Key Takeaways

• In 2025, your PSHB premiums are increasing, with annuitant contributions now averaging over $241 per month for Self Only coverage and over $567 for Self and Family. Understanding where this extra money is going can help you make informed decisions during future Open Seasons.

• A significant portion of the increased cost is tied to broader healthcare trends, enhanced benefits, and integration with Medicare Part B. But not all of it translates directly into better out-of-pocket costs or coverage for you.

Understanding the 2025 PSHB Contribution Increase

The Postal Service Health Benefits (PSHB) Program is fully in place for 2025, replacing FEHB for Postal Service employees, retirees, and eligible family members. One of the biggest changes you’re seeing this year is an increase in your premium contributions.

If you’re retired, you may now be contributing an average of:

• $241.07 per month for Self Only

• $521.06 per month for Self Plus One

• $567.02 per month for Self and Family

Compared to previous years under FEHB, these increases may feel steep. But they are rooted in several major shifts within the PSHB structure and the broader healthcare system.

What’s Driving the Cost Increase?

Multiple factors have contributed to the jump in PSHB contributions in 2025. Understanding these can help you better evaluate your current plan and consider adjustments during Open Season.

Rising Healthcare Inflation

Healthcare costs continue to outpace general inflation in 2025. Medical service providers have increased rates for inpatient, outpatient, and specialist care. Pharmacy benefit managers have passed on higher drug acquisition costs. Hospitals and clinics are also charging more due to wage pressures and resource constraints.

These system-wide pressures are reflected in higher plan costs across the board, and you bear part of that cost through your monthly PSHB contribution.

Enhanced Prescription Drug Coverage

As of 2025, all Medicare-eligible PSHB enrollees are automatically enrolled in a Medicare Part D Employer Group Waiver Plan (EGWP). This integration brings enhanced drug benefits, including:

• A $2,000 annual cap on out-of-pocket prescription drug costs

• Access to a broader pharmacy network

• $35 monthly cap on insulin

While these features reduce what you pay at the pharmacy, the cost of administering these benefits is built into your premium. That means the extra coverage you’re getting is part of why your monthly bill is higher.

Medicare Part B Coordination

If you are Medicare-eligible and enrolled in Part B, many PSHB plans reduce or waive deductibles and copays. These benefits may include:

• Lower coinsurance for hospital stays

• Waived primary care visit copays

• Reduced specialist visit fees

The government and your health plan still absorb those costs, and they are indirectly funded by your contribution. PSHB plans are spending more per enrollee who has Medicare, and those higher expenditures are distributed across all premiums.

Increased Administrative Costs During Transition

The 2025 rollout of PSHB involved major administrative shifts, including:

• Transitioning millions of enrollees from FEHB to PSHB

• Updating billing systems, ID cards, and provider directories

• Training support staff and developing communication infrastructure

While some of these are one-time costs, they contributed to initial premium setting for 2025 and can impact your monthly rate.

High Utilization and Aging Demographics

Many retirees and annuitants in the PSHB system are now older and utilizing more care. Higher usage of:

• Chronic disease management services

• Specialty pharmaceuticals

• Outpatient surgery

leads to higher claims, which in turn impacts how premiums are set. The PSHB pool, while large, is experiencing more intensive care needs in 2025 than in earlier years.

How Much of the Increase Actually Improves Your Coverage?

It’s easy to assume that higher contributions equal better care, but that’s not always the case. Here’s how your 2025 dollars are really being divided:

1. Premiums That Offset Medicare Benefits

If you’re on Medicare Part B, your PSHB plan may be giving you richer benefits than in past years, such as reduced or no copays. That additional value offsets part of your higher contribution.

2. Drug Cost Protections

The integration of the Part D EGWP means you’re more protected against extreme out-of-pocket costs for medications. You also benefit from predictable drug spending if you take insulin or high-tier prescriptions.

3. Operating Expenses

A portion of the increase supports plan administration, customer service infrastructure, and compliance with new PSHB federal standards. While necessary, these do not directly improve your personal coverage.

4. Cost Shifting from the Employer Side

The federal government still pays approximately 72% of PSHB premiums, but overall healthcare costs are rising faster than that share. The remaining burden often shifts to you, the enrollee.

Key Timeline Events That Affect Contributions

Your current PSHB premiums reflect data and policy finalized during several major 2024 events:

• April to September 2024: Special Enrollment Period for Medicare Part B for eligible annuitants

• November to December 2024: PSHB Open Season for 2025 coverage selection

• January 1, 2025: PSHB officially replaces FEHB for USPS employees and annuitants

Because 2025 is the first full year of PSHB implementation, your contributions this year are based on projected costs, risk pooling assessments, and Medicare coordination effects. You may see further adjustments in 2026 as real-world data becomes available.

Comparing PSHB to FEHB: Then and Now

If you were enrolled in FEHB in 2024, you may be wondering how this year’s PSHB costs compare.

• Average FEHB premium increases in 2024 were 13.5% for enrollees.

• PSHB premiums for annuitants in 2025 increased by a similar or slightly higher margin, but with added benefits like integrated prescription drug protections.

However, the way these plans are structured differs significantly:

• PSHB has mandatory Medicare Part B integration for most new retirees, while FEHB did not.

• PSHB includes an embedded Part D plan for Medicare members.

• PSHB is specifically designed for Postal Service populations, offering a narrower risk pool.

While some benefits are more robust, they come at a premium.

What You Can Do to Evaluate Your Plan

You may not be able to avoid the 2025 increase, but you can ensure you’re getting the most value out of your plan. Here are a few tips:

Review Your 2025 PSHB Plan Brochure

Check your plan’s full list of benefits, especially cost-sharing arrangements:

• What is your annual deductible?

• Are specialist visits subject to coinsurance or flat copays?

• What tier are your most-used prescriptions?

Use Medicare Coordination to Your Advantage

If you’re eligible for Medicare, confirm your enrollment in Part B. Then:

• Make sure your PSHB plan acknowledges your Medicare enrollment.

• Ask whether you receive waived copays or reduced coinsurance.

Some plans even reimburse part of your Part B premium, further increasing your value.

Plan Ahead for Open Season

The next Open Season runs from November to December 2025. In preparation:

• Track your out-of-pocket spending during the year

• Compare plan premiums and out-of-pocket costs

• Reassess family member needs if you’re on a Self and Family plan

Being proactive means you’re less likely to overpay in 2026.

Avoid Over-Insuring Yourself

If you’ve added third-party supplemental insurance that duplicates PSHB benefits, you might be wasting money. With PSHB and Medicare working together, you may not need any extra private plans.

Check that you’re not double-paying for services already included in your PSHB plan.

What to Watch for Moving Forward

You should expect further refinements to PSHB in 2026 and beyond. As the Office of Personnel Management (OPM) evaluates data from 2025, future premium structures may shift based on:

• Real utilization rates

• Medicare claim reimbursement trends

• Plan satisfaction and performance metrics

Additionally, if Congress introduces changes to Medicare eligibility or cost-sharing rules, those would affect future PSHB plan design and premiums.

For now, staying informed and engaged is your best tool for managing what you pay.

Your Monthly PSHB Premium Isn’t Just a Number

While the sticker shock of your 2025 contribution is real, the cost isn’t arbitrary. Your dollars support a wide web of benefits, protections, and federal mandates. Some of those clearly reduce your personal costs, like capped drug expenses. Others are structural, like administrative upgrades and government cost-sharing models.

Your job now is to stay vigilant. Read your plan documents, know your usage patterns, and prepare to compare when Open Season returns. If you want to understand your specific PSHB plan or Medicare coordination better, get in touch with a licensed agent listed on this website for personal guidance.