Key Takeaways

• PSHB premiums in 2025 are calculated differently than what most Postal retirees and employees were used to under FEHB, with significant variation across plan types and coverage tiers.

• Understanding government contributions, Medicare coordination, and biweekly vs. monthly premium breakdowns is essential to avoid costly surprises.

Premiums Are No Longer What They Used to Be

When the Postal Service Health Benefits (PSHB) Program officially replaced FEHB for Postal Service employees and annuitants in January 2025, one of the biggest shifts you may have noticed came in your premiums. If you’re still using the old FEHB framework to anticipate your costs, it’s time to adjust your expectations.

Unlike FEHB, which applied the same rate-setting principles across all federal agencies, PSHB premiums are structured exclusively for Postal workers. While this has introduced tailored options, it has also led to unexpected pricing shifts—especially for retirees.

Postal-Specific Rating

PSHB plans are now rated separately from other federal plans. This means the risk pool for PSHB participants is limited to Postal Service employees, annuitants, and their covered family members. The intention is to provide more accurate pricing based on this narrower group. In practice, though, this can cause substantial differences in premiums—especially depending on the age distribution, geographic region, and Medicare enrollment within the Postal-specific group.

What Drives Premium Costs Under PSHB

Several key variables determine your premium under the new system:

• Coverage type: Self Only, Self Plus One, or Self and Family.

• Age demographics in the plan’s Postal-specific pool.

• Geographic location and regional healthcare costs.

• Medicare enrollment (especially Part B).

• Plan tier and deductible structure (standard, high-deductible, or consumer-driven).

As a result, two retirees who previously paid similar premiums under FEHB may now find themselves in very different pricing brackets under PSHB.

Monthly vs. Biweekly: Know What You’re Paying

It’s important to understand that PSHB premiums are still primarily deducted on a biweekly basis for active employees. But for annuitants, the monthly premium amount is what you see reflected in your OPM annuity deduction—or billed to you if you pay directly.

Let’s say you’re used to seeing biweekly rates. For accuracy, multiply that amount by 26 and divide by 12 to get a true monthly average. This helps you compare plans on an equal footing, particularly when analyzing your out-of-pocket obligations for the year.

Government Contributions Are Not Flat Across Plans

There’s a common misconception that the government pays a set percentage of every premium. Under PSHB in 2025, the federal government continues to cover approximately 70% of the total premium cost—but that percentage can fluctuate based on the plan you choose.

For example:

• Lower-premium plans might receive a smaller dollar contribution, pushing a larger share of the cost onto you.

• Higher-premium plans may result in higher government contributions in absolute dollars, even though your share still increases.

Understanding this nuance is crucial when evaluating why your premiums under one plan may feel higher—even if the government is paying the same “percentage.”

Medicare Part B Enrollment Can Significantly Reduce Premium Impact

If you’re a Medicare-eligible Postal retiree, your choice to enroll in Medicare Part B has a major effect on your PSHB premium experience. Many plans offer:

• Reduced cost sharing or waived deductibles.

• Enhanced coordination of benefits.

• Prescription drug coverage integration through Medicare Part D EGWP.

In 2025, certain PSHB plans also reimburse part of your Medicare Part B premium. While this doesn’t lower the PSHB premium itself, it helps lower your net out-of-pocket healthcare costs. However, these benefits vary, and not all plans provide them equally. Always review your plan’s Summary of Benefits.

Retiree Premium Shares Can Be Higher Than Expected

One of the most eye-opening shifts in 2025 is the premium contribution required from Postal annuitants. While active employees continue to benefit from full agency contributions, retirees pay a larger share of premiums—especially if they’re no longer eligible for the full government share due to plan selection or Medicare enrollment status.

Some of the reasons your premium might feel unexpectedly high:

• You chose a plan with limited Medicare coordination.

• You didn’t enroll in Medicare Part B and lost access to cost-saving features.

• You switched to Self Plus One instead of Self and Family, where tier pricing can be less favorable.

Remember: your costs aren’t only about the premium. Factor in deductibles, copayments, coinsurance, and whether your medications are covered affordably.

Prescription Drug Coverage and the Role of Medicare Part D

In 2025, all PSHB plans that cover Medicare-eligible annuitants automatically include Medicare Part D drug coverage through an Employer Group Waiver Plan (EGWP). This change plays a direct role in premium formulation, because:

• The EGWP is integrated into your PSHB plan.

• Plans receive federal subsidies to offer drug coverage through EGWP, which can indirectly stabilize your premiums.

• Opting out of Part D coverage could affect both your medication access and cost.

If you opt out of this integrated coverage, your PSHB plan may not cover prescriptions at all.

Family Size and Tier Can Skew Pricing

The difference between Self Plus One and Self and Family isn’t always intuitive under PSHB. In fact, many retirees find that Self Plus One plans cost almost the same—or sometimes more—than full family coverage. This is because the pricing structure does not always scale predictably by number of dependents.

If your spouse is your only dependent, you may assume Self Plus One is the better financial option. But depending on the plan, the Family tier might be marginally more expensive while offering broader network access or more generous prescription coverage.

Always compare both tiers during Open Season—even if your family composition hasn’t changed.

Premium Shock During the First Year

The first year of PSHB (2025) has introduced some sticker shock, particularly for retirees transitioning from FEHB. Some of the contributing factors:

• Plans have restructured benefits and cost-sharing formulas.

• Government contributions now reflect only the PSHB risk pool.

• Prescription drug integration with Medicare Part D affects pricing.

Retirees need to be especially vigilant about these changes, because a miscalculation now could mean hundreds of dollars lost per month until the next Open Season.

You Must Act During Open Season to Control Costs

PSHB Open Season runs annually from November to December. This is your only guaranteed opportunity to:

• Change plans.

• Switch tiers (Self Only, Self Plus One, Self and Family).

• Reassess Medicare coordination features.

If you’re unhappy with your 2025 premiums or cost-sharing, be prepared to reassess your plan before the end of the calendar year. Waiting too long means you’re locked in until the next Open Season unless you experience a qualifying life event.

Premium Planning Requires Year-Round Awareness

To manage your healthcare spending in retirement, you’ll need to:

• Track changes in plan premiums every fall.

• Compare current-year costs with projected out-of-pocket expenses.

• Watch for any notices about plan benefit reductions or rising drug costs.

• Reevaluate your Medicare enrollment annually.

Premiums are just one part of the healthcare equation. To truly understand your annual financial obligation, you must factor in the total cost of care: premiums, deductibles, coinsurance, and drug coverage.

Understanding PSHB Premiums Is Critical to Avoid Costly Mistakes

It’s easy to assume you understand how premiums work—until a new system like PSHB comes along. In 2025, retirees and employees alike are realizing that old assumptions don’t apply. If you haven’t reviewed your plan booklet in detail, now is the time.

To avoid costly surprises, speak with a licensed agent listed on this website who can walk you through the real-world impact of your plan choices. They can help you compare tiers, Medicare integration, and prescription coverage to better manage your total costs.