Key Takeaways

  • PSHB premiums and contributions have increased in 2025, largely due to inflation, expanded benefits, and healthcare market shifts.

  • Understanding where your money goes can help you evaluate the true value of your PSHB plan, especially when coordinated with Medicare.

Why Are You Paying More in 2025?

If you’ve looked at your paycheck lately and noticed your Postal Service Health Benefits (PSHB) deduction is higher than it was in 2024, you’re not imagining things. Like many government employees and retirees, you’re likely seeing an uptick in your monthly health plan contributions. But what’s behind the increase?

The reasons are complex but not mysterious. A mix of economic trends, regulatory shifts, and healthcare cost adjustments has affected how PSHB premiums are calculated. Understanding this helps you see what your money is truly buying—and why your contributions are still meaningful.

What Drove the Increase in Contributions for 2025?

Several overlapping factors have resulted in higher PSHB premiums this year:

Inflation and Healthcare Costs

The healthcare sector continues to experience cost inflation, with hospital services, physician care, and prescription drugs all climbing in price. PSHB plans must account for these rising costs, which directly impact premiums.

Expanded Benefits Under PSHB

PSHB plans now include features designed to enhance value, especially for retirees who integrate Medicare Part B. For example:

  • Coordination with Medicare Part B can reduce or waive deductibles.

  • Prescription drug coverage through Medicare Part D EGWP is now integrated.

  • Enhanced preventive and telehealth services are standard across many PSHB options.

These benefits cost money, but they also add real value. The tradeoff is reflected in your premium increase.

Transition Costs from FEHB to PSHB

2025 marks the full transition from the Federal Employees Health Benefits (FEHB) program to the standalone Postal Service Health Benefits program. The rollout of PSHB involved administrative restructuring, updated plan offerings, and systems upgrades. These one-time transition expenses have affected plan pricing.

Medicare Part B Integration Rules

Medicare-eligible annuitants and family members must now enroll in Medicare Part B to maintain PSHB coverage, with some exceptions. This requirement has shifted cost-sharing structures and influenced premium rates across the board.

Comparing Employee vs. Annuitant Costs

PSHB contributions vary based on your employment status. If you’re still an active employee, your share is determined through biweekly payroll deductions. If you’re an annuitant, your deductions are typically monthly and may appear higher due to the absence of an active payroll framework.

For 2025:

  • Active USPS employees are seeing weighted average monthly premiums around $860 for Self Only coverage.

  • Annuitants’ average monthly premiums are around $241 for Self Only, depending on their plan and Medicare status.

It’s worth noting that the federal government continues to pay about 70% of the total premium, meaning your contribution only reflects a portion of the overall cost.

What You’re Actually Paying For

With higher premiums, you may be wondering where that money goes. Here’s how your PSHB contributions are used in 2025.

1. Monthly Risk Pool Coverage

PSHB is a group insurance program, which means your contributions help fund:

  • Claims paid for medical services

  • Prescription drug benefits

  • Emergency and specialist care

  • Preventive screenings and chronic disease management

These funds support all enrolled members, allowing cost-sharing and risk pooling to keep services available and affordable.

2. Administrative Costs

A portion of your contribution covers administrative functions such as:

  • Customer service

  • Claims processing

  • Digital portals for health plan management

  • Compliance with federal regulations

These are necessary to ensure your plan operates smoothly, especially with new PSHB rules in place.

3. Medicare Part D EGWP Prescription Drug Program

If you’re Medicare-eligible and enrolled in Part B, you’re automatically included in the Medicare Part D Employer Group Waiver Plan (EGWP) through your PSHB plan. This benefit provides:

  • A $2,000 annual cap on out-of-pocket drug costs

  • No donut hole coverage gap

  • National pharmacy network access

  • A $35 monthly insulin cap

These enhancements are part of what you now pay for, though they may lower your separate out-of-pocket spending overall.

4. Coordination Benefits with Medicare Part B

When you enroll in both PSHB and Medicare Part B, your health plan becomes more robust. Many plans offer:

  • Reduced or waived deductibles

  • Lower copayments or coinsurance

  • Faster claim coordination

This coordination allows for fewer out-of-pocket surprises, which may offset the higher monthly premium.

What Has Changed Compared to 2024

It helps to review how 2025’s PSHB changes compare to last year’s structure under FEHB.

Premium Increases

Premiums rose more sharply in 2025 than in prior years, driven in part by the PSHB program’s separation from FEHB. While the increase might feel steep, it supports improved services, added pharmacy benefits, and stronger coordination with Medicare.

Part B Enrollment Requirements

In 2024, many retirees had the choice to delay or skip Medicare Part B. In 2025, if you’re Medicare-eligible and not exempt, you must enroll in Part B to retain full PSHB coverage. This new rule impacts coverage costs and coordination benefits.

Enhanced Drug Coverage

Before 2025, retirees managed separate Part D plans or paid more out-of-pocket for drugs. The new integrated EGWP plan simplifies pharmacy coverage and caps costs more effectively than prior arrangements.

Out-of-Pocket Maximums

In-network out-of-pocket maximums are now standardized for PSHB:

  • $7,500 for Self Only

  • $15,000 for Self Plus One and Self & Family

Prescription drug costs under the EGWP are capped at $2,000 per year. These caps improve predictability compared to 2024’s more variable expenses.

Who Is Exempt From Some Changes

Certain annuitants are not required to enroll in Medicare Part B and may not see as much of an increase in their contributions. You are exempt if:

  • You retired on or before January 1, 2025

  • You were age 64 or older as of January 1, 2025

  • You reside permanently outside the U.S.

  • You are eligible for health services through the VA or Indian Health Services

If you meet any of these conditions, you can continue coverage under PSHB without enrolling in Medicare Part B, though you may not benefit from certain reduced cost-sharing features.

What to Watch for in the Future

The PSHB program is new, and premiums may continue adjusting in the coming years. Here’s what you should pay attention to:

  • Annual Open Season notices: These outline premium changes, benefits adjustments, and plan features for the upcoming year.

  • Medicare integration updates: More plans may offer premium reimbursements or new cost-sharing incentives.

  • Plan comparisons: Don’t assume last year’s best option is still ideal. Evaluate your current and expected healthcare needs annually.

Why These Changes May Still Benefit You

Although higher premiums can feel burdensome, they come with tangible improvements in 2025:

  • Lower total out-of-pocket costs when coordinated with Medicare

  • Capped prescription drug expenses

  • Better care coordination and preventive service access

If you use your PSHB plan regularly, these changes can translate into real value across the year.

Choosing the Right Path Forward

Now more than ever, you need to understand your PSHB options. Take the time to:

  • Review your current plan’s benefits and costs

  • Check your Medicare status and enrollment requirements

  • Compare your plan’s cost-sharing features with others

  • Assess how often you use care and what services you rely on

If you’re unsure where to begin, speak with a licensed agent listed on this website. They can help you identify which PSHB plan best fits your health profile and budget.

Your Monthly Contributions May Be Higher, But They’re Covering More Than Ever

The 2025 PSHB landscape is more robust, more protective, and more structured to work with Medicare than ever before. While higher contributions may feel like a strain initially, the underlying enhancements—especially for those with Medicare—make the increased costs more palatable when you consider the overall financial protection and improved services.

Make sure you’re enrolled in the right plan, taking advantage of every benefit, and staying compliant with new requirements. Get in touch with a licensed agent listed on this website to review your options and ensure your 2025 PSHB coverage works as hard as your paycheck does.