Key Takeaways

• The Federal Employees Health Benefits (FEHB) Program and the Postal Service Health Benefits (PSHB) Program differ significantly in how they affect your retirement healthcare costs, access, and Medicare integration.

• In 2025, understanding which program better suits your needs in retirement depends on your Medicare enrollment status, plan options, and long-term budget considerations.

The Transition from FEHB to PSHB: What Changed?

The Postal Service Health Benefits (PSHB) Program officially took effect on January 1, 2025, replacing FEHB coverage for postal workers and retirees. While the FEHB program continues for other federal employees, postal retirees now fall under PSHB unless they were enrolled in FEHB through a non-postal family member.

This shift was mandated under the Postal Service Reform Act of 2022. While both programs are administered by the Office of Personnel Management (OPM), PSHB is specifically designed for postal employees and retirees with unique rules and obligations—especially regarding Medicare Part B.

Medicare Enrollment Rules: The Game-Changer in PSHB

One of the most notable differences in retirement under PSHB is the Medicare Part B enrollment requirement:

• If you retired on or before January 1, 2025, and you’re not enrolled in Medicare Part B, you are not required to sign up.

• If you retire after January 1, 2025, and are Medicare-eligible, you must enroll in Medicare Part B to retain your PSHB coverage.

This distinction matters. Under FEHB, retirees could choose whether or not to enroll in Part B without losing coverage. But under PSHB, failing to enroll in Part B means losing access to your plan’s benefits if you’re required to have it.

Comparing Cost Structures: Premiums and Out-of-Pocket Spending

Although both FEHB and PSHB follow a similar government contribution model (roughly 70% of total premiums), PSHB plan designs have changed:

• Premiums: PSHB premiums are comparable to FEHB but can differ based on new plan structures exclusive to postal enrollees.

• Deductibles: Some PSHB plans in 2025 have higher deductibles than equivalent FEHB plans had in 2024. For example, deductibles can range from $350 to $2,000 depending on the plan type.

• Coinsurance and Copayments: PSHB coinsurance for in-network care often ranges from 10% to 30%, and out-of-network can reach 50%.

With higher deductibles and coinsurance, your actual spending in retirement under PSHB could be higher than it was under FEHB, especially if you don’t utilize Medicare Part B benefits.

Network Access and Provider Flexibility

In both FEHB and PSHB, access to broad provider networks is a central feature. However, there are slight variations in the 2025 PSHB network coverage:

• PSHB plans often still include national coverage but may restructure preferred provider relationships.

• Coordination with Medicare under PSHB is tighter, sometimes limiting how care is covered if you aren’t enrolled in Part B.

Under FEHB, retirees had more flexibility in opting out of Medicare while still enjoying relatively consistent network access. Under PSHB, Medicare Part B plays a critical role in ensuring full access to benefits.

Coordination of Benefits with Medicare: More Than Just Paperwork

For retirees enrolled in both PSHB and Medicare Part B, many plans offer the following:

• Reduced or waived deductibles

• Lower copayments for services like specialist visits or emergency care

• Integrated prescription drug coverage through a Medicare Part D Employer Group Waiver Plan (EGWP), often with a $2,000 out-of-pocket max in 2025

Under FEHB, coordination with Medicare was optional and variable. Under PSHB, it’s structured and in many cases, essential. If you’re Medicare-eligible and not enrolled, you’ll lose significant cost-sharing protections under PSHB.

Plan Selection in Retirement: Fewer but Focused Choices

The PSHB program offers fewer plan options than FEHB but tailors them more specifically to postal retirees. In 2025:

• Plan availability is based on zip code, just like FEHB.

• PSHB includes Special Enrollment Period protections for those who were previously not enrolled in Part B but are now required to join.

• Certain plans offer Medicare Part B premium reimbursements or incentive credits.

FEHB previously offered a broader catalog, including more high-deductible and consumer-driven plans. With PSHB, the focus is narrower, and your options depend more on how you coordinate with Medicare.

Retiree Experience Under PSHB: New Rules, New Responsibilities

If you’re retired and already on FEHB as of 2024, you may notice some differences post-transition:

• Automatic enrollment into a corresponding PSHB plan occurred in 2024, with coverage effective January 1, 2025.

• You maintain your plan unless you actively opt for a different one during Open Season.

• Costs, copays, and deductible structures may not be identical, even if the plan name stayed the same.

FEHB allowed for relative consistency across the years. PSHB may require more active management of your healthcare, especially as you age into or approach Medicare eligibility.

Survivor Benefits and Plan Portability

Both FEHB and PSHB allow survivor benefits, but the structure has slight differences:

• Under PSHB, survivor benefits are maintained only if the annuitant elected a survivor annuity and the survivor is enrolled under the Self Plus One or Self and Family option at the time of death.

• The transition from FEHB to PSHB did not affect eligibility for Federal Employees Dental and Vision Insurance Program (FEDVIP), which remains separate.

Plan portability between retirement and survivor status remains consistent, but only if proper elections were made during retirement.

Prescription Drug Coverage: Major Enhancements in PSHB

One of the more noticeable upgrades in PSHB is how prescription drug coverage is integrated:

• PSHB enrollees who are Medicare-eligible are automatically enrolled in a Medicare Part D EGWP unless they opt out.

• The 2025 EGWP includes a $2,000 cap on out-of-pocket drug costs, eliminating the old coverage gap (donut hole).

• FEHB drug benefits did not have the same Part D protections.

This change represents a real improvement in retirement for those with high medication needs, but it also requires Medicare Part B enrollment to access the full scope of benefits.

Administrative Differences You’ll Notice

Day-to-day interactions under PSHB differ from FEHB in 2025:

• You’ll manage benefits via KeepingPosted.org (for retirees), not the previous FEHB systems.

• Help lines, Open Season materials, and plan comparison tools are now PSHB-specific.

• The PSHB Navigator Helpline is available for enrollment and benefit questions.

Understanding where to go for help is part of the new learning curve under PSHB. While the FEHB system had familiarity, PSHB brings structural and procedural changes retirees must adapt to.

Weighing Which Program Serves You Best in Retirement

Now that PSHB is fully implemented, your best option depends largely on your Medicare status and your anticipated healthcare usage. Here’s how to frame your decision-making:

• If you’re already enrolled in Medicare Part B or plan to enroll when eligible, PSHB may offer stronger cost protections and drug coverage than FEHB ever did.

• If you prefer not to enroll in Part B, and you retired before 2025, you may still benefit from the familiarity and flexibility of FEHB-like features within the PSHB framework.

• If you’re retiring after 2025 and don’t enroll in Part B, you risk losing your health coverage entirely under PSHB.

Your retirement stage, Medicare status, and financial needs must all be factored together.

Making the Right Call About Your Healthcare Future

Retirees now face a different environment in 2025 than they did just a year ago. PSHB introduces stricter Medicare coordination, new cost-sharing patterns, and streamlined—though fewer—plan choices. These changes are meant to reduce long-term postal service liabilities and improve health outcomes, but they place more responsibility on your shoulders.

If you want personalized help weighing your Medicare Part B decision, plan options, or how the out-of-pocket structure affects your retirement finances, reach out to a licensed agent listed on this website. They can help clarify what matters most for your health and financial security.