Key Takeaways

• Medicare Supplement plans, while widely assumed to provide blanket protection, have clear limitations when paired with the Postal Service Health Benefits (PSHB) Program.

• You may end up paying more or receiving less flexibility with Supplement plans, especially if you’re Medicare-eligible and already integrated into a PSHB plan.

What Medicare Supplement Plans Actually Do

Medicare Supplement plans—also called Medigap—are designed to work with Original Medicare (Parts A and B) to cover certain out-of-pocket costs like deductibles, copayments, and coinsurance. But they are not designed to work with Medicare Advantage (Part C) or with the integrated structure of PSHB plans for Postal Service annuitants and employees.

You can’t use a Supplement plan to fill the gaps in Medicare Advantage, and if you are enrolled in a PSHB plan that coordinates with Medicare, a Supplement plan may become redundant or even incompatible.

The Structure of Medigap

• Only works with Original Medicare (Parts A and B)

• Doesn’t cover prescription drugs (you need a standalone Part D plan)

• Offers no dental, vision, or hearing coverage

• Limited enrollment protections outside your initial eligibility window

How PSHB and Medicare Work Together in 2025

Starting January 1, 2025, Postal Service annuitants and their family members must enroll in a PSHB plan to retain health coverage. For Medicare-eligible individuals, this coverage now coordinates more directly with Medicare Parts A and B. That makes Medicare Supplement plans mostly unnecessary—and potentially a financial burden.

Here’s how PSHB interacts with Medicare:

• If you have Medicare Part A and Part B, most PSHB plans reduce or waive your deductibles and coinsurance.

• Prescription drug coverage is automatically included under a Medicare Part D Employer Group Waiver Plan (EGWP).

• Some PSHB plans even offer reimbursements for part of your Part B premium.

In contrast, a Medicare Supplement plan offers none of these PSHB-based benefits.

Limitations of Medicare Supplement Plans You Might Overlook

1. No Drug Coverage Included

Supplement plans do not offer prescription coverage. You’d need to enroll in a standalone Part D plan. But if you’re already under PSHB, your drug coverage is automatically bundled through your EGWP. Adding a separate Part D plan can disqualify you from this integrated coverage.

2. You Can’t Combine with PSHB + Medicare Advantage

Supplement plans are not compatible with Medicare Advantage. If your PSHB plan uses a Part C-style structure, your Supplement plan becomes unusable. That means paying an extra premium for something you can’t use.

3. Higher Out-of-Pocket Costs in Some Scenarios

People often assume Supplement plans eliminate all surprise bills. But that depends on the plan letter you choose, and those plans don’t come cheap. Some plans don’t cover the Part B deductible or excess charges, and none of them help with long-term care, dental, vision, or hearing expenses.

4. Strict Enrollment Windows

Unless you’re in your Medicare Initial Enrollment Period or qualify for a special enrollment right, you may face underwriting when applying for a Supplement plan. That could mean being denied coverage or charged more due to pre-existing conditions. Meanwhile, PSHB doesn’t require medical underwriting.

5. No Family Coverage Option

Supplement plans are individual only. You and your spouse would each need separate policies, each with its own monthly premium. PSHB plans offer Self Plus One and Self and Family options—simplifying costs and coverage.

Why Many Assume Supplement Plans Are Safer

The idea that Medicare Supplement plans are the gold standard stems from their popularity before the integration of employer-sponsored retiree plans like PSHB. In theory, Supplement plans promise predictability: standardized benefits, consistent cost-sharing, and a safety net for hospital and outpatient services.

But in reality, these advantages often get overshadowed by the complexity of managing multiple plans, added costs, and redundant coverage—especially when you’re also eligible for PSHB.

Medicare Supplement vs. PSHB: A Quick Comparison

Common Scenarios Where Supplement Plans Fail

Even with the best intentions, a Supplement plan can fall short if:

• You need comprehensive prescription drug coverage.

• You require dental, vision, or hearing services.

• You want to simplify billing and avoid managing multiple plans.

• You move to another state and face issues with guaranteed issue rights.

• You later want to switch to Medicare Advantage or back to PSHB-only coverage.

PSHB plans are designed to work across states and for Postal Service retirees no matter where they live, offering flexibility that most Supplement plans can’t match.

What You Should Consider Before Buying a Supplement Plan

If you’re already a PSHB enrollee or annuitant, stop and evaluate the following before exploring Supplement coverage:

• Do you already have Medicare Part B? If yes, your PSHB plan likely already coordinates benefits.

• Are you receiving any reimbursements or waived deductibles through your current PSHB plan?

• Will a Supplement plan actually reduce your overall costs, or add a new premium without real added value?

• Are you or your spouse covered under Self Plus One or Self and Family? Supplement plans won’t help there.

The 2025 PSHB Advantage

The PSHB system was specifically modernized in 2025 to reduce retiree out-of-pocket costs and enhance Medicare integration. By building in drug coverage, lowering cost-sharing, and eliminating the need for duplicate insurance, PSHB plans remove the gaps many once looked to Supplement plans to fill.

In most cases, if you’re already part of the PSHB system and enrolled in Medicare Parts A and B, a Supplement plan doesn’t add safety—it adds cost and complexity.

The Takeaway for PSHB Enrollees

Before pursuing a Medicare Supplement plan, look at what your PSHB plan already offers. Most likely, your deductibles are lower, your coverage is more comprehensive, and your costs are more streamlined. A second insurance policy may only serve to create confusion—and another monthly bill.

Think Through Your Coverage Before You Commit

Medicare Supplement plans have their place—but usually not for Postal Service retirees with PSHB. What may seem like an added layer of protection can turn out to be unnecessary, expensive, and incompatible with your existing coverage.

Before you sign up for anything extra, speak with a licensed agent listed on this website. They can review your existing PSHB and Medicare coverage and help you determine if a Supplement plan offers any real benefit—or if you’re better off sticking with what you’ve got.