Key Takeaways

• Many Postal Service employees and annuitants are still holding onto Federal Employees Health Benefits (FEHB), but switching to the Postal Service Health Benefits (PSHB) program in 2025 could offer more tailored benefits, especially if you’re Medicare-eligible.

• While FEHB and PSHB may appear similar on the surface, there are key differences in premiums, prescription drug coverage, and Medicare integration that can make PSHB the more cost-effective and streamlined choice for most USPS retirees.

Understanding the Basics of PSHB vs FEHB

If you’re still enrolled in a Federal Employees Health Benefits (FEHB) plan in 2025, you’re likely feeling some uncertainty about the Postal Service Health Benefits (PSHB) program. The transition became official on January 1, 2025, and it brought a lot of changes that are worth understanding, especially if you’re trying to compare the two systems.

The PSHB program was created under the Postal Service Reform Act of 2022, which separated postal employees and retirees from the rest of the FEHB population. While your benefits might look familiar, they function under new rules, and if you’ve been defaulted into a plan or haven’t reviewed the options thoroughly, you may be missing out on cost savings or enhanced coordination with Medicare.

Why the Shift Happened

FEHB has served the federal workforce for decades, but postal employees have long had different employment and retirement structures. To address rising costs, improve Medicare coordination, and reduce taxpayer burdens, Congress directed the Office of Personnel Management (OPM) to create the PSHB program exclusively for Postal Service employees and retirees.

The result is a benefits system that looks similar in design but is structured to better align with USPS workforce needs.

1. PSHB Is Mandatory for USPS Retirees and Employees

If you’re an active Postal Service employee or a USPS retiree who wants to keep your health insurance beyond 2024, you must be enrolled in a PSHB plan as of 2025. This is not optional.

• If you didn’t make a plan selection during Open Season from November to December 2024, you were automatically enrolled in a PSHB plan that was considered the closest match to your previous FEHB plan.

• However, automatic enrollment doesn’t mean optimized coverage. Reviewing your options remains essential, especially because many plan designs, cost-sharing structures, and Medicare incentives differ from what you had under FEHB.

2. PSHB Requires Medicare Part B Enrollment—With Exceptions

For annuitants and family members who are eligible for Medicare Part B, enrollment is now a condition to keep full PSHB coverage. But there are exceptions:

• If you retired on or before January 1, 2025, and aren’t already enrolled in Medicare Part B, you’re exempt from this requirement.

• If you were age 64 or older as of January 1, 2025, you’re also exempt, even if you’re still employed.

• Certain individuals residing abroad or covered under VA or Indian Health Service may also qualify for exemptions.

If you fall into one of these groups, you can remain in PSHB without enrolling in Medicare Part B, but reviewing the value of Part B—even if not required—is still a smart move.

3. PSHB Offers Enhanced Integration with Medicare

Unlike FEHB, PSHB is designed to work hand-in-hand with Medicare. If you are enrolled in Medicare Parts A and B:

• You may benefit from reduced or waived deductibles and copayments.

• Many PSHB plans offer reimbursement for part or all of your Medicare Part B premiums.

• Drug coverage is integrated through a Medicare Part D Employer Group Waiver Plan (EGWP), which helps control out-of-pocket costs. This includes benefits like a $35 monthly insulin cap and a $2,000 out-of-pocket maximum for prescriptions.

This Medicare alignment isn’t available under FEHB plans in the same way, which can mean more out-of-pocket expenses and less efficient coordination of benefits.

4. Prescription Drug Coverage Is Better Aligned With Needs

FEHB plans often had confusing prescription drug coverage when layered with Medicare. Under PSHB, the prescription benefits are standardized for Medicare-eligible participants:

• All Medicare-enrolled annuitants and their eligible family members are automatically enrolled in the EGWP prescription drug plan unless they opt out.

• Opting out removes your drug coverage under PSHB entirely, with limited opportunities to re-enroll.

If you are taking high-cost medications or managing a chronic illness, this benefit structure offers more predictability in annual costs than what FEHB typically provided.

5. PSHB Premiums Are Structured Specifically for USPS Enrollees

While FEHB premiums in 2025 increased by an average of 11.2%, PSHB plans are structured with the Postal Service’s specific risk pool in mind. This can lead to better premium stability over time and improved government contributions toward your total premium.

• For example, annuitants in 2025 pay monthly premiums around $241 for Self Only, $521 for Self Plus One, and $567 for Self and Family, depending on the plan selected.

• Government contributions still cover about 70% of total premium costs in PSHB, similar to FEHB.

However, these rates reflect plans tailored to Postal Service risk factors, which could make them more favorable in the long term.

6. Out-of-Pocket Costs Can Be Lower with PSHB

Because of the built-in Medicare coordination and plan design, you may face lower out-of-pocket costs in PSHB plans. Key savings areas include:

• Waived deductibles for those with Medicare Part B

• Lower copayments for services like primary care and specialist visits

• A defined out-of-pocket cap for prescription drugs

With FEHB, those cost-sharing features were often higher or required you to coordinate benefits on your own, which could lead to overpayment or missed reimbursements.

7. Open Season Choices Still Matter

Even though PSHB became mandatory in 2025, you’re still in control of your coverage during each Open Season, which occurs from November to December every year. This is the only time (outside of qualifying life events) when you can:

• Switch between PSHB plans

• Adjust enrollment types (Self Only, Self Plus One, Self and Family)

• Confirm Medicare coordination preferences

Sticking with your auto-assigned plan without doing an annual review could result in higher-than-necessary costs.

8. PSHB Does Not Affect Other Federal Benefits

You might worry that switching from FEHB to PSHB could somehow impact your other federal benefits. It doesn’t.

• Your dental and vision coverage under FEDVIP remains unchanged.

• Life insurance through FEGLI is unaffected.

• Retirement annuity payments, including COLAs, are not impacted by your health plan enrollment.

PSHB is a standalone change that relates only to your health insurance.

9. You Can Use the Same Provider Network in Many Cases

If you’re worried about having to change doctors or facilities, it’s important to note that many PSHB plans use the same provider networks as their FEHB predecessors. Still, you should:

• Check whether your current providers are still in-network

• Confirm any changes in referral or pre-authorization rules

Staying with a familiar plan name doesn’t guarantee identical access, so always review your Summary of Benefits.

Time to Reevaluate What Works Best for You

In 2025, holding onto FEHB isn’t just outdated—it’s no longer an option for Postal employees and retirees. PSHB is now the required system, and while the change may seem like a loss of control, it could actually offer stronger benefits, better integration with Medicare, and more affordable prescription drug protection.

Your next Open Season is the key to taking full advantage of what PSHB offers. Don’t assume the default selection meets your needs. Take time to review your plan materials, compare options, and align your plan with your current health situation and Medicare status.

For personalized help, get in touch with a licensed agent listed on this website to walk through your choices.