Key Takeaways

• PSHB plans in 2025 offer robust coverage but often leave out certain Medicare-related expenses, which could leave you with high out-of-pocket costs.

• Adding a Medigap policy may provide the financial protection you need, especially if you anticipate needing frequent or extended medical care.

What You Think PSHB Covers—And What It Actually Does

The Postal Service Health Benefits (PSHB) Program was created to deliver strong health coverage to Postal Service employees, retirees, and their families. In 2025, it continues to serve that role, but it’s not without its boundaries—especially for retirees who are eligible for Medicare.

If you’re enrolled in both PSHB and Medicare Part A and Part B, you might believe that your healthcare is fully covered. That’s a reasonable assumption—but it’s not entirely accurate. While the PSHB plan typically acts as the secondary payer to Medicare, certain costs fall through the cracks. That’s where Medigap, or Medicare Supplement Insurance, becomes relevant.

What PSHB and Medicare Cover Jointly

When you are enrolled in both Medicare and a PSHB plan, Medicare pays first, and your PSHB plan generally covers remaining costs. This coordination works well in many cases. Here’s what you can expect to be covered:

• Hospital stays (Medicare Part A and PSHB coordination)

• Doctor visits and outpatient care (Medicare Part B and PSHB coordination)

• Lab work, imaging, and preventive services

• Emergency services

For the most part, this pairing handles the majority of common medical needs. However, the key phrase is “most.” Not everything gets paid for in full.

Where PSHB Leaves Gaps

Several healthcare expenses may still result in out-of-pocket payments—even with both Medicare and PSHB. These include:

• Excess charges: If your provider doesn’t accept Medicare assignment, you could be billed up to 15% more than Medicare’s approved amount. PSHB doesn’t always pay for this.

• Foreign travel emergencies: Most PSHB plans offer limited or no coverage outside the U.S. Medicare doesn’t cover care abroad either.

• Skilled nursing facility (SNF) costs beyond 20 days: Medicare covers up to 20 days fully, but starting day 21, you’ll pay daily coinsurance unless your PSHB plan picks up the slack—which many don’t fully do.

• Part B coinsurance or copayment: Medicare covers 80% of approved costs. PSHB may not always cover the full remaining 20%.

• Deductibles: Your Medicare Part A and Part B deductibles may still be your responsibility, and not all PSHB plans reimburse them.

The issue isn’t that PSHB plans are weak. It’s that they aren’t designed to work as full Medicare Supplement policies.

What Medigap Is Designed to Do

A Medigap plan—also known as Medicare Supplement Insurance—is designed to do exactly what the name implies: cover the “gaps” in Original Medicare. These plans are standardized across most states and are regulated to pay for things like:

• Part A deductible

• Part B deductible (in plans purchased before January 1, 2020)

• Part B coinsurance or copayment

• Skilled nursing facility care coinsurance

• Emergency foreign travel (with limits)

• Excess charges from non-participating Medicare providers

In 2025, these supplemental policies are especially helpful for retirees who expect frequent doctor visits, chronic condition management, or potential hospitalization.

What Medigap Does Not Cover

Despite the benefits, Medigap plans do not cover every possible medical expense. These include:

• Prescription drug coverage (you need a separate Part D plan)

• Long-term care

• Vision or dental services

• Hearing aids

• Private-duty nursing

That’s why PSHB still serves a valuable role—it often includes prescription drugs and routine vision/dental benefits that Medigap plans never offer.

Why Medigap Still Makes Sense in 2025

So, you might be thinking: If PSHB already offers strong secondary coverage, why would you need Medigap?

In 2025, many retirees are finding that while PSHB coverage works well for general needs, they face large and unexpected costs in more complex situations. Here’s where Medigap makes a difference:

• Predictable costs: Medigap standardizes your out-of-pocket expenses. With the right plan, you could pay little to nothing beyond your monthly premiums.

• Lower surprise bills: Excess charges and coinsurance add up, especially if you see specialists or need procedures.

• Better travel peace of mind: If you’re planning international travel, the limited emergency coverage Medigap offers is better than none.

Medigap isn’t a substitute for PSHB or Medicare—it’s a supplement. But for some, it’s the piece that completes the puzzle.

Enrollment Timing Matters

Unlike PSHB and Medicare, Medigap doesn’t offer guaranteed coverage forever. You get a one-time Medigap Open Enrollment Period when you are both 65 or older and enrolled in Medicare Part B. This window lasts for six months. During this time:

• You can buy any Medigap policy offered in your state.

• You cannot be denied coverage due to preexisting conditions.

• You cannot be charged more based on health history.

After this period ends, insurers may decline your application or charge higher premiums based on your health.

So if you’re a newly eligible retiree or just now enrolling in Medicare Part B in 2025, this six-month window is crucial.

How Medigap Interacts with PSHB

Technically, you can’t use Medigap and PSHB at the same time for the same claims. If you decide to purchase a Medigap policy, you might consider suspending or canceling your PSHB enrollment to avoid duplicative coverage. However, there are caveats:

• Suspending PSHB: This is allowed under certain conditions and gives you the option to reactivate it later.

• Canceling PSHB: This is permanent. If you cancel your PSHB plan, you lose access to it unless you return to USPS employment.

The decision to add Medigap usually involves comparing total costs and coverage needs. It’s rarely as simple as “either/or”—you have to weigh what you’d be giving up.

Questions to Ask Before Choosing Medigap

Before making a change, ask yourself:

• Do I frequently need care that exceeds what PSHB reimburses?

• Am I traveling internationally in retirement?

• Have I hit the Part B deductible or excess charges multiple times?

• Am I in my Medigap enrollment window?

• Am I willing to lose PSHB access permanently if I cancel it?

These answers can point you in the right direction.

What You May Not Realize About Cost Sharing in 2025

Even in 2025, some PSHB plans leave you with substantial cost-sharing responsibilities. These include:

• Coinsurance of 20% to 30% for durable medical equipment

• Deductibles of $350 to $500 for in-network services

• Copayments of $100 to $150 for emergency room visits

• Limited cost-sharing for out-of-network providers

Medigap policies, depending on the plan, can reduce or eliminate many of these charges when paired with Original Medicare.

Is Medigap Worth It If You Already Have Medicare and PSHB?

There’s no universal answer. For some retirees, especially those with low healthcare usage and high satisfaction with their PSHB plan, adding Medigap may be unnecessary.

But if you’ve experienced large bills, or worry about future ones, it may be a layer of protection worth considering—particularly in light of Medicare’s design in 2025.

It’s not about redundancy. It’s about risk protection.

Your Next Step: Getting Help You Can Trust

Understanding the interaction between PSHB, Medicare, and Medigap isn’t straightforward. But making the wrong choice can lead to irreversible consequences.

If you’re unsure whether Medigap makes sense for your situation, speak with a licensed agent listed on this website. They can walk you through your options, help you understand timing rules, and make sure you don’t accidentally lose valuable coverage.