Key Takeaways

  • The $2,000 out-of-pocket cap under Medicare Part D in 2025 brings important relief, but it does not guarantee lower total costs for all beneficiaries.

  • If you’re enrolled in a PSHB plan and also qualify for Medicare, your actual drug costs may still vary based on formulary tiers, plan integration with Medicare Part B and D, and other PSHB-specific cost-sharing rules.

A Promising Change—But With Important Limits

Medicare Part D has introduced a game-changing $2,000 annual cap on out-of-pocket prescription drug costs in 2025. This change aims to improve affordability for many Americans, especially those who face high medication expenses year after year. For PSHB enrollees who are also Medicare-eligible, this sounds like great news.

However, while this cap is a significant milestone, it doesn’t mean that everyone will see an automatic reduction in total drug costs. In reality, your out-of-pocket expenses under PSHB can still vary widely based on how your plan integrates Medicare benefits, which drugs you take, and how costs are structured throughout the year.

Understanding the Part D Cap

The $2,000 cap introduced in 2025 replaces the older, more complex model that included a donut hole (coverage gap) and catastrophic coverage. Now, once your out-of-pocket spending on covered Part D drugs hits $2,000, your plan covers 100% of the cost for the remainder of the calendar year.

This change applies only to drugs covered under Medicare Part D, and not to medications covered under Medicare Part B. Additionally, not all your prescription costs count toward this cap. Understanding these boundaries is crucial.

What Still Falls Outside the Cap

You might assume that once you spend $2,000, you’re completely protected from drug costs. But the following are not included in the cap:

  • Drugs not covered by your Part D plan

  • Medications filled at out-of-network pharmacies

  • Costs for drugs under Medicare Part B (often administered in a clinical setting)

  • Any premiums, such as those for PSHB or Medicare

That means you could still face significant expenses depending on your treatment regimen and how well your PSHB plan coordinates with Medicare.

PSHB and Medicare: Complex but Important Integration

Postal Service Health Benefits (PSHB) are tightly integrated with Medicare for annuitants who are eligible. If you’re enrolled in both PSHB and Medicare Part B, your plan likely provides additional cost savings.

Here’s how PSHB and Medicare typically work together:

  • Medicare Part B covers outpatient drugs administered in a clinical setting, such as injections.

  • Part D covers most self-administered prescriptions.

  • PSHB plans that are properly coordinated may waive deductibles and reduce coinsurance when Medicare is your primary payer.

So, while the new Part D cap is helpful, your experience depends heavily on how your specific PSHB plan integrates with Medicare benefits.

The Impact of Formularies and Tiers

PSHB plans that include prescription drug coverage may still have their own formularies—lists of covered medications that are divided into tiers. Lower-tier drugs typically have lower copayments, while higher-tier or specialty drugs often involve coinsurance.

This matters because:

  • If your drug is in a higher tier, your out-of-pocket cost may be higher—even before you reach the $2,000 cap.

  • If your medication isn’t on the formulary, you could be paying full price.

  • Step therapy or prior authorization rules may apply, delaying or restricting access.

The new Medicare rules don’t override these internal structures of PSHB plans. So even if you hit the cap, you may have already spent significantly out of pocket to get there.

Timing of Costs Still Affects Cash Flow

Even with the $2,000 ceiling, how and when you incur costs throughout the year affects your budget. If you use expensive medications early in the year, you might reach the cap quickly and benefit from 100% coverage afterward. But if your drug costs are more evenly spread out, you’ll be paying consistently until the cap is met.

This can still result in considerable month-to-month out-of-pocket spending, especially if your prescriptions are in higher tiers. Planning your budget around this timing is essential.

The Medicare Prescription Payment Plan

To ease cash flow burdens, Medicare has introduced a new Prescription Payment Plan in 2025. This option lets you spread your out-of-pocket costs across the calendar year in monthly payments rather than paying large sums upfront.

If you’re a PSHB annuitant enrolled in Medicare and Part D, this plan may be available to you. However, it’s not automatic—you have to opt into it.

Key details include:

  • No interest or late fees for participants

  • Equal monthly payments based on your projected costs

  • Available for any beneficiary who qualifies for Medicare Part D

This can help you manage your budget more predictably, even if your overall costs don’t go down.

The $2,000 Cap Doesn’t Eliminate the Need to Review Plans Annually

Even with a standard out-of-pocket cap, you should still review your plan during the PSHB Open Season (typically held from November to December).

Here’s why:

  • Formulary updates: Plans can change which drugs are covered and how they’re tiered.

  • Cost-sharing changes: Your copayments or coinsurance may be adjusted.

  • Network changes: Your preferred pharmacy might no longer be in-network.

  • New plan offerings: A different PSHB plan may coordinate better with your Medicare benefits.

The $2,000 cap doesn’t mean one-size-fits-all. Reviewing your plan annually helps ensure you aren’t caught off guard by unexpected expenses.

Some PSHB Plans Offer More Favorable Coordination Than Others

While all PSHB plans must meet certain requirements for coordination with Medicare, some go beyond the basics. Certain plans may:

  • Offer partial reimbursement for Medicare Part B premiums

  • Waive or lower deductibles for those enrolled in both PSHB and Medicare

  • Reduce coinsurance or copayments for high-cost prescriptions

However, these benefits vary, and they’re not guaranteed across all PSHB plans. Always read the plan brochure closely or speak with a licensed agent to understand what’s included.

Don’t Overlook Part B Drug Costs

Medications administered in a doctor’s office or hospital are generally billed under Medicare Part B—not Part D. These can include injectable medications, chemotherapy, and certain specialty infusions.

While the Part D cap does not apply to these drugs, your PSHB plan may help reduce costs here, especially if you’re fully enrolled in both PSHB and Medicare Part B.

Still, if you’re not enrolled in Part B, your PSHB plan might treat you as having incomplete coverage, which could limit benefits or raise your share of costs.

Late Enrollment Penalties Still Apply

If you delay enrolling in Medicare Part D when you’re first eligible and go more than 63 days without creditable coverage, you may face a permanent late enrollment penalty. The $2,000 cap doesn’t erase this penalty.

If you’re newly eligible for Medicare and are covered by a PSHB plan, check to ensure your plan includes creditable drug coverage. If not, timely enrollment in Part D is necessary to avoid penalties.

Why It’s Still Worth Comparing Your Total Drug Spend

Even with the new cap in place, it’s smart to calculate your projected annual drug costs. Consider:

  • The cost of premiums (PSHB + Part B + Part D)

  • Out-of-pocket prescription costs leading up to the $2,000 cap

  • Drug tiers and utilization rules like prior authorization or quantity limits

  • Whether your drugs fall under Part B or D

Seeing the full picture will help you plan effectively—and avoid nasty cost surprises.

Your PSHB Strategy Should Still Be Personalized

While the Part D cap is a major improvement for prescription drug affordability, it doesn’t replace the need for a personalized review of your PSHB plan. Your medication list, Medicare enrollment status, and financial goals all influence how well your plan meets your needs.

What works well for one enrollee might not be suitable for you. The integration between Medicare and PSHB adds a layer of complexity that deserves careful attention.

A Smarter Way to Protect Yourself From Surprises

The bottom line is this: the $2,000 Medicare Part D cap in 2025 is a helpful improvement—but not a complete solution. If you rely on costly prescriptions, enroll in both Medicare and PSHB, and choose a plan that’s tailored to your needs, you’re more likely to avoid unpleasant financial surprises.

Take the time to evaluate your coverage annually and ask questions when something doesn’t make sense. Being proactive now helps protect your health and your wallet in the long term.

For professional help with comparing your PSHB and Medicare options, get in touch with a licensed agent listed on this website.