Key Takeaways

  • Choosing the wrong Medicare Part D plan under the PSHB program can expose you to unexpected out-of-pocket drug costs that may exceed $2,000, even in 2025 when a cap is in place.

  • Understanding how the integrated drug coverage under PSHB and Medicare Part D works is crucial to avoiding gaps, denials, and costly coverage mistakes.

Why Prescription Drug Coverage Is No Longer Simple

In 2025, your drug coverage as a Postal Service annuitant or retiree is not just a checkbox on a form. It ties into multiple systems, including Medicare Part D and the Employer Group Waiver Plan (EGWP) embedded within most PSHB options. The biggest risk you face is assuming all plans are the same when they are not.

You now have a $2,000 annual out-of-pocket maximum for prescription drugs under Medicare Part D. That sounds like protection, but the reality is more complex. Not every drug is covered the same way, and not every plan handles formularies, pharmacy networks, and prior authorizations in the same fashion.

What the $2,000 Cap Does and Doesn’t Do

Yes, there is a federally mandated $2,000 annual out-of-pocket limit on covered drugs under Medicare Part D in 2025. But this cap only applies after you’ve satisfied your plan’s deductible, and only for medications that are listed on the plan’s formulary.

Here’s what the cap doesn’t protect you from:

  • Paying full price for non-formulary or denied drugs

  • Tiered pricing that may drive you toward costlier alternatives

  • Prior authorization delays that may postpone critical medications

  • Specialty pharmacy requirements that could limit where you can fill a prescription

If you’re not aware of these details when choosing your PSHB plan, you could face thousands of dollars in uncovered medication costs.

What Makes PSHB Drug Coverage Different

As a Postal Service Health Benefits (PSHB) enrollee, your drug coverage for 2025 is integrated with a Medicare Part D EGWP. This employer-sponsored structure means you’re automatically enrolled into a plan that meets federal requirements and coordinates with your PSHB medical coverage.

However, the plan details still vary by option. You might see differences in:

  • Monthly premiums (combined with your PSHB plan)

  • Formularies and which drugs are covered at what cost tier

  • Pharmacy network size and restrictions

  • Requirements for mail-order vs. retail pick-up

  • Whether or not you need to meet a deductible first

You must check these variables because even within the PSHB structure, one plan’s coverage could be significantly different from another’s.

Enrollment Timeline and What to Watch For

Every year, the Medicare Open Enrollment Period runs from October 15 to December 7. For PSHB enrollees, changes to your drug coverage usually occur during the federal benefits Open Season, which runs from mid-November through mid-December.

Your opportunity to make the right decision is limited to:

  • Annual Open Season: When you can switch PSHB plans that offer different drug coverage.

  • Qualifying Life Events (QLEs): Like moving to a new service area or losing other coverage.

  • Medicare Part B Enrollment Coordination: For some retirees, maintaining PSHB drug coverage requires being enrolled in Medicare Part B.

Missing the window means you’re locked into your current drug plan until the next year unless you experience a QLE.

The High Cost of Not Reviewing Your Formulary

Every plan has a formulary, which is the list of drugs it covers. These are broken down by tiers, and each tier determines what you’ll pay out of pocket until you hit your $2,000 cap.

What to verify before enrolling:

  • Is your medication listed? If not, you’ll be paying the full cost.

  • Which tier is it in? The higher the tier, the more you’ll pay before the cap.

  • Are there generic alternatives? If your plan pushes you to generics, you may need to switch.

  • Do they require prior authorization or step therapy? These administrative hurdles can delay access.

By assuming a drug is covered when it’s not, you could end up with a surprise bill that pushes you past your budget quickly.

Mail-Order vs. Retail Pharmacy Requirements

Not all plans offer the same flexibility when it comes to where you can fill prescriptions. Some plans require:

  • Use of specific in-network retail pharmacies

  • Mandatory mail-order for maintenance medications

  • Specialty pharmacies for high-cost injectables or biologics

If your preferred pharmacy is out of network or doesn’t process your prescription according to plan rules, you might:

  • Pay full retail price

  • Be denied reimbursement

  • Have to switch providers entirely mid-treatment

A plan that appears convenient on the surface may come with logistical barriers you didn’t anticipate.

Medicare Part B Drugs vs. Part D Drugs

Some medications fall under Medicare Part B, not Part D. This includes:

  • Infused drugs administered in a clinical setting

  • Some injectables

  • Chemotherapy agents

  • Durable medical equipment-related medications

These drugs are often billed differently. If your PSHB plan does not clearly coordinate coverage between Part B and Part D, you could be caught in billing disputes or unexpected cost-sharing arrangements.

Make sure your drug plan within PSHB specifies how it handles Part B medications.

What Happens If You Opt Out of Drug Coverage

Although most PSHB plans integrate Part D coverage through EGWP, you can technically opt out of this component. Doing so comes with major consequences:

  • Loss of drug coverage entirely under PSHB

  • Penalties if you later decide to enroll in Medicare Part D

  • Limited re-enrollment opportunities

If you are Medicare-eligible and enrolled in a PSHB plan, your drug coverage will be through the integrated EGWP unless you take action to decline it. In nearly every case, keeping the coverage is the better financial decision.

The Impact of IRMAA on High-Income Enrollees

If your income is above certain thresholds, you may be subject to the Income-Related Monthly Adjustment Amount (IRMAA). In 2025, this applies if your 2023 income exceeds:

  • $106,000 for individuals

  • $212,000 for joint filers

IRMAA applies to Medicare Part D premiums as well, even under PSHB. The surcharge is deducted from your Social Security check or billed directly, and it’s not optional.

Your actual drug coverage might be excellent, but you’ll still pay more just because of your income bracket. Be prepared to factor that into your budgeting.

Don’t Assume the Same Plan from 2024 Still Works in 2025

Every year, Part D plans revise their:

  • Formularies

  • Copayment structures

  • Pharmacy contracts

  • Prior authorization policies

Even if you liked your plan in 2024, it might not cover the same drugs or may raise costs in 2025. You’ll receive an Annual Notice of Change (ANOC) from your PSHB plan, usually by September. Review it thoroughly.

Failure to compare last year’s benefits with this year’s offerings is one of the most common causes of increased drug costs. A small shift in formulary structure can drastically affect your out-of-pocket costs.

What to Review Before You Commit

Before you lock in your plan for the year, review the following:

  • The formulary list for your medications

  • Copay and coinsurance amounts by tier

  • Deductible requirements

  • Network pharmacy access and limitations

  • Whether your preferred pharmacy is included

  • Any specialty pharmacy restrictions

  • Mail-order availability and requirements

  • Rules about prior authorization, step therapy, and quantity limits

Even among plans that meet federal Part D standards, these details determine how much you’ll truly spend.

Making the Most of the $2,000 Out-of-Pocket Cap

The 2025 cap on Part D out-of-pocket drug costs sounds reassuring, but it’s only effective if your prescriptions fall within plan-approved boundaries.

Tips to actually benefit from the cap:

  • Use in-network pharmacies to ensure cost counting

  • Fill medications only listed on your plan’s formulary

  • Track your cumulative spending to ensure the cap is being applied

  • Contact your plan’s support line for clarification when unsure

The cap won’t help if your medication is not covered or denied during pre-authorization. Always confirm coverage before filling a high-cost drug.

What This Means for Postal Retirees and Annuitants

As a PSHB enrollee, your drug coverage options are structured, but not identical across plans. You need to evaluate:

  • What medications you rely on

  • How much you’ve spent in the past year

  • Whether those same drugs are still covered in 2025

  • How well the PSHB plan integrates with Medicare Part D under the EGWP

Even a small oversight can cost you more than the monthly premium. A wrong plan choice could leave you paying full price for a critical medication.

Choosing Carefully Protects Your Health and Wallet

In a system with multiple moving parts, what looks like a good deal can quickly turn into an expensive burden. By investing the time to understand your prescription drug coverage under PSHB and Medicare Part D, you reduce the risk of being caught off guard by surprise bills or denied claims.

Take the time this Open Season to compare plan documents, talk with support lines, and get the facts about how your medications are handled. If needed, speak directly with a licensed agent listed on this website to make sure you choose a plan that protects your financial and medical needs.