurance

  • Certain preventive care costs

This type of coordination already mimics the role a Medigap plan plays. So, paying an additional monthly premium for a Medigap plan may result in little to no additional coverage value.

You’d essentially be paying for:

  • A third layer of coverage that rarely gets used

  • Premiums for a Medigap policy that offers duplicate benefits

In 2025, Medigap premiums vary widely depending on the plan type and where you live, but in all cases, they add an extra recurring cost with minimal benefit if you already have PSHB.

Specific Risks of Overlapping Coverage

It’s important to understand how multiple layers of insurance interact. Here are some problems that can occur when you try to layer Medigap on top of Medicare and PSHB:

  • Claims Confusion: Providers and insurance companies may get conflicting signals about who pays what, leading to delays or denials.

  • Premium Waste: You’re paying three entities (Medicare Part B, PSHB, and Medigap) when two would suffice.

  • Limited Use: Many Medigap policies have no additional services that aren’t already covered under PSHB with Medicare.

  • No Coordination Mechanism: Medigap policies are not designed to coordinate with employer health plans, and coordination problems can affect billing and reimbursements.

What Happens If You Try to Use All Three Together

When you have Medicare, PSHB, and Medigap, the coordination of benefits becomes unclear:

  1. Medicare pays first.

  2. PSHB pays second as the employer-sponsored plan.

  3. Medigap isn’t recognized in this hierarchy because it’s not designed to coordinate with other group plans.

This can leave your Medigap plan in a passive role, paying nothing or very little. Despite this, you continue paying monthly premiums for that plan, seeing almost no return.

Timing and Enrollment Considerations

In 2025, enrollment rules for Medigap differ from Medicare Advantage or Part D. If you’re considering Medigap, here are the key timing rules:

  • Initial Enrollment Period: Begins the month you turn 65 and are enrolled in Part B. You have 6 months to purchase any Medigap plan without medical underwriting.

  • Outside Enrollment Period: If you apply later, insurers can deny you coverage or charge higher premiums based on your health status.

For Postal retirees or annuitants newly enrolling in Medicare in 2025, this can be a tempting window to buy a Medigap plan “just in case.” But if you’re already enrolled in PSHB, it’s worth thinking twice.

How Medicare Part B Works with PSHB

If you’re enrolled in Medicare Part B and a PSHB plan, your out-of-pocket costs are already significantly reduced. In fact, many PSHB plans in 2025:

  • Waive the Part B deductible

  • Cover your Part B coinsurance entirely

  • Offer reduced copays for specialists, urgent care, and ER visits

This level of integration makes the addition of Medigap superfluous. Instead of helping, it becomes a third wheel in a two-step system that already works efficiently.

Drug Coverage and Medigap: Another Reason to Skip It

Medigap plans do not include prescription drug coverage. That benefit was removed from Medigap in 2006. If you purchase a Medigap plan, you’d need a separate Part D plan to get drug coverage.

But PSHB plans already provide prescription coverage as part of their benefits package. In 2025, these plans are integrated with Medicare Part D through an Employer Group Waiver Plan (EGWP), which offers:

  • An annual out-of-pocket cap of $2,000

  • A $35 insulin cap

  • Broad pharmacy networks

Adding a separate Part D plan to complement a Medigap policy may result in lost PSHB drug benefits. And you can’t have both simultaneously.

When Might Medigap Be Worth Considering?

There are only a few scenarios where Medigap might make sense, and most of them don’t apply to PSHB participants:

  • You decline PSHB coverage entirely and want to rely solely on Original Medicare plus Medigap.

  • You move overseas and need foreign emergency coverage that a Medigap plan offers.

  • You have very specific provider preferences that are only fully covered under Medigap.

However, these are rare cases. For most Postal retirees and annuitants, PSHB plans with Medicare provide more comprehensive and seamless coverage than the combination of Original Medicare and Medigap.

The Financial Equation in 2025

Let’s look at the big picture of monthly and annual costs:

  • Medicare Part B Premium: $185 per month in 2025.

  • PSHB Premium: Depends on plan and coverage level, but the government covers roughly 72%.

  • Medigap Premium: Entirely out-of-pocket and adds a third layer of expense.

The combination of Medicare + PSHB already addresses nearly all major medical and hospital expenses. By adding Medigap, you’d likely be paying hundreds of extra dollars annually for minimal added protection.

Even for those who rarely use healthcare services, that premium drain continues month after month. It’s often more cost-effective to keep that money aside for unexpected costs than to spend it on a redundant insurance layer.

If You Already Bought Medigap

If you already purchased a Medigap plan thinking it would enhance your PSHB coverage, don’t panic. You can disenroll:

  • Contact your Medigap insurer to discuss cancellation procedures.

  • Confirm your current PSHB plan’s coordination with Medicare Part B.

  • Make sure you retain prescription drug coverage through your PSHB plan.

Timing matters. Some Medigap plans have refund policies if canceled early. You should also make sure there are no coverage gaps when transitioning out of Medigap.

What to Do Before You Enroll in Any Supplement Plan

Before enrolling in any Medicare Supplement policy, take the following steps:

  • Review your PSHB plan’s benefits when paired with Medicare

  • Ask your plan administrator if any costs remain that Medigap would cover

  • Evaluate your yearly healthcare spending and future expectations

  • Speak to a licensed agent listed on this website for clarity

The right combination of plans varies by individual need, but one thing is clear: adding a Medigap plan to an already integrated Medicare + PSHB setup rarely improves your coverage.

Streamlining Your Coverage Strategy

When it comes to managing your healthcare coverage in retirement, simplicity often leads to savings. With Medicare and PSHB working together, you already have a highly coordinated system that minimizes your costs and protects against major medical expenses.

Before adding another policy, especially one as specific as Medigap, look closely at how the benefits interact. In most cases, they won’t.

To ensure you’re choosing the right setup for your situation, speak with a licensed agent listed on this website. They can help you compare benefits, clarify timelines, and avoid unnecessary expenses.