Key Takeaways

• Medicare Supplement (Medigap) plans often duplicate the coverage you already receive under PSHB if you’re a Medicare-enrolled annuitant.

• Enrolling in both PSHB and a Medicare Supplement plan could lead to unnecessary costs without added value.

Understanding PSHB and What It Covers

The Postal Service Health Benefits (PSHB) Program replaces your FEHB plan in 2025 if you are a Postal Service employee or retiree. It mirrors many features of FEHB but is tailored specifically for postal workers. For annuitants who are eligible for Medicare, especially Part A and Part B, PSHB integrates with Medicare in ways that can significantly reduce your out-of-pocket costs.

When you have Medicare Parts A and B, your PSHB plan often becomes the secondary payer. This coordination generally means that:

• Medicare pays first for covered services.

• PSHB picks up most or all of the remaining costs.

• You may pay little or nothing out of pocket for many services.

This strong coordination is one reason why many PSHB annuitants find that Medicare Supplement plans are unnecessary.

What Medicare Supplement Plans Do

Medicare Supplement plans (often called Medigap) are private insurance policies designed to help fill “gaps” in Original Medicare. These gaps may include:

• Deductibles

• Copayments

• Coinsurance

Medigap plans are typically used by individuals with only Medicare Parts A and B, but no other coverage. The plans are designed to cover expenses that Medicare does not fully pay. However, PSHB already does this for you when it’s secondary to Medicare.

Overlapping Benefits Between PSHB and Medigap

If you’re enrolled in both PSHB and Medicare Parts A and B, adding a Medigap plan usually doesn’t add any new financial protections. That’s because:

• Medicare covers the bulk of hospital and outpatient costs.

• PSHB covers much of the remaining amount.

• Medigap, if added, would have little to no remaining costs to cover.

For example:

• Medicare Part A has a hospital deductible. Your PSHB plan typically covers this.

• Medicare Part B leaves you with 20% coinsurance. PSHB plans often cover most or all of this balance.

In this setup, paying for a Medicare Supplement plan could mean you’re paying a monthly premium for coverage that your PSHB plan already provides.

Understanding the Costs of Redundancy

Medicare Supplement plans require you to pay an additional monthly premium. Since PSHB premiums already include the value of wraparound benefits for Medicare enrollees, you’re effectively paying twice if you add a Medigap plan.

The monthly premiums for Medicare Supplement plans vary based on age, region, and type of plan. While some individuals consider these plans valuable, PSHB annuitants rarely benefit from this extra layer unless:

• They plan to drop PSHB coverage entirely (which is uncommon and usually not advisable).

• They live or travel extensively outside the U.S., where coverage coordination might not be as seamless.

Outside of such rare cases, this redundancy can quickly add up in cost.

Drug Coverage Complications

Medicare Supplement plans do not include prescription drug coverage. That means you’d need to enroll separately in a standalone Medicare Part D plan to receive drug coverage.

However, PSHB already includes drug benefits. For Medicare-eligible enrollees, this is provided through a Part D Employer Group Waiver Plan (EGWP), which:

• Caps out-of-pocket spending on prescription drugs at $2,000 in 2025.

• Includes a $35 cap for insulin.

• Offers a nationwide network of pharmacies.

If you purchase a standalone Part D plan along with a Medigap plan, your PSHB prescription drug benefits may be disrupted or duplicated, leading to inefficiencies or even coverage issues.

Coordination of Benefits: Medicare, PSHB, and Medigap

Medicare and PSHB are designed to coordinate smoothly. The federal government oversees both programs and ensures they operate in tandem for Medicare-enrolled annuitants.

Medigap, on the other hand, is not integrated into this system. It was never designed to coordinate with employer-sponsored retiree plans. This creates a potential for:

• Payment conflicts

• Denied claims

• Confusion at the provider level

Since Medigap assumes there is no secondary payer beyond itself, adding it into the mix with PSHB can introduce friction into what would otherwise be a seamless process.

What Happens If You Try to Use All Three

If you attempt to use Medicare, PSHB, and Medigap together, you may run into limitations such as:

• Providers billing Medicare and PSHB but not accepting the Medigap plan’s coordination.

• Medigap refusing to pay because the PSHB plan already paid its share.

• Duplicate payments that don’t result in refunds.

This means you may be paying a Medigap premium each month with no guarantee that it adds any value. Worse, you may find that it complicates your claims process.

What About High-Deductible PSHB Plans?

Some PSHB plans come with higher deductibles and lower premiums. You might think about pairing such a plan with Medigap to offset the deductible costs. But here’s the issue:

• PSHB high-deductible plans are still designed to work with Medicare.

• Your Medicare coverage (especially Part B) pays first, making the PSHB deductible often irrelevant.

The high deductible in the PSHB plan usually doesn’t affect you much because Medicare absorbs most of the upfront costs. Adding Medigap still wouldn’t make sense in most of these cases.

What If You’re Not Enrolled in Medicare Part B?

This is one of the few scenarios where a Medigap plan might seem attractive. If you only have Medicare Part A and skip Part B, your PSHB plan becomes your primary payer for outpatient services.

However, in 2025, most PSHB enrollees are required to have Medicare Part B to maintain full coverage. If you’re required to enroll in Part B and fail to do so:

• You could lose access to your PSHB drug benefits.

• Your plan may shift to a different benefit structure.

• You might face late enrollment penalties for Part B.

Trying to bypass Part B by adding a Medigap plan doesn’t solve the problem. It could create more issues and potentially disqualify you from staying in your PSHB plan.

Timeline for Enrollment Decisions

Enrollment in Medicare Supplement plans typically occurs:

• During your Medigap Open Enrollment Period: a 6-month window starting the month you turn 65 and are enrolled in Medicare Part B.

• After that, applications may require medical underwriting.

PSHB enrollment aligns with the November to December Open Season annually. During that period, you can:

• Confirm your Medicare Part B enrollment

• Review your PSHB plan choices

• Drop or change your plan

However, there’s no real advantage in using this time to add Medigap. Most retirees on PSHB with Medicare Parts A and B already receive the complete coverage they need without it.

When a Medicare Supplement Might Still Make Sense

In rare cases, you might consider a Medigap plan only if:

• You decline PSHB coverage entirely

• You spend extended periods overseas and need different coverage structures

• You transition to a private retirement path and no longer qualify for PSHB

Even in these situations, it’s essential to weigh whether dropping PSHB coverage is truly beneficial. For most annuitants, retaining PSHB remains the more cost-effective and secure route.

Where This Leaves You as a PSHB Annuitant

The 2025 PSHB rollout has improved the integration between federal retiree benefits and Medicare. With robust secondary coverage, a nationwide network, and prescription drug integration through EGWP, PSHB eliminates the need for most other plans.

Adding a Medicare Supplement plan when you already have Medicare Parts A and B and are enrolled in PSHB often introduces:

• Duplicate coverage

• Extra monthly premiums

• Potential claim coordination issues

This combination does not deliver additional protection and might instead make your healthcare experience more complex and expensive.

Think Twice Before Doubling Up on Coverage

As you evaluate your coverage for the year ahead, especially during Open Season, consider whether a Medicare Supplement plan offers any benefit to you if you already have PSHB and Medicare Parts A and B. In most cases, it doesn’t.

To avoid paying for redundant coverage or facing billing confusion, speak with a licensed agent listed on this website to review your situation and determine whether your current benefits are already doing the job.