Key Takeaways

  • Many retirees unknowingly pay for Medigap policies even though their PSHB plan already includes similar or overlapping coverage.

  • In 2025, the integration of PSHB with Medicare offers substantial cost-sharing protections, making separate Medigap coverage often unnecessary.

Understanding What Medigap Is Supposed to Do

Medicare Supplement Insurance, also known as Medigap, is designed to fill the coverage gaps in Original Medicare (Parts A and B). This includes deductibles, coinsurance, and certain copayments. The idea behind Medigap is to reduce your out-of-pocket expenses when you receive medical services under Original Medicare.

Typically, people purchase Medigap policies to limit their healthcare spending, especially for hospital stays, specialist visits, and extended care that falls under Medicare Part A or B. These policies are standardized across most states and come in lettered plans—Plan G, Plan N, etc.—each offering a different set of benefits.

But if you’re a Postal Service retiree or annuitant enrolled in the new PSHB program, you need to look closely at what you’re already getting.

PSHB Coverage in 2025: What You’re Already Getting

The Postal Service Health Benefits (PSHB) Program in 2025 is structured to work with Medicare, not duplicate it. If you’re Medicare-eligible and enrolled in both Medicare Parts A and B, your PSHB plan becomes secondary and picks up many of the costs that Medicare does not cover.

Here’s what your PSHB plan typically includes in 2025:

  • Waived or reduced deductibles for medical services when Medicare is primary

  • Lower copayments for office visits and outpatient care

  • Enhanced pharmacy benefits through integrated Medicare Part D coverage

  • Out-of-pocket maximums that cap your annual spending

  • Coinsurance support that complements Medicare’s coverage structure

These features already provide protection from high medical costs—often the same kind of protection Medigap is supposed to offer. So why pay for both?

Medigap and PSHB: The Areas That Overlap

In 2025, the overlap between Medigap and PSHB coverage becomes clearer when you evaluate key services:

  • Hospital Costs: Medicare Part A covers inpatient care with a deductible. Medigap typically pays that deductible. But your PSHB plan already waives or covers these costs when Medicare is your primary insurer.

  • Doctor Visits: Medicare Part B covers 80% of outpatient care; Medigap usually pays the other 20%. Your PSHB plan typically pays this 20% as well—rendering Medigap unnecessary.

  • Skilled Nursing Facility Care: Covered under Medicare with coinsurance after 20 days. Your PSHB plan often covers this coinsurance when you have Medicare.

  • Lab Tests and Imaging: Most PSHB plans cover Medicare-approved lab work with little to no cost-sharing when Medicare is primary.

  • Emergency Care: Medigap plans help reduce the cost of emergency services. PSHB already includes substantial emergency and urgent care coverage as secondary payer to Medicare.

When you add all this up, most of what Medigap provides is already addressed through your PSHB plan if you’re enrolled in Medicare A and B.

The Financial Side of Double Coverage

Medigap policies are not inexpensive, especially if you’re paying monthly premiums alongside your Medicare Part B premium and your PSHB plan premium. Since PSHB already helps with many of Medicare’s cost-sharing requirements, a Medigap policy in addition becomes an extra monthly cost without added value in most cases.

In 2025, the average Medicare Part B premium is $185. You also pay your share of your PSHB premium—based on Self Only, Self Plus One, or Self and Family enrollment. Now layer a Medigap premium on top of that. You’re paying three different monthly health-related premiums, often for services that the PSHB plan already supports.

Unless you have highly unusual healthcare needs or travel extensively outside of the U.S., the benefits of Medigap rarely justify the extra cost when paired with PSHB.

Prescription Drug Coverage Is Already Included

Another reason retirees mistakenly purchase Medigap is the assumption that it includes prescription drug benefits. It does not. Medigap plans sold after 2006 don’t cover prescriptions.

Your PSHB plan, by contrast, includes integrated Medicare Part D coverage if you’re eligible. This includes:

  • A $2,000 annual out-of-pocket cap on prescription drugs (new for 2025)

  • Coverage of brand-name and generic medications

  • Access to nationwide pharmacy networks

  • A $35 cap on monthly insulin costs

That means you already have enhanced drug coverage without needing a stand-alone Part D or any Medigap add-on.

PSHB Has an Out-of-Pocket Maximum—Medigap Doesn’t

One of the most overlooked facts about Medigap is that it does not include an annual out-of-pocket maximum. This means you could continue to incur medical costs without a guaranteed upper limit (although your exposure is typically low).

By contrast, PSHB plans include an out-of-pocket maximum. In 2025, these limits are:

  • $7,500 for Self Only

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

These caps protect you financially if you face a major illness or long hospital stay. When paired with Medicare, your actual out-of-pocket spending is usually far below these thresholds. This financial safeguard is another reason PSHB can be more beneficial than Medigap.

The Coordination Requirement and Why It Matters

The PSHB program has a unique Medicare coordination requirement. If you’re a Medicare-eligible Postal Service annuitant or family member, you must enroll in Medicare Part B to maintain full PSHB coverage unless you qualify for an exemption (such as being age 64 or older as of January 1, 2025).

Once enrolled in both Medicare Parts A and B, your PSHB plan steps in as secondary payer. This setup is what allows your plan to absorb most out-of-pocket costs and makes having a separate Medigap policy redundant.

Skipping Part B not only triggers penalties but also prevents your PSHB plan from functioning as designed—opening you to much higher costs. But once enrolled, your PSHB plan mirrors many of the protections that people often assume only Medigap can offer.

When Medigap Might Still Make Sense

There are a few narrow situations in which a Medigap plan could still make sense, even for Postal retirees:

  • You’ve permanently moved abroad and need health coverage that PSHB and Medicare won’t provide.

  • You are no longer eligible for PSHB and need an alternative to help with Medicare’s cost sharing.

  • You’re not enrolled in Medicare Part B and therefore cannot receive the secondary benefits from PSHB.

If none of these apply to you, Medigap may be an unnecessary financial burden.

Ask Yourself These Questions Before You Pay for Both

To evaluate whether you need Medigap alongside PSHB, ask yourself:

  • Am I already enrolled in Medicare Parts A and B?

  • Does my PSHB plan cover what I expect Medigap to handle?

  • Do I face high out-of-pocket expenses that my PSHB plan doesn’t already cap?

  • Am I paying multiple premiums for overlapping services?

Answering these questions can help you avoid duplicative coverage and unnecessary costs.

You Don’t Need to Pay Twice for the Same Protection

You’ve already earned strong benefits as a Postal Service retiree. PSHB plans in 2025 are specifically designed to work hand-in-hand with Medicare—not compete with it. Once you’re enrolled in Medicare Parts A and B, your PSHB plan covers many of the same gaps that Medigap traditionally addresses.

Paying for a Medigap policy on top of PSHB often means you’re spending more without gaining additional protection. Your PSHB plan, combined with Medicare, already provides a reliable safety net. Don’t let assumptions about “filling the gaps” lead you to overpay for coverage you don’t need.

Get in touch with a licensed agent listed on this website to walk through your current coverage and eliminate anything unnecessary from your monthly premiums.