Key Takeaways

  • In 2025, PSHB plans for Medicare-eligible USPS retirees and family members include integrated Medicare Part D prescription drug coverage.

  • This drug coverage brings important benefits such as capped out-of-pocket costs and a broader pharmacy network, but opting out has consequences.

Understanding the Integration of PSHB and Medicare Part D

If you’re a Postal Service retiree or a Medicare-eligible family member covered under a PSHB plan in 2025, your health coverage now includes integrated Medicare Part D prescription drug benefits. This integration is automatic and part of a broader effort to reduce your drug costs and streamline your access to medication.

This new setup comes under a Medicare Employer Group Waiver Plan (EGWP), which is a specific type of Medicare Part D plan designed for retirees. These plans are coordinated through the PSHB system to make drug benefits easier to manage and more affordable.

Who Is Eligible for This Coverage

You’re automatically enrolled in the Medicare Part D EGWP component of your PSHB plan if:

  • You are enrolled in a PSHB plan in 2025

  • You are eligible for Medicare Part A and enrolled in Medicare Part B

This includes Postal retirees and their Medicare-eligible family members unless you meet specific exemptions.

Exemptions From Enrollment

You are not automatically enrolled in the drug benefit if:

  • You live outside the U.S.

  • You are eligible for Indian Health Services (IHS) or receive VA benefits and don’t want to use Medicare Part D

  • You opted out during the designated period in 2024

Be cautious: if you decline this coverage, you will not have any prescription drug coverage through PSHB unless you re-enroll later during a qualifying life event or open enrollment window.

What’s Actually Included in the Drug Coverage

The integrated Medicare Part D coverage within PSHB plans in 2025 is robust and aligned with current CMS standards. Here’s what you get:

1. A Standardized Drug Formulary

  • Includes a comprehensive list of generic and brand-name drugs

  • Prioritizes commonly used medications for chronic and acute conditions

  • Reviewed and updated regularly by the plan sponsor and CMS

2. Access to a Wide Pharmacy Network

  • Nationwide retail pharmacies

  • Mail-order service options

  • Expanded coverage compared to standalone Part D plans

3. Low-Cost Insulin Options

  • Monthly copay capped at $35 for many insulins

  • Available regardless of deductible or drug phase

4. $2,000 Out-of-Pocket Maximum

One of the most significant changes in 2025 is the $2,000 annual cap on out-of-pocket costs for prescription drugs under Medicare Part D. Once you hit this limit, your plan covers 100% of drug costs for the rest of the year.

This limit applies across all phases:

  • Deductible Phase

  • Initial Coverage Phase

  • Catastrophic Phase (newly restructured in 2025)

5. Prescription Payment Plan Option

You now have the choice to spread out your drug costs over the calendar year instead of paying them all at once. This can ease the financial burden if you hit the $2,000 cap early in the year.

How the EGWP Works Within PSHB Plans

The Employer Group Waiver Plan (EGWP) operates behind the scenes of your PSHB plan. You don’t need to enroll separately, but you will receive a separate ID card for the Medicare prescription drug portion of your benefits.

You’ll still deal with your PSHB carrier for most health matters, but your prescription claims are processed under Medicare Part D rules. Coordination of benefits is automatic.

If You Opt Out of EGWP

  • You lose your PSHB prescription coverage entirely

  • You may face late enrollment penalties if you decide to join Medicare Part D later

  • You will have limited opportunities to rejoin, typically only during open enrollment or qualifying life events

Cost Considerations in 2025

Even though specific plan costs vary, some general expectations can help you prepare:

  • Premiums: You pay your standard PSHB premium; there’s no extra cost for the EGWP coverage

  • Copayments: Vary by drug tier but remain consistent across most in-network pharmacies

  • Deductibles: May apply before initial coverage begins, but are often modest within PSHB-integrated plans

  • Catastrophic Protection: Once you reach the $2,000 cap, the plan pays 100% of additional drug costs

These protections are designed to make prescription drugs more affordable for USPS retirees and their families.

How 2025 Changes Compare to Past Years

In 2024 and earlier, many retirees had to manage a separate Medicare Part D plan—or forgo it altogether. That setup left gaps in drug coverage, introduced higher out-of-pocket expenses, and complicated coordination between providers.

With 2025’s changes:

  • The EGWP is integrated into your PSHB plan

  • There’s no need to shop for standalone Part D coverage

  • The risk of reaching a “donut hole” in drug coverage is eliminated due to the $2,000 cap

This transition simplifies your retirement planning and helps you budget for prescription drugs more predictably.

How to Use Your Benefits Effectively

To make the most of your 2025 PSHB Medicare drug coverage:

  • Stay in-network: Use pharmacies within the network to get the lowest copays

  • Use mail-order services: Save time and money on maintenance medications

  • Keep track of expenses: Monitor your out-of-pocket totals so you know when you hit the $2,000 cap

  • Consult your plan formulary: Make sure your medications are covered or look for alternatives

  • Take advantage of the Payment Plan: Spread out high drug costs over the year to reduce financial stress

Common Questions USPS Retirees Ask

Do I have to do anything to enroll in the Medicare drug plan under PSHB?

No. If you’re eligible and enrolled in Medicare Part B, your enrollment in the drug plan portion is automatic unless you opt out.

Will I get a new card for the drug plan?

Yes. You’ll receive a separate card specifically for the Medicare Part D EGWP portion of your benefits.

Can I opt out later if I change my mind?

You can opt out during qualifying life events or the annual open enrollment period, but be aware that you may lose your prescription drug coverage under PSHB and face penalties for late enrollment in Medicare Part D.

Will my drugs be covered under this new setup?

Most commonly used drugs, including generics and many brand names, are covered. Always check your plan’s formulary or speak with a licensed agent for clarity.

Planning Ahead for Future Open Seasons

As you move through 2025, it’s a good idea to:

  • Review your Annual Notice of Change each fall

  • Check the formulary and pharmacy list before each Open Season (November to December)

  • Compare other PSHB plans if you anticipate changes in your prescription needs

  • Stay aware of any policy updates from OPM or your plan provider

The more proactive you are, the better you can align your healthcare with your retirement goals.

Why the New Drug Benefit Matters to You

The integration of Medicare drug coverage into PSHB plans represents a significant step toward reducing health costs and improving access for Postal retirees. The new structure limits out-of-pocket expenses, removes the complexity of dual plans, and ensures that you remain protected from high drug prices throughout the year.

If you’re unsure about what this means for your specific situation, now’s the time to speak with a licensed agent listed on this website for personalized support and peace of mind.