Key Takeaways

• Medigap is not necessary for most Postal retirees or annuitants who are already enrolled in a PSHB plan, especially if they are also enrolled in Medicare Part B.

• Using both Medigap and PSHB together often leads to overlapping coverage and unnecessary out-of-pocket spending, since PSHB plans offer extensive benefits that already supplement Medicare.

Understanding the Basics of PSHB and Medigap

Before examining how Medigap and PSHB might interact, it helps to clarify what each program is designed to do:

• Postal Service Health Benefits (PSHB) is the 2025 replacement for FEHB coverage for all Postal Service employees and retirees. These plans include comprehensive medical coverage, and for Medicare-eligible enrollees, they coordinate benefits with Medicare.

• Medigap (also known as Medicare Supplement Insurance) is designed to work with Original Medicare (Parts A and B) to cover certain out-of-pocket costs like coinsurance, copayments, and deductibles.

At a glance, both PSHB and Medigap seem to perform a similar role—helping reduce your out-of-pocket healthcare costs. But in practice, the overlap can create confusion and waste.

Why Medigap Is Usually Unnecessary With PSHB

If you’re a Postal retiree or annuitant enrolled in both Medicare Parts A and B, and you also keep your PSHB coverage, then Medigap may not offer you any added value. Here’s why:

• PSHB plans already coordinate with Medicare. Most PSHB plans are designed to act as secondary payers to Medicare, covering costs that Medicare does not.

• Medigap doesn’t coordinate with PSHB. Medigap is built to work with Original Medicare only. It doesn’t integrate with employer-sponsored group plans like PSHB.

• You’re likely paying extra for redundant benefits. Medigap policies have monthly premiums that add an additional cost to your healthcare. Since PSHB plans already reduce many of the same out-of-pocket expenses, using both often results in duplicative coverage.

The Order of Payer Rules in 2025

Understanding the coordination of benefits is key. In 2025, if you’re a Postal retiree with Medicare Parts A and B and a PSHB plan, the payment order generally looks like this:

1. Medicare pays first – covering your Medicare-eligible expenses.

2. PSHB pays second – covering costs not paid by Medicare (like copayments, deductibles, and coinsurance).

If you add Medigap to this setup, the plan has no recognized place in the payer order and typically won’t pay benefits if the PSHB plan already does.

What If You Have Medigap Already?

If you enrolled in a Medigap plan before the transition to PSHB in 2025, you might be wondering whether to keep it. Here are a few considerations:

• Check your PSHB plan brochure to see what is covered once you’re enrolled in Medicare.

• Evaluate your costs. Compare your Medigap premium with what you save by having PSHB as your secondary payer.

• Be aware of disenrollment rules. If you cancel a Medigap policy, you may not be able to get it back later unless you qualify for guaranteed issue rights.

What Happens When You Have Only One?

Some enrollees may choose to drop PSHB entirely and rely on Medigap + Medicare instead. Here’s what changes:

• You lose access to PSHB prescription drug benefits. Medigap plans do not include drug coverage.

• You must enroll in a standalone Medicare Part D plan. That’s another premium and another plan to manage.

• You lose any PSHB-specific benefits. These may include dental, vision, or hearing coverage not offered through Medigap.

On the flip side, if you keep only PSHB and drop Medigap, you’ll still have coordinated coverage with Medicare and may retain those extra non-Medicare benefits. Most Postal retirees find this setup to be more streamlined and cost-effective.

Medicare Part B Is the Key to Coordinated Coverage

For PSHB to act as your secondary payer in retirement, you must be enrolled in Medicare Part B. If you skip Part B, your PSHB plan becomes the primary payer and may reduce or limit benefits it would otherwise provide.

In 2025, certain Postal Service annuitants and eligible family members are required to enroll in Part B to maintain PSHB coverage. This rule reinforces the intention that PSHB and Medicare should work together, without needing Medigap as a third layer.

Why Some People Still Consider Medigap

Despite the inefficiencies of combining Medigap with PSHB, some people consider it out of:

• A misunderstanding of how PSHB and Medicare coordinate.

• A desire for extra peace of mind. Some assume more coverage is better.

• Old habits. Retirees who were previously advised to get Medigap before 2025 may not realize PSHB replaces the need for it.

However, using both plans rarely leads to better coverage—it more often results in over-insuring yourself.

PSHB Offers Features That Medigap Can’t

Medigap plans are designed only to supplement Original Medicare, but PSHB offers several features beyond that scope:

• Integrated drug coverage through Medicare Part D Employer Group Waiver Plans (EGWPs).

• Dental and vision benefits (not covered by Medicare or Medigap).

• Lower out-of-pocket costs if enrolled in both PSHB and Medicare Part B.

• Global emergency coverage in many PSHB plans.

These advantages mean you’re likely to get more comprehensive care with less administrative hassle by relying solely on PSHB + Medicare.

Cost Implications in 2025

While PSHB plans do require monthly premium payments (based on your enrollment type), these costs are partly subsidized by the government—around 70%. On the other hand, Medigap plans are not subsidized, and premiums vary widely by age, location, and plan type.

Here’s how the financial impact typically breaks down:

• Keeping both PSHB and Medigap leads to paying two premiums, with no coordinated benefit structure.

• Dropping Medigap but keeping PSHB and enrolling in Medicare Part B often results in lower total costs, with better coverage integration.

Should You Ever Consider Both?

In nearly all situations for Postal retirees in 2025, keeping both plans is unnecessary. However, if you:

• Retired before 2025,

• Declined PSHB coverage at retirement, and

• Are not eligible to reenroll in PSHB,

then Medigap might be your only way to supplement Original Medicare. But this is the exception, not the norm.

When to Review Your Coverage

Your healthcare needs and options can change over time. You should review your coverage:

• Annually during Open Season (November to December).

• When you turn 65 and become eligible for Medicare.

• After major life events such as marriage, divorce, or relocation.

Taking the time to reassess ensures you’re not overpaying or missing out on benefits.

What to Ask Before Making a Change

Before deciding to keep or drop Medigap alongside your PSHB plan, ask yourself:

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

• Does my PSHB plan coordinate with Medicare?

• What extra value, if any, does Medigap provide?

• Am I willing to pay additional monthly premiums for redundant coverage?

Having clear answers can prevent costly mistakes.

Making the Most of Your Benefits Without Overlap

You’re not alone if you’ve found the combination of PSHB, Medicare, and Medigap confusing. But in 2025, PSHB is specifically designed to work with Medicare Parts A and B—rendering Medigap mostly obsolete for Postal retirees.

Rather than layering on additional coverage that doesn’t coordinate or pay, you’re better off maximizing the benefits of your PSHB plan with Medicare. It’s more efficient, cost-effective, and tailored for your situation.

If you’re unsure, the best move is to speak with a licensed agent listed on this website who understands how the programs interact. They can walk you through what coverage you need—and what you don’t.

Understand What You’re Really Paying For

Reviewing your healthcare plan isn’t just about counting premiums. It’s about understanding the value each part of your plan delivers—and whether that value overlaps unnecessarily.

PSHB, especially when paired correctly with Medicare, already provides a high level of protection. Adding Medigap often brings more costs than benefits.

A quick conversation with a licensed agent listed on this website could save you hundreds over the course of a year—without giving up the coverage you truly need.