Key Takeaways

• In 2025, many Medicare Advantage plans may appear cost-effective upfront, but actual coverage limitations and cost-sharing details often reveal financial and logistical challenges, especially when compared to Postal Service Health Benefits (PSHB).

• As a USPS employee or annuitant, understanding the structural differences between PSHB and Medicare Advantage plans can help you avoid unexpected costs and ensure you receive uninterrupted, nationwide healthcare access.

Medicare Advantage Plans: The Appeal on Paper

Medicare Advantage plans, also known as Medicare Part C, are frequently promoted as convenient, all-in-one packages. These plans consolidate Part A (hospital insurance), Part B (medical insurance), and often include Part D (prescription drug coverage). On paper, they may seem like a simple solution to complex healthcare needs.

Many Medicare Advantage plans advertise low monthly premiums, built-in drug coverage, and supplemental benefits like vision, dental, or fitness programs. But when you dig into the details, what looks attractive in a brochure may not hold up in real life. And if you’re a Postal Service annuitant or employee now covered under the new PSHB system, it’s critical to recognize those distinctions.

PSHB and Medicare: How the Two Interact

Starting January 1, 2025, the Postal Service Health Benefits (PSHB) Program replaces your previous FEHB coverage. If you’re Medicare-eligible, the PSHB program assumes you are enrolled in both Medicare Part A and Part B. For most annuitants and eligible family members, Part B enrollment is required to maintain PSHB coverage, unless you meet specific exemptions.

Unlike many Medicare Advantage plans, PSHB plans in 2025 are specifically designed to integrate with Original Medicare. When enrolled in both Medicare Parts A and B, your PSHB plan becomes your secondary payer, reducing out-of-pocket expenses. This coordination offers predictable costs and broad provider access without restrictive networks.

What Looks Good at First May Hide Limitations

Medicare Advantage plans are often built around managed care models such as HMOs and PPOs. These plans usually come with:

• Limited provider networks

• Referral requirements for specialists

• Regional coverage restrictions

If you’re used to the nationwide access that PSHB provides, especially if you travel, relocate, or receive care in multiple states, a Medicare Advantage plan may leave you facing significant barriers.

PSHB, in contrast, is structured to work seamlessly across the country. Most PSHB plans allow you to keep your provider, access specialists directly, and use in-network benefits outside your primary residence state. That difference can be crucial, especially if you split time between locations.

Out-of-Pocket Costs That Add Up Quickly

In 2025, Medicare Advantage plans are subject to a maximum out-of-pocket limit of $9,350 for in-network services and $14,000 for combined in- and out-of-network care. However, many enrollees reach these thresholds faster than expected due to coinsurance percentages and cost-sharing requirements.

Typical Medicare Advantage cost-sharing may include:

• $30 to $60 specialist visit copays

• 20% to 30% coinsurance for diagnostic imaging

• Up to 50% coinsurance for out-of-network services

• Emergency room visit copays as high as $150

PSHB plans often offer more stable cost-sharing structures. If you are also enrolled in Medicare Part B, many PSHB options waive deductibles, lower coinsurance amounts, and cover drug costs under integrated Medicare Part D plans with a $2,000 annual out-of-pocket cap.

Prescription Drug Costs: A Major Factor in 2025

The 2025 Medicare Part D program introduces a new structure with a $2,000 annual cap on out-of-pocket spending for prescription drugs. This is a major improvement from the prior year’s donut hole system, but your experience will still vary significantly depending on your plan type.

Many Medicare Advantage plans offer bundled drug coverage, but formulary restrictions, step therapy, and prior authorization requirements remain common. In contrast, PSHB plans that coordinate with Medicare Part D EGWP (Employer Group Waiver Plans) typically offer:

• Lower drug prices

• Expanded pharmacy networks

• No deductible or simplified cost tiers

• Access to a broader class of medications

If managing multiple prescriptions, these differences could translate into thousands of dollars in savings and greater treatment flexibility.

Access to Providers and Specialists

In a Medicare Advantage HMO, your choice of doctors may be limited to a regional network. If your current providers are out-of-network or you receive care while traveling, you may have to pay substantially more or even cover the entire cost yourself.

PSHB plans integrated with Medicare offer access to any provider that accepts Medicare, without requiring referrals or preapprovals. This is especially helpful for:

• Retirees living in different regions throughout the year

• USPS workers with families scattered across states

• Members receiving specialized care outside local networks

Provider flexibility often means fewer delays and a smoother healthcare experience, especially when seeing specialists or managing chronic conditions.

Administrative Complexity and Billing Surprises

Medicare Advantage plans are run by private insurers. Each plan sets its own rules about network requirements, billing procedures, and service approvals. These differences can result in:

• Prior authorization delays

• Denied claims based on network or medical necessity rules

• Unexpected medical bills due to non-covered services

The PSHB program, working in tandem with Original Medicare, generally avoids these obstacles. Claims are processed through Medicare first, then through your PSHB plan. That dual-structure simplifies billing and reduces the risk of surprise charges.

For instance, Original Medicare pays 80% of the approved amount for a covered service. The PSHB plan typically covers the remaining 20% and may waive the deductible or coinsurance if you are enrolled in Part B. You get clearer billing and less red tape.

Enrollment Timing and Commitment

Medicare Advantage plans lock you in for the year. You can only switch during Medicare Open Enrollment from October 15 to December 7 or during a qualifying life event. Outside those windows, you’re committed to the plan’s limitations, even if your health needs change.

With PSHB, you’re free to review and change your plan annually during the PSHB Open Season, which also takes place from November to December. You maintain the flexibility to choose a new plan that better suits your needs without being restricted to a narrow provider network.

Coordination of Benefits in Retirement

If you are a retired USPS employee, PSHB plans offer full coordination of benefits with Medicare Parts A and B. This coordination results in substantial cost protection, as your PSHB plan acts as a secondary insurer.

You’ll also automatically receive Part D coverage through your PSHB plan in the form of a Medicare Part D EGWP. This means:

• You don’t need to enroll separately in a standalone Part D plan

• Your prescription costs are capped under the new 2025 structure

• You retain comprehensive coverage even during transitions (e.g., new prescriptions, plan changes, moving between care settings)

Medicare Advantage plans, while bundled, often don’t offer the same seamless coordination with federal retiree benefits. And if you opt for a Medicare Advantage plan instead of Original Medicare + PSHB, you risk forfeiting your PSHB secondary coverage altogether.

2025 Trends to Be Aware Of

In 2025, the following trends are worth keeping in mind as you compare options:

• The number of Medicare Advantage plans nationwide has slightly decreased, though Special Needs Plans (SNPs) have increased.

• Fewer Advantage plans now offer transportation and over-the-counter benefits compared to 2024.

• Mid-year notifications are being sent between June 30 and July 31 to alert Medicare Advantage enrollees about unused supplemental benefits.

• PSHB plans continue to emphasize nationwide access, simplified coordination with Medicare, and prescription drug protection with the $2,000 cap firmly in place.

All of this makes it even more critical to thoroughly compare the fine print before opting for Medicare Advantage instead of PSHB.

Choosing Coverage That Reflects Your Needs

No plan is one-size-fits-all. But for USPS employees and annuitants, the 2025 PSHB structure offers advantages specifically designed around your employment history, Medicare integration, and healthcare continuity.

Before enrolling in any Medicare Advantage plan, ask yourself:

• Will this plan restrict where I can receive care?

• Are my doctors and specialists in-network?

• How high are the copays and coinsurance for frequent services?

• What happens if I need care while traveling?

• Will I lose access to my PSHB benefits?

Weighing these answers can help you avoid short-term appeal that leads to long-term frustration.

Why Looking Beyond the Surface Is Essential

Medicare Advantage may sound easy, but the details matter. As a Postal Service retiree or employee, your PSHB plan in 2025 is built to work hand-in-hand with Medicare. It offers more predictable costs, broader access, and fewer administrative surprises.

Make sure you review all your options during Open Season. If you need help comparing plan details, provider access, drug formularies, and cost-sharing rules, get in touch with a licensed agent listed on this website for personalized advice.