Key Takeaways

• The shift from FEHB to PSHB in 2025 introduces critical differences that impact premiums, Medicare integration, and plan eligibility for USPS employees and retirees.

• Choosing the wrong program or failing to understand the new PSHB structure could result in higher out-of-pocket costs and reduced benefits.

Understanding the Split: Why 2025 Changed Everything

Starting January 1, 2025, Postal Service employees, annuitants, and eligible family members are no longer part of the broader Federal Employees Health Benefits (FEHB) Program. Instead, they are covered under the newly established Postal Service Health Benefits (PSHB) Program. While PSHB may look and feel like FEHB on the surface, there are structural changes you need to account for—especially if you’re trying to protect your retirement savings or manage ongoing medical costs.

This isn’t a simple rebranding. The PSHB is a separate risk pool with different rules, different plan options, and a mandatory Medicare Part B enrollment requirement for certain enrollees. Your choices now have long-term financial implications.

Who Stays in FEHB and Who Moves to PSHB

In 2025, eligibility lines are clearly drawn:

• USPS Employees and Retirees are automatically moved into PSHB if they were previously enrolled in FEHB and are eligible.

• Family members covered under a federal (non-postal) employee or annuitant’s FEHB plan may remain in FEHB.

• Dual-eligible families must determine whether both members stay split across FEHB and PSHB or consolidate coverage under one plan type.

The new PSHB program doesn’t affect other federal employees or retirees. This creates administrative and financial consequences if you or your family straddle both programs.

Medicare Part B Integration: A Deciding Factor

One of the biggest shifts in PSHB is its coordination with Medicare. If you’re Medicare-eligible, the PSHB Program requires you to enroll in Medicare Part B unless you qualify for a specific exemption.

Mandatory Medicare Part B Enrollment in PSHB

As of 2025:

• If you are a USPS annuitant or eligible family member and turn 65 on or after January 1, 2025, you must enroll in Medicare Part B to maintain full PSHB coverage.

• Those who retired on or before January 1, 2025 are exempt from this requirement.

• Medicare Part B is also not required if you are living abroad, receive care through Indian Health Services or the VA, or were age 64 or older as of January 1, 2025.

This integration can be a financial advantage if you are enrolled in Medicare Part B, since PSHB plans often waive deductibles, reduce coinsurance, and lower prescription drug costs for dual-enrollees. But if you miss the enrollment or opt out when required, your PSHB coverage may be reduced or even canceled for certain benefits.

Premium Contributions and Government Share

Although the federal government continues to cover approximately 70% of your PSHB premiums in 2025, the premium amounts and your out-of-pocket share vary based on plan selection.

What changed in PSHB:

• Premiums are separately calculated from FEHB. The average costs may appear similar, but the PSHB pool is rated independently.

• Plan choices under PSHB are only available to USPS workers and retirees, limiting the field but also offering Medicare-aligned benefits in some cases.

• Premium contributions for annuitants remain monthly instead of biweekly.

If you’re used to the way FEHB handled cost-sharing, don’t assume the same will apply. Even a small shift in premium structure can affect your long-term budgeting, especially if you move from employee to retiree status this year.

Prescription Drug Coverage Shifts Under PSHB

In 2025, PSHB plans automatically include a Medicare Part D Employer Group Waiver Plan (EGWP) for annuitants and family members who are Medicare-eligible. This is a significant departure from how FEHB used to handle drug coverage.

Key changes:

• $2,000 out-of-pocket cap on prescription drug costs applies under PSHB Part D coverage.

• Many plans offer lower copayments and coinsurance for prescription drugs if Medicare Part B is also active.

• If you opt out of the PSHB Part D plan, your drug coverage may be severely limited.

These enhancements can be financially beneficial but require coordination. You must understand what you’re auto-enrolled in, what you can opt out of, and the risks of doing so.

Coverage Area, Networks, and Providers

Some enrollees assume the provider networks are identical under PSHB and FEHB. That’s not guaranteed. Even plans that carry the same name under both programs may operate differently.

With PSHB:

• Provider networks may be narrower or differently negotiated compared to their FEHB counterparts.

• Out-of-network costs tend to be higher, sometimes 40%-50%.

• If you frequently travel or live part-time in a different state, the availability of in-network care under PSHB needs to be verified before enrollment.

Assumptions based on your prior FEHB experience might lead to miscalculations. Carefully check provider directories and ask questions before sticking with a familiar plan name.

When You Can Change Your Plan

Plan selection windows also mirror the FEHB system but with some critical nuances for 2025:

• Open Season for PSHB took place from November to December 2024. Future open seasons will follow a similar schedule.

• Outside of Open Season, you can only change your PSHB plan during a Qualifying Life Event (QLE) such as marriage, divorce, death, or a move that affects access to care.

• Annuitants who newly qualify for Medicare Part B may be eligible for a Special Enrollment Period in the PSHB Part D plan.

If you’re counting on switching plans mid-year without a valid QLE, you may be locked into higher costs than expected. Understand your timeline and restrictions.

Financial Risk of Picking the Wrong Program

Making the wrong choice between PSHB and FEHB—when you have a legitimate option—can be costly.

Risks include:

• Higher out-of-pocket maximums if you remain in a less compatible plan.

• Loss of drug coverage if you don’t properly coordinate Medicare with PSHB.

• Reduced provider access if you fail to verify network differences.

• Delayed care or increased claim denials due to plan mismatch.

Additionally, not enrolling in Medicare Part B when required could lead to:

• Late enrollment penalties from Medicare.

• Gaps in coverage for PSHB services.

• Permanent higher premiums for Medicare Part B.

What to Watch for in Your Plan Documents

Don’t assume plan brochures are the same under PSHB and FEHB. In 2025, PSHB plans are required to include:

• Clear breakdowns of Part B coordination benefits

• Descriptions of drug coverage under the integrated Part D plan

• Specific out-of-pocket maximums

• Updated lists of network providers and service areas

• Premium costs based on Self Only, Self Plus One, and Self & Family

Take the time to read these documents in full. If anything is unclear, contact your plan’s customer service or speak with a licensed agent listed on this website who can explain how each choice fits your circumstances.

Making the Most of Your PSHB Benefits in 2025

The PSHB program brings new opportunities for better integration with Medicare and potential savings on prescriptions and services. But it also demands more from you:

• Review your eligibility for Medicare Part B

• Understand the new plan structures, networks, and drug coverage rules

• Monitor premium differences and out-of-pocket exposure

• Use Open Season strategically each year to reassess your situation

What seems like a simple switch from FEHB to PSHB is actually a redefinition of how your health benefits work in retirement. Treat it with the attention it deserves.

How to Avoid Budget Shocks and Coverage Gaps

Choosing a PSHB plan that doesn’t align with your medical needs or your Medicare status can create serious financial strain. To protect yourself:

• Evaluate your total health costs, not just the premiums

• Confirm your providers are in-network under the new PSHB plan

• Check your prescription drugs against the plan formulary

• Don’t skip Medicare Part B enrollment if you’re required to join

These actions may seem tedious, but they could save you hundreds or even thousands of dollars over the course of the year.

Protect Your Health Coverage by Staying Informed

Switching from FEHB to PSHB in 2025 may feel like a minor administrative detail, but its effects ripple throughout your retirement budget. By learning how the two programs differ, how they interact with Medicare, and how your benefits are shaped by enrollment choices, you can avoid preventable costs and maintain access to the care you need.

If you still have questions or need help deciding which PSHB plan best fits your situation, get in touch with a licensed agent listed on this website for personalized assistance.