Key Takeaways

  • Although PSHB premiums in 2025 are technically subsidized, many enrollees perceive them as more expensive due to increased Medicare integration and required coordination of benefits.

  • Out-of-pocket costs, including Medicare Part B premiums, cost-sharing, and prescription drug spending, add complexity and raise the overall financial burden.

Understanding the PSHB Premium Structure in 2025

The Postal Service Health Benefits (PSHB) Program, officially launched in January 2025, replaces Federal Employees Health Benefits (FEHB) coverage for USPS employees and retirees. While the shift promises tailored plans and a continued government premium subsidy, many enrollees are surprised by how much they’re paying. Despite the federal government covering approximately 70% of the total premium, you may still feel like your costs are rising.

This isn’t just perception—it reflects real changes in plan structure, integration with Medicare, and how premium contributions are divided. To understand why PSHB premiums feel higher in 2025, you need to look at the full picture, not just your biweekly deduction.

The Government Still Subsidizes Your Plan—But Your Share Is Bigger

Under PSHB, the federal government continues to pay a large share of the total premium cost, typically around 70%. That percentage hasn’t changed from FEHB. What has changed is the underlying cost of coverage.

In 2025:

  • Total plan premiums have increased across the board due to inflation, expanded benefits, and updated actuarial costs.

  • Your 30% share is calculated on a higher base premium, meaning your out-of-pocket amount has increased even though the subsidy formula is unchanged.

  • PSHB plans now incorporate different cost-sharing structures than you might have experienced under FEHB, especially if you are Medicare-eligible.

This means you’re not paying more because you’re getting less support. You’re paying more because everything is more expensive—and you’re absorbing a portion of that increase.

Medicare Part B Is Now a Core Part of PSHB for Many

For annuitants and family members who are eligible for Medicare, the 2025 PSHB structure introduces a significant shift: enrollment in Medicare Part B is now mandatory to retain full PSHB benefits unless you fall under a listed exemption (such as having retired before January 1, 2025).

Here’s what that means for you:

  • You must pay the Medicare Part B premium—$185 per month in 2025.

  • This premium is in addition to your PSHB plan premium.

  • While some PSHB plans offer benefits like lower deductibles or premium reimbursements if you’re enrolled in Part B, you still need to pay up front.

Many retirees had previously opted out of Part B to save money. Under PSHB, that’s no longer an option without penalty.

Dual Premiums Create Sticker Shock

The most common reason retirees feel like PSHB is costing more is the dual-premium setup. You’re now responsible for:

  • Your PSHB plan premium (your share of the 30%)

  • Your Medicare Part B premium

When you add those together, the total monthly cost often exceeds what you paid under FEHB in 2024. This is especially jarring for annuitants on fixed incomes, who must plan their budgets around consistent outflows.

Even if your PSHB plan includes some Part B reimbursement, these reimbursements are rarely equal to the full cost of Part B. This leaves you with higher recurring healthcare expenses, despite the promise of coordinated care.

Cost-Sharing Differences: Copays, Coinsurance, and Deductibles

PSHB plans in 2025 often introduce different cost-sharing structures compared to what FEHB offered. You may now face:

  • Higher deductibles (especially in high-deductible health plans)

  • Increased coinsurance percentages for some specialist or out-of-network services

  • Prescription drug tiers that come with higher copays or non-preferred costs

Even though the premium may appear manageable at first glance, these added expenses create a layered cost environment. Many retirees only realize the full burden after several doctor visits or specialist referrals.

Prescription Drug Coverage Has Changed

As part of the transition to PSHB, Medicare-eligible enrollees are automatically enrolled in a Part D prescription drug plan through an Employer Group Waiver Plan (EGWP) embedded in their PSHB plan.

This change brings new rules:

  • Your plan now operates under Medicare Part D regulations

  • There is a $2,000 annual cap on out-of-pocket drug spending in 2025

  • Certain prescriptions may now fall under different formulary tiers

While the cap is a welcomed safeguard, you may find that some medications are no longer covered the same way. Tier changes can lead to higher copays or denials that require prior authorization or appeals.

Premiums vs. Overall Cost of Care

A key reason PSHB premiums feel higher is because enrollees often focus on premiums alone when evaluating costs. But in reality, your total healthcare expenses include:

  • Premiums (PSHB + Medicare Part B)

  • Deductibles and coinsurance

  • Prescription drug spending

  • Out-of-network charges, if applicable

When all these layers are added, it becomes clear that your overall cost of care in 2025 may be higher than it was in 2024—even if your actual PSHB premium hasn’t increased dramatically.

Plan Shopping Has Become More Complicated

Another factor influencing the feeling of higher costs is decision fatigue. In 2025, choosing a PSHB plan involves more variables:

  • Does the plan offer Part B reimbursement?

  • How does it coordinate with Medicare?

  • What are the in-network and out-of-network differences?

  • How is prescription coverage structured?

The mental burden of trying to find the “right” plan—and the risk of making an expensive mistake—adds to the perception that PSHB is less affordable. Even if your premiums are subsidized, they may not feel worth it if the plan design doesn’t match your health needs.

2025 Inflation and Healthcare Trends

Healthcare inflation plays a large role in your 2025 PSHB costs. Medical service prices and prescription drug costs have risen nationally, and insurers adjust their premiums accordingly.

In addition:

  • An aging retiree population contributes to higher average costs per enrollee

  • Broader access to new treatments, diagnostics, and therapies also drives up usage

  • Compliance with Medicare integration rules adds administrative costs

All these factors get baked into the plan premiums you see in 2025. So even though subsidies remain in place, you’re sharing the cost of a much more expensive system.

The Illusion of a Stable Premium

Some enrollees are surprised that their PSHB premium looks similar to what they paid under FEHB in late 2024. But what you see on your annuity statement or pay stub doesn’t include:

  • The new Medicare Part B premium (mandatory for most retirees)

  • Higher cost-sharing structures for medical and pharmacy services

  • Shifting costs from the plan to the enrollee in subtle ways

This gives the illusion of a stable system when the underlying financial burden has increased.

What You Can Do to Manage These Costs

If your 2025 PSHB premiums and healthcare expenses feel higher than expected, consider taking these steps:

  • Review your Medicare Part B eligibility and determine if you’re required to enroll.

  • Compare PSHB plans carefully during Open Season. Look at total costs, not just premiums.

  • Estimate your annual out-of-pocket expenses using past healthcare usage as a baseline.

  • Check whether your plan offers any reimbursements for Part B premiums or pharmacy benefits.

  • Speak with a licensed agent listed on this website to review your current plan and discuss potential alternatives.

Understanding the full cost of care is essential to making informed decisions in the PSHB environment.

How to Make Sense of Your PSHB Coverage in 2025

PSHB premiums in 2025 may be subsidized on paper, but the real-world experience often tells a different story. As you factor in Medicare Part B requirements, dual premiums, cost-sharing differences, and inflation, it’s clear why many retirees feel their expenses have increased.

Your best strategy is to take a comprehensive view of your healthcare costs—including what’s deducted from your annuity, what you pay to Medicare, and what you’re likely to spend on care and prescriptions throughout the year. If you’re feeling uncertain or overwhelmed, get in touch with a licensed agent listed on this website. They can help you evaluate options based on your health needs and financial situation.