Key Takeaways

• Medicare Supplement (Medigap) plans are not designed to work with the PSHB program, and combining them can lead to unnecessary overlap in coverage and higher costs.

• If you’re already enrolled in PSHB and are eligible for Medicare, you likely do not need to purchase a Medigap plan—and doing so may result in wasted premiums.

Understanding the Role of PSHB in 2025

The Postal Service Health Benefits (PSHB) program, launched in 2025, replaces previous FEHB coverage for Postal Service employees and annuitants. PSHB is specifically tailored for the unique needs of Postal retirees and integrates closely with Medicare coverage, especially for those aged 65 and older.

As of now, PSHB plans are structured to coordinate effectively with Medicare Part A and Part B. In fact, if you’re eligible for Medicare and retired after January 1, 2025, you are required to enroll in Medicare Part B to maintain PSHB coverage. The program’s benefits, cost-sharing, and drug coverage reflect this coordination.

What Medigap Plans Do—and Why They’re Usually Unnecessary With PSHB

Medicare Supplement Insurance (commonly called Medigap) is intended to fill the “gaps” in Original Medicare. These gaps include deductibles, coinsurance, and other out-of-pocket costs not covered by Medicare Parts A and B.

However, PSHB plans already do this.

PSHB Fills the Same Gaps Medigap Targets

When you combine Medicare Part A and Part B with your PSHB plan, the PSHB plan acts as your secondary coverage. It typically picks up many of the costs that Medicare doesn’t cover:

• Coinsurance after Medicare pays its share

• Deductibles for hospital or medical care

• Extended hospital stays

• Skilled nursing care copayments

Because PSHB fills many of the same gaps that Medigap policies are designed to cover, you may end up paying premiums for a plan that adds little or no extra value. That’s the real concern—duplicate coverage without additional benefit.

How PSHB Coordinates With Medicare

In 2025, PSHB plans are integrated with Medicare in a way that mirrors or even exceeds what Medigap offers in terms of cost protection:

• Secondary Payer Role: PSHB becomes the secondary payer after Medicare. It pays for most or all of what Medicare doesn’t.

• Lower Cost-Sharing: When you’re enrolled in both Medicare and PSHB, many plans reduce or eliminate your deductibles, coinsurance, and copayments.

• Prescription Coverage: Medicare-eligible annuitants under PSHB are enrolled in a Part D-equivalent Employer Group Waiver Plan (EGWP) with an annual out-of-pocket drug cap of $2,000.

This built-in coordination eliminates the need for any Medigap plan to serve as backup.

Why Medigap Doesn’t Fit Into the PSHB Ecosystem

Here’s what makes Medigap plans incompatible with PSHB:

• They Don’t Coordinate: Medigap plans are designed to pair only with Original Medicare (Parts A and B), not with employer coverage or federal retiree plans like PSHB.

• They Can’t Act as a Tertiary Payer: If Medicare pays first and PSHB pays second, a Medigap plan has nowhere to step in. It’s effectively sidelined.

• Premiums Add Up: You’ll pay a monthly premium for a Medigap plan that may never pay out benefits—because your PSHB plan already absorbs the cost-sharing burden.

In short, you’re spending money for a plan that can’t contribute.

Financial Waste and Coverage Redundancy

One of the biggest risks of combining Medigap with PSHB is financial inefficiency. Here’s how that happens:

• Redundant Premiums: You pay for PSHB coverage and a separate Medigap policy, doubling up on protection you don’t need.

• Non-Coordinating Benefits: Medigap isn’t built to recognize PSHB as a second payer. This causes confusion and delays in claims processing.

• No Added Protection: Because PSHB already reduces or removes cost-sharing once Medicare pays, there’s no “gap” left for Medigap to fill.

This leads to waste in two ways: higher out-of-pocket costs for premiums, and no functional value in return.

Situations Where People Might Still Try to Combine the Two

There are a few scenarios where retirees mistakenly enroll in both PSHB and Medigap:

• Lack of Information: Many assume that because Medigap works with Medicare, it must be needed—even with PSHB.

• Former FEHB Mindset: Under the older FEHB system, some individuals added Medigap out of habit or confusion, and may carry that thinking into the PSHB era.

• Fear of Gaps: Concerned about cost exposure, some retirees buy Medigap out of caution, unaware of how completely PSHB works alongside Medicare.

Unfortunately, these assumptions often lead to paying unnecessary premiums without receiving additional value.

How to Know If You’re Paying for Too Much Coverage

It’s important to evaluate whether your current coverage makes sense:

• Check Your Coordination of Benefits: If Medicare and PSHB are already covering most of your costs, adding a Medigap plan likely won’t improve your coverage.

• Review Your Explanation of Benefits (EOBs): These can show you whether the Medigap plan is paying anything after Medicare and PSHB pay their shares.

• Ask a Licensed Agent: A licensed agent listed on this website can help you understand if your supplemental policy is doing anything that PSHB doesn’t already take care of.

What About Those Retired Before 2025?

If you retired before January 1, 2025, you aren’t required to enroll in Medicare Part B to keep your PSHB plan. But if you do choose to enroll in Medicare, your PSHB plan still coordinates benefits in a similar way.

Even in these cases, adding Medigap may be unnecessary. The difference is that you may still have the option to rely entirely on your PSHB plan without Medicare, but most will still benefit from the Medicare + PSHB combination—again, without needing Medigap.

Cost Considerations in 2025

As of 2025, here are the general cost dynamics:

• PSHB Premiums: You pay a monthly premium that covers medical and prescription benefits.

• Medicare Part B: The standard premium in 2025 is $185/month, with a deductible of $257.

• Medigap Premiums: These vary by age, location, and plan—but represent an extra cost that’s often unnecessary with PSHB.

• Prescription Costs: Covered under PSHB’s integrated EGWP plan, with an annual cap of $2,000 in out-of-pocket costs.

Given these figures, stacking a Medigap policy on top of your PSHB and Medicare Part B enrollment could mean paying hundreds more per month for minimal gain.

Better Alternatives to Medigap if You’re Already Covered by PSHB

Instead of adding a Medigap plan, consider the following options to manage healthcare expenses more wisely:

• Health Savings: Use a Health Savings Account (if eligible before Medicare enrollment) or set aside funds for future expenses.

• Plan Comparison: During the PSHB Open Season (each November to December), compare PSHB plans for the next year. Some may offer better cost-sharing than others.

• Evaluate Part B Enrollment: If you’re exempt from the mandatory Part B rule, weigh the premium cost against potential cost-sharing savings.

These alternatives provide real benefits without duplicating what PSHB already includes.

Make Smart Choices With the Right Help

Health insurance decisions in retirement are complex. With PSHB in place, your coverage is already structured to work in tandem with Medicare. The addition of Medigap doesn’t strengthen this setup—it just introduces unnecessary expense and redundancy.

To make the most of your PSHB and Medicare coverage, get in touch with a licensed agent listed on this website. They can help you:

• Review your current coverage

• Understand what’s included

• Identify if you’re over-insured

• Find cost-saving alternatives that actually add value

Avoiding Redundant Coverage Is Part of Smarter PSHB Enrollment

Understanding how your PSHB plan interacts with Medicare is key to avoiding wasted premiums and overlapping coverage. Medigap might sound helpful at first glance, but in reality, it rarely adds anything of value when PSHB is already in place.

Make sure your choices align with your needs—not just with what sounds familiar. A quick review of your current plan setup can protect you from years of unnecessary spending.

If you’re unsure about your next move, reach out to a licensed agent listed on this website to get a personalized assessment.