Key Takeaways

• In 2025, Postal Service employees and retirees transition from the Federal Employees Health Benefits (FEHB) Program to the new Postal Service Health Benefits (PSHB) Program, which brings distinct structural, cost, and eligibility changes.

• While PSHB is designed to mirror FEHB in many ways, it introduces mandatory Medicare Part B enrollment for some and restructures access to prescription drug benefits under Medicare Part D.

Why This Shift Happened

The Postal Service Reform Act of 2022 mandated the creation of a separate health benefits program for postal workers. The PSHB Program officially launches in 2025 and applies to both current employees and retirees of the U.S. Postal Service. The main reason behind this shift was to reduce long-term liabilities for the Postal Service and align retiree health coverage more closely with Medicare.

Who This Impacts in 2025

You are impacted by this change if you fall into one of the following groups:

• You’re a current USPS employee covered under FEHB.

• You’re a USPS retiree or annuitant receiving health coverage through FEHB.

• You’re a family member covered under a USPS employee’s FEHB plan.

Although the transition automatically enrolls you in a corresponding PSHB plan, you are encouraged to review your options during Open Season to ensure the new plan meets your needs.

What You Lose by Leaving FEHB

1. FEHB Plan Familiarity

Under FEHB, you may have spent years with a particular plan, understanding its rules, networks, and costs. PSHB plans may have different:

• Networks of providers

• Cost-sharing structures

• Formularies for prescription drugs

Even if the plan name remains the same, the benefits structure might be different under PSHB. You’ll need to carefully review your new plan’s brochure.

2. Flexibility Around Medicare Part B

Previously, Medicare Part B enrollment was optional for retirees. Now in 2025, if you’re a Medicare-eligible Postal retiree or family member, you are generally required to enroll in Part B to maintain your PSHB coverage—unless you qualify for specific exemptions:

• You retired on or before January 1, 2025, and are not currently enrolled in Part B.

• You are age 64 or older as of January 1, 2025.

Without Medicare Part B, your PSHB coverage may be terminated or significantly reduced.

3. Access to FEHB Outside of Postal Context

One significant loss is the ability to remain in the broader FEHB system. Once you’re in PSHB, you cannot rejoin FEHB unless you change your employment status (e.g., by moving to a non-USPS federal job). That means the broader plan selection and structure of FEHB are no longer available to you.

4. Simpler Drug Coverage for Some

Before 2025, your prescription drugs may have been covered under a single FEHB plan. Under PSHB, Medicare-eligible retirees and family members automatically receive their drug benefits through a Medicare Part D Employer Group Waiver Plan (EGWP). This separation introduces a new layer of coordination, and opting out of Part D can mean losing drug coverage entirely.

What You Gain With PSHB

1. Cost-Sharing Reductions with Medicare Part B

If you enroll in Medicare Part B, many PSHB plans offer reduced cost-sharing:

• Waived deductibles

• Lower copayments

• Reduced coinsurance

This integration can reduce your out-of-pocket spending significantly. Some plans even offer partial reimbursement for your Medicare Part B premium, though details vary.

2. Enhanced Prescription Drug Coverage Under Part D

The 2025 PSHB program includes automatic enrollment into a Medicare Part D EGWP for eligible members. Benefits include:

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

• $35 monthly insulin cap

• Broader national pharmacy network

These updates reflect 2025 improvements to Medicare Part D and offer real financial relief, especially for chronic conditions requiring long-term medication.

3. USPS-Specific Design

PSHB plans are tailored specifically for postal employees and retirees. This specialization may result in:

• More predictable government contributions

• Targeted benefits for Postal Service job roles

• Better alignment with USPS employment conditions and retirement schedules

4. Auto-Enrollment Safety Net

For 2025, automatic enrollment ensures no eligible participant loses coverage during the transition. This removes the burden of reapplying but still allows you to switch plans during Open Season.

5. Continued Access to Federal Benefits

Although you’re leaving FEHB, you still retain access to other benefits:

• Federal Dental and Vision Insurance Program (FEDVIP)

• Federal Long Term Care Insurance Program (FLTCIP, if already enrolled)

• Flexible Spending Accounts (FSA, for active employees)

These programs are unaffected by your move from FEHB to PSHB.

Financial Implications to Watch

Premium Contributions

The Postal Service continues to pay a substantial portion of your premium—about 70%—just like in FEHB. However, your actual monthly premium under PSHB may be higher, especially if you select a more comprehensive plan.

Deductibles and Out-of-Pocket Limits

Most PSHB plans maintain similar structures to what you had under FEHB, but:

• In-network deductibles generally range from $350 to $500

• Out-of-pocket maximums can be as high as $7,500 (Self Only) or $15,000 (Self & Family)

• These amounts reset annually

You should review the PSHB brochure each year to compare your plan’s cost structure.

Coordination with Medicare

For Medicare-eligible enrollees, PSHB can significantly reduce costs if paired with Part B. But without Part B, your out-of-pocket costs could rise sharply. Coordination between Medicare and PSHB is crucial in 2025 to avoid coverage gaps.

Timeline You Should Know

• 2022: Postal Service Reform Act signed into law

• 2024: Special Enrollment Period (SEP) for Medicare Part B ran from April to September

• November-December 2024: Open Season for PSHB enrollment

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

If you didn’t review your plan during the 2024 Open Season, your auto-enrolled plan started January 1, 2025.

What to Do in 2025

Review Your PSHB Plan Now

Even if you were automatically enrolled, compare your plan’s coverage, cost-sharing, and provider network to previous years. Watch especially for differences in:

• Copayments and coinsurance

• Prescription coverage tiers

• Out-of-network policies

Verify Medicare Part B Enrollment

If you’re Medicare-eligible, confirm your enrollment in Part B. If you’re exempt, make sure that’s clearly documented. Without this step, you risk losing your PSHB coverage or facing penalties.

Check Prescription Drug Plan Enrollment

If you qualify for Medicare, confirm that you are enrolled in the Part D EGWP included in your PSHB plan. Opting out of it can result in losing drug coverage altogether.

Contact a Licensed Insurance Agent

Navigating PSHB for the first time can feel like learning a new language. Get help by reaching out to a licensed insurance agent listed on this website. They can walk you through your benefits, compare options, and make sure you’re not missing important details.

What This Shift Means for the Future

The transition from FEHB to PSHB marks a structural change in how postal health benefits are managed—but it’s not necessarily worse or better. It’s simply different. You lose some flexibility, gain some targeted advantages, and now must consider Medicare Part B more seriously.

Ultimately, your costs and experience will depend on your plan choice, Medicare enrollment status, and healthcare needs. Annual reviews will be more important than ever.