Key Takeaways

  • You can legally enroll in a Medigap plan even if you’re covered under a PSHB plan, but it may not make financial or practical sense.

  • Most PSHB plans paired with Medicare Parts A and B already cover nearly all out-of-pocket costs, making the added Medigap premiums unnecessary in many cases.

Understanding the Basics: PSHB and Medigap Are Not Mutually Exclusive

If you’re a Postal Service retiree or annuitant enrolled in the Postal Service Health Benefits (PSHB) Program, and you’re eligible for Medicare, you might be wondering whether a Medicare Supplement Insurance plan (commonly known as Medigap) fits into your coverage puzzle.

The short answer? You can purchase a Medigap plan if you have Medicare Parts A and B and are also enrolled in PSHB. There’s no legal barrier. But the more important question is whether you should—and in most cases, the answer is no.

How PSHB and Medicare Work Together

The PSHB program, which replaced FEHB for USPS employees and retirees beginning in 2025, is specifically designed to integrate with Medicare. Here’s how the coordination typically works:

  • Medicare pays first for your covered services.

  • PSHB pays second, picking up much of what Medicare doesn’t cover.

  • If you have both Part A and Part B, many PSHB plans waive cost-sharing like deductibles and copayments.

This built-in coordination means you often pay little to nothing out of pocket for services covered by Medicare—making additional coverage, like Medigap, mostly redundant.

What Medigap Covers That PSHB Plans Already May

Medigap policies were originally created to fill the gaps left by Original Medicare. These include:

  • Part A hospital coinsurance

  • Part B copayments or coinsurance

  • Blood (first 3 pints)

  • Part A hospice coinsurance

  • Skilled nursing facility coinsurance

  • Medicare deductibles (Part A and sometimes Part B)

However, many PSHB plans in 2025 already cover these expenses when you are enrolled in both Medicare Part A and Part B. In fact, some PSHB plans:

  • Waive the Part B deductible

  • Offer lower or $0 copayments

  • Cap your out-of-pocket costs annually

So while Medigap and PSHB don’t directly conflict, their benefits do overlap significantly.

Scenarios Where Medigap May Still Be Considered

There are only a few situations where adding a Medigap plan to your PSHB-Medicare combo might be worth discussing:

1. You Rarely Use Your PSHB Plan

If you’re enrolled in Medicare and rarely use your PSHB plan—perhaps due to having doctors who only accept Medicare and not PSHB—then you may want to drop PSHB entirely and use Medigap instead. But remember, this decision is permanent unless you qualify for a future enrollment opportunity.

2. You Plan to Drop PSHB in Retirement

Although PSHB can continue for life, some retirees explore the option of dropping it in favor of a Medigap plan with lower premiums. However, this can be risky if:

  • You lose access to prescription drug coverage integrated into PSHB.

  • You miss out on the benefits of secondary coordination between PSHB and Medicare.

  • You’re subject to medical underwriting after your Medigap open enrollment window closes.

3. You Live in a State That Requires Medigap to Cover More

A few states mandate that Medigap plans offer additional protections or benefits beyond the federal minimum. If you live in one of these states, and your PSHB plan offers limited coverage in that region, a Medigap policy may provide added reassurance. Even then, it’s essential to weigh this against PSHB’s robust nationwide network and cost structure.

The Financial Redundancy of Having Both

For most enrollees, carrying both a PSHB plan and a Medigap plan results in unnecessary premium costs. Here’s why:

  • PSHB plans already coordinate with Medicare and reduce out-of-pocket costs significantly.

  • Medigap plans charge their own monthly premiums, which can add hundreds per month with little to no added benefit.

  • You continue paying for both PSHB and Medigap, but in almost every medical scenario, only Medicare and PSHB are used.

As a result, you’re essentially paying a third party to do nothing—while thinking you’re better covered. You aren’t.

Timeline Considerations: Enrollment Periods Matter

PSHB Enrollment

You can change your PSHB plan annually during Open Season (November to December), or due to a qualifying life event.

Medigap Enrollment

Your initial Medigap enrollment window is the 6-month period that begins when you are both:

  • 65 or older, and

  • Enrolled in Medicare Part B.

After that, you may be subject to medical underwriting, which can result in higher premiums or denial.

Be aware: if you drop PSHB in favor of Medigap, you may not be able to return unless you meet specific re-enrollment criteria. That’s a critical decision point.

The Role of Medicare Part D Inside PSHB

PSHB plans automatically enroll Medicare-eligible retirees in a Medicare Part D Employer Group Waiver Plan (EGWP), providing robust prescription drug coverage. If you switch to Medigap and drop PSHB, you must:

  • Enroll in a standalone Part D plan separately.

  • Monitor your out-of-pocket expenses, which are capped at $2,000 in 2025 under Part D.

The shift from bundled PSHB drug benefits to standalone Part D coverage may involve:

  • Higher copayments

  • Separate prior authorizations

  • Potential network limitations

You’ll also lose any Part B premium reimbursement or copay waivers your PSHB plan may offer.

What PSHB Does That Medigap Doesn’t

Medigap plans only cover Medicare-approved services. PSHB plans, in contrast, may offer:

  • Dental and vision benefits

  • Hearing aid coverage

  • Access to telehealth and wellness programs

  • Comprehensive family coverage options

Even if Medigap covers the same gaps in Medicare, it doesn’t touch any of these extras. For many retirees, those added features—especially dental and vision—make PSHB more valuable.

When You May Be Double Paying

If you’re enrolled in both a PSHB plan and a Medigap plan:

  • You’re paying two monthly premiums.

  • You may never use the Medigap plan.

  • Your providers bill Medicare and then PSHB—not Medigap.

Even worse, Medigap plans don’t coordinate with PSHB. So if you get care outside Medicare’s scope and PSHB would cover it, Medigap adds no value.

Questions to Ask Yourself Before Adding Medigap

  • Does your PSHB plan already waive or reduce your deductibles and copayments?

  • Are you using your PSHB plan in conjunction with Medicare regularly?

  • Do you value dental, vision, or hearing coverage?

  • Are you willing to pay extra for something that might never be used?

If the answers lean toward “yes” for the first three—and “no” for the last—then Medigap probably isn’t a good fit.

Your Plan Moving Forward

If you’re turning 65, or newly eligible for Medicare Part B, it’s essential to take a hard look at your total coverage picture. The reality in 2025 is that PSHB plans are optimized for Medicare coordination. In many cases, that optimization renders a Medigap plan unnecessary.

However, if you’re considering dropping PSHB entirely or have very specific needs unmet by your current plan, then comparing your options—preferably with the help of a licensed agent listed on this website—is the smartest move.

Making Sense of Overlapping Coverage Costs

Before you commit to a secondary policy, run the numbers:

  • How much are you paying for PSHB each month?

  • What is your actual out-of-pocket exposure?

  • What would a Medigap premium add to that?

  • Are you doubling your coverage for minimal benefit?

In most cases, once you’re enrolled in both Medicare and PSHB, there’s little left for Medigap to contribute. That’s why thousands of Postal retirees are choosing to stick with PSHB and skip the supplemental plan entirely.

Know When to Ask for Help

This isn’t a one-size-fits-all decision. It’s a high-stakes commitment with limited reversibility—especially when it comes to Medigap underwriting and PSHB re-enrollment eligibility.

To avoid making a costly misstep, get in touch with a licensed agent listed on this website. They can walk you through:

  • Your PSHB plan’s integration with Medicare

  • The cost-benefit of adding or skipping Medigap

  • What you lose by dropping PSHB

  • Whether your situation justifies an exception

Deciding What’s Worth Keeping in 2025

As you assess your healthcare needs in retirement, the overlap between PSHB and Medigap should prompt you to evaluate your priorities: cost, simplicity, and comprehensive coverage. In most cases, keeping PSHB with Medicare Parts A and B will serve you better—and cost you less—than adding a Medigap plan on top.

To discuss your situation and get clarity on what makes sense for you, speak with a licensed agent listed on this website today.