Key Takeaways

  • The transition from FEHB to PSHB in 2025 introduces several cost and coverage differences that can impact your long-term retirement planning.

  • While many features remain familiar, critical updates in prescription benefits, Medicare integration, and premium sharing must be understood to avoid unexpected financial strain.

Why This Shift Matters in 2025

If you’re a Postal Service employee or annuitant, your health benefits are no longer under the Federal Employees Health Benefits (FEHB) Program as of January 1, 2025. You’ve now moved to the Postal Service Health Benefits (PSHB) Program—a new system mandated by the Postal Service Reform Act of 2022. While many features of FEHB are retained, PSHB introduces some important financial and structural shifts that could affect your retirement budget for years to come.

Understanding these changes is essential. What you used to rely on under FEHB may look similar at first glance but differ in cost-sharing, Medicare requirements, and plan coordination. Let’s break down what’s truly changed—and what hasn’t.

1. Enrollment Structure: Automatic But Not Simple

PSHB automatically enrolled you into a plan similar to your prior FEHB coverage, but this isn’t always a one-to-one match. You may need to review your new plan details carefully to confirm:

  • Your provider network remains the same

  • Prescription coverage meets your current health needs

  • You’re enrolled in the right tier (Self Only, Self Plus One, or Self & Family)

Failure to review and adjust during Open Season (held from November to December each year) could lead to mismatched coverage and higher out-of-pocket costs.

2. Medicare Part B Now Has Higher Stakes

One of the most impactful differences is how PSHB coordinates with Medicare. For Medicare-eligible annuitants and family members, enrollment in Medicare Part B is now mandatory unless you qualify for an exemption:

  • Retired on or before January 1, 2025

  • Were age 64 or older as of January 1, 2025

  • Reside outside the U.S.

  • Are enrolled in VA or Indian Health Services coverage

Under FEHB, Medicare Part B was optional, albeit encouraged. With PSHB, failure to enroll means you may lose your health coverage entirely.

This requirement means factoring in the current 2025 Medicare Part B premium of $185/month into your retirement budget—along with any Income-Related Monthly Adjustment Amount (IRMAA) if your income exceeds the standard threshold.

3. Prescription Drug Coverage Sees a Major Overhaul

With PSHB, your prescription coverage is now tied to a Medicare Part D Employer Group Waiver Plan (EGWP) if you’re Medicare-eligible. This arrangement introduces some financial benefits:

  • A $2,000 annual out-of-pocket cap for covered prescriptions

  • Flat-rate insulin coverage capped at $35 per month

  • Expanded pharmacy networks

These features didn’t exist under FEHB in such structured terms. However, if you’re not enrolled in Medicare Part B, you won’t receive these Part D benefits—and your PSHB prescription coverage could be severely limited.

4. Premium Contributions Still Split, But Watch for Shifts

Much like FEHB, the government still covers approximately 70% of PSHB premiums. That said, your share of the premium is recalculated each year based on plan costs and enrollment tier.

In 2025, annuitants contribute:

  • Around $241/month for Self Only

  • Around $521/month for Self Plus One

  • Around $567/month for Self and Family

These numbers may look similar to what you were paying under FEHB, but the actual out-of-pocket differences depend on which PSHB plan you chose and whether you coordinate with Medicare. Be sure to review the full premium table every year during Open Season.

5. Deductibles and Cost-Sharing Get More Complex

While FEHB offered standardized tiers of coverage, PSHB introduces plans with varied deductibles, coinsurance rates, and copayments:

  • In-network deductibles range from $350 to $2,000 depending on plan type

  • Coinsurance ranges from 10% to 30% for in-network services, and as high as 50% out-of-network

  • Copayments for common services (like primary care visits or urgent care) fall between $20 and $150

This variability can catch you off guard, especially if you’re managing chronic conditions or require frequent care. Your actual annual healthcare expenses could fluctuate more dramatically under PSHB compared to FEHB.

6. Out-of-Pocket Maximums: A Hidden Budget Risk

PSHB plans include out-of-pocket maximums for in-network services, which are vital to protecting your retirement savings. In 2025, these limits are:

  • $7,500 for Self Only

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

If you require high-cost treatment, such as surgeries, hospital stays, or specialty care, these caps can be reached quickly—especially without Medicare coordination. This makes enrolling in Medicare Part B even more critical.

7. No Impact on FEDVIP or Other Federal Benefits

It’s important to note that the transition to PSHB does not affect your eligibility for:

  • FEDVIP (Federal Employees Dental and Vision Insurance Program)

  • FEGLI (Federal Employees’ Group Life Insurance)

  • FSAFEDS (Flexible Spending Accounts for active employees)

  • FLTCIP (Federal Long Term Care Insurance Program)

However, your PSHB premiums and out-of-pocket costs may impact how much of your retirement income you can allocate to these other benefits.

8. Qualifying Life Events Still Apply—but Timing Is Crucial

Just like FEHB, PSHB allows changes outside of Open Season during specific Qualifying Life Events (QLEs), such as:

  • Marriage or divorce

  • Birth or adoption of a child

  • Death of a covered family member

  • Loss of other health coverage

The timing to report a QLE is strict—usually within 30 to 60 days. Missing the window could leave you stuck with mismatched coverage for the rest of the year.

9. Out-of-Network Costs Are a Bigger Concern

Under PSHB, out-of-network charges are significantly higher. You could pay:

  • 40% to 50% coinsurance rates

  • Out-of-network deductibles up to $3,000

  • No cap on some services not deemed medically necessary

Staying within your plan’s provider network is more important than ever. It also means retirees who travel frequently or live in areas with limited provider options may face more unpredictable healthcare expenses.

What You Can Do Now to Protect Your Budget

  • Enroll in Medicare Part B if you’re required. Delaying could cost you your PSHB coverage.

  • Review plan brochures carefully each Open Season.

  • Compare annual out-of-pocket maximums, not just premiums.

  • Keep track of QLE timelines to make changes when needed.

  • Ask about coordination of benefits if you have dual coverage (such as from a spouse).

Health coverage is no longer static, especially in retirement. Even if your plan seems similar on paper, the financial implications can evolve each year.

Staying Prepared for the Future of PSHB

The shift from FEHB to PSHB represents a fundamental change in how Postal Service retirees access and pay for healthcare. While it preserves many familiar elements, key differences—especially in Medicare requirements, prescription drug benefits, and cost-sharing—demand your attention.

Be proactive. Review your plan every year. Consider how coordination with Medicare affects not just your coverage but your retirement budget. And don’t assume past assumptions still hold.

For tailored advice, connect with a licensed agent listed on this website who can walk you through the specifics of your situation and ensure you’re making the most financially sound decisions for your future.