Key Takeaways

  • Your out-of-pocket drug costs under Medicare Part D in 2025 are directly influenced by whether your medications are listed on your plan’s formulary (drug list).

  • The PSHB program integrates with Medicare Part D through an EGWP, but your cost savings hinge on choosing a plan with a formulary that matches your actual prescriptions.

Why Your Drug List Matters More Than Ever in 2025

The introduction of the $2,000 out-of-pocket cap on prescription drugs in 2025 under Medicare Part D is a significant milestone. For PSHB enrollees, especially retirees and Medicare-eligible annuitants, this seems like welcome news. But here’s the critical factor: the cap only applies after you pay for drugs that are actually covered by your Part D plan. If your medication isn’t on your plan’s formulary, the savings cap won’t help you at all.

That’s why understanding the formulary—the list of drugs your plan agrees to cover—is essential from day one.

How Part D Works Under PSHB in 2025

As a PSHB enrollee eligible for Medicare, your prescription drug coverage is provided through a Part D Employer Group Waiver Plan (EGWP). This means:

  • You are automatically enrolled in the Part D plan if you have Medicare and are covered under PSHB.

  • Your coverage includes a standard structure: deductible phase, initial coverage phase, and then catastrophic coverage phase after reaching the $2,000 cap.

  • Copayments and coinsurance vary depending on whether your prescriptions fall under generic, preferred brand, non-preferred brand, or specialty tiers.

But the structure only applies to drugs that are included in your plan’s formulary. Anything not listed is typically not covered—and those costs do not count toward your out-of-pocket cap.

What a Formulary Is—And Why It’s a Dealbreaker

A formulary is a plan-specific list of medications that are covered. It’s divided into tiers:

  • Tier 1: Generic drugs with the lowest out-of-pocket cost

  • Tier 2: Preferred brand-name drugs

  • Tier 3: Non-preferred brand-name drugs

  • Tier 4 or 5: Specialty drugs with the highest costs

Plans update formularies annually, and sometimes more often. They can remove drugs, add new ones, or change tier placement. This directly affects how much you pay. If a drug is dropped or moved to a higher tier, your cost can increase significantly.

Timing Is Critical: When to Check the Formulary

You should verify your drug list during the following periods:

  • Annual PSHB Open Season (November to December): This is your opportunity to evaluate plan options and make a change if your current plan’s formulary doesn’t align with your prescriptions.

  • Medicare Annual Enrollment (October 15 to December 7): Relevant for Medicare Advantage and standalone Part D plans, but since you’re in PSHB, your integrated Part D plan is tied to your PSHB plan.

  • Any Qualifying Life Event (QLE): If you experience a life event like retirement or loss of coverage, you may have a Special Enrollment Period.

How to Review and Compare Formularies

It’s not enough to know that your medication is covered. You need to:

  • Check the tier level: This determines your copay.

  • See if prior authorization is required.

  • Understand quantity limits or step therapy requirements.

Formulary tools are available through your PSHB plan’s website or the plan brochure. You can also call the plan’s customer service number to verify specific drugs.

Watch Out for These 2025-Specific Changes

The $2,000 cap under Medicare Part D is new for 2025, but it applies only to drugs that are covered. Here are 2025 realities you need to keep in mind:

  • The Part D deductible is $590 before initial coverage starts.

  • Formulary compliance is now more important than ever, since out-of-pocket protection hinges on being within the plan’s list.

  • More plans are offering payment smoothing through the Medicare Prescription Payment Plan, allowing you to spread out cost-sharing across the year—but only for covered medications.

PSHB + Medicare = Integrated but Not Automatic Protection

Even though your PSHB plan includes Part D coverage, you still need to do the homework. No plan will automatically cover every drug. And if your prescription falls off the list mid-year, you could be forced to either pay full price or switch medications.

Here’s what you should do now:

  • Make a list of all your prescriptions and dosages.

  • Compare that list to your current PSHB plan’s formulary.

  • Talk to your doctor about alternatives if any drugs are not covered or have moved to a higher tier.

What Happens if Your Drug Isn’t Covered?

If your medication is not on the formulary:

  • You may have to pay the full retail price.

  • That cost does not count toward your $2,000 cap.

  • You can request a formulary exception, but approval is not guaranteed.

  • If denied, you can appeal, but this takes time and may delay treatment.

Avoid surprises by checking the list in advance.

The Power of Planning Ahead

Many people focus solely on premiums when comparing plans, but the real savings are in cost-sharing, especially for prescriptions. A higher premium plan with better drug coverage could save you hundreds or even thousands over the year compared to a plan that covers less but looks cheaper up front.

You can’t afford to make assumptions:

  • Don’t assume your current plan will continue covering your drugs next year.

  • Don’t assume every Part D plan under PSHB is the same.

  • Don’t assume your medication is on the formulary just because it was last year.

How to Make a Confident Decision This Year

Use the following checklist before making your 2025 PSHB election:

By evaluating plans based on their drug list, not just their name or reputation, you set yourself up for smarter, more predictable healthcare spending.

Drug List Choices Define Your Savings

In 2025, the $2,000 out-of-pocket cap under Medicare Part D is a big win—but only if your prescriptions are on the right list. The PSHB integration gives you access to solid prescription drug coverage, but it’s your responsibility to make sure your medications are on the formulary.

Don’t leave your wallet exposed. Review your drug list, ask the right questions, and choose your PSHB plan carefully this year. If you’re not sure what plan works for your prescriptions, speak to a licensed agent listed on this website for personalized help.