FEHB vs. PSHB—Which One Offers Better Coverage, Lower Costs, and More Flexibility for Retirees?

Key Takeaways

• FEHB and PSHB both provide health coverage for postal retirees, but PSHB is specifically designed for USPS workers and retirees, impacting plan choices and Medicare integration.

• Costs, benefits, and flexibility vary, so understanding how each program affects premiums, out-of-pocket costs, and provider networks is essential before making a decision.

Understanding FEHB and PSHB: What’s Changing for Postal Retirees?

If you’re a USPS retiree, you’ve likely relied on the Federal Employees Health Benefits (FEHB) Program for years. But starting in 2025, you must transition to the Postal Service Health Benefits (PSHB) Program to maintain coverage. While FEHB and PSHB share similarities, PSHB introduces new factors that may affect your costs, plan options, and Medicare enrollment requirements.

Let’s break down how these two programs compare and which one might be better for you in terms of coverage, costs, and flexibility.

Who Can Enroll in PSHB and FEHB?

FEHB Eligibility

• Available to federal employees, retirees, and eligible family members.

• Postal retirees remain eligible for FEHB only if they’re covered under a spouse’s federal FEHB plan.

• FEHB remains an option for federal retirees outside the USPS.

PSHB Eligibility

• Exclusively for USPS employees, retirees, and eligible family members.

• Retirees who want health benefits must transition from FEHB to a PSHB plan.

• Family members remain eligible if they meet the same criteria used for FEHB.

Comparing Coverage Options: Are There Major Differences?

FEHB and PSHB offer similar core benefits, including hospital, medical, and preventive care coverage. However, PSHB plans are specifically structured for postal workers and retirees, which may affect how they coordinate with Medicare.

What Remains the Same?

• Access to Nationwide Plans: Both programs provide a range of plans, including fee-for-service and health maintenance organization (HMO) options.

• Preventive and Essential Medical Services: You continue to receive coverage for routine doctor visits, hospital stays, and specialist care.

• Prescription Drug Coverage: Both include prescription benefits, though PSHB integrates a Medicare Part D prescription drug plan for Medicare-eligible retirees.

What’s Different?

• Medicare Requirement for Retirees: If you are Medicare-eligible, you must enroll in Medicare Part B to keep your PSHB plan. FEHB does not require this.

• Plan Options and Structure: FEHB includes plans designed for the entire federal workforce, while PSHB focuses on USPS retirees, potentially altering plan availability.

• Prescription Drug Costs: With PSHB’s built-in Medicare Part D plan, costs for medications may be different from what FEHB enrollees have been accustomed to.

Costs: Will You Pay More or Less Under PSHB?

Your healthcare costs under FEHB or PSHB include premiums, deductibles, copayments, and out-of-pocket expenses. Here’s how the two programs stack up:

Premiums

• Under FEHB, the federal government covers about 70% of the premium, with enrollees paying the remaining share.

• PSHB follows the same cost-sharing structure, but premiums may differ due to plan availability and negotiated rates.

Medicare Cost Considerations

• PSHB retirees who enroll in Medicare Part B may see lower out-of-pocket costs because many plans waive certain deductibles and copays.

• FEHB enrollees who delay Medicare enrollment may face late penalties and higher costs.

Out-of-Pocket Maximums

• Both programs limit how much you spend annually before your plan covers 100% of eligible expenses.

• PSHB enrollees with Medicare Part B may benefit from lower maximum out-of-pocket limits.

Deductibles and Copays

• FEHB plans generally have set deductibles and copays that remain consistent across the federal workforce.

• PSHB plans may introduce different cost-sharing structures tailored specifically to postal retirees.

Flexibility: Which Program Offers More Choices?

Plan Selection

• FEHB offers a wide selection of plans from various national and regional providers.

• PSHB plan options are USPS-specific, so plan choices may shift compared to what you had under FEHB.

Provider Networks

• FEHB plans include both national and regional provider networks.

• PSHB plans also offer broad networks, but some providers may shift due to the restructuring of benefits.

Enrollment and Switching Plans

• FEHB enrollees can switch plans during Open Season or after a qualifying life event.

• PSHB enrollees follow the same enrollment rules but must transition to a PSHB plan in 2025 unless covered under a spouse’s FEHB plan.

Medicare and PSHB: What You Need to Know

Medicare plays a bigger role in PSHB than it does in FEHB. If you are a retiree aged 65 or older, here’s how it impacts your coverage:

• Medicare Part B Enrollment Is Required to keep PSHB coverage.

• Medicare Part D Prescription Drug Coverage is included in PSHB plans for Medicare-eligible enrollees.

• Lower Cost Sharing with Medicare: If you have Medicare Part B, many PSHB plans reduce or waive deductibles and copayments.

• Prescription Drug Coverage Integration: Unlike FEHB, PSHB automatically coordinates with Medicare Part D, potentially lowering prescription costs.

What Should You Consider Before Transitioning to PSHB?

1. Medicare Enrollment Status – If you are Medicare-eligible but have not enrolled in Part B, you must do so to maintain PSHB coverage.

2. Plan Costs and Out-of-Pocket Expenses – Compare the total costs of premiums, deductibles, and copays between your FEHB plan and PSHB options.

3. Provider Availability – Ensure that your preferred doctors and hospitals accept your new PSHB plan.

4. Prescription Drug Costs – With PSHB’s built-in Medicare Part D plan, evaluate how your medication costs may change.

5. Future Healthcare Needs – Consider how your health needs may change and whether PSHB provides better long-term coverage.

6. Flexibility and Travel Considerations – If you frequently travel or live in multiple locations throughout the year, make sure your PSHB plan provides nationwide coverage similar to FEHB.

Making the Right Choice for Your Retirement Health Coverage

The transition from FEHB to PSHB marks a significant shift for USPS retirees. PSHB’s Medicare integration offers cost savings for some but requires careful planning, especially for those not yet enrolled in Medicare Part B.

If you’re unsure how these changes affect your specific situation, it’s worth discussing your options with a licensed agent listed on this website to get personalized guidance.