Key Takeaways

• Adding a separate Medicare Supplement (Medigap) policy to your Postal Service Health Benefits (PSHB) coverage in 2025 may result in higher out-of-pocket costs without proportionate added benefits.

• PSHB plans already coordinate with Medicare to reduce your cost-sharing, meaning additional supplemental insurance often provides minimal, if any, value.

Why More Insurance Isn’t Always Better with PSHB

When you become eligible for Medicare and also have coverage under the Postal Service Health Benefits (PSHB) Program, you may feel pressured to explore additional coverage options like Medigap. These policies are designed to fill the cost-sharing gaps left by Original Medicare. But what happens when your PSHB plan already does that?

You could end up paying for benefits you already receive through PSHB. In 2025, the structure of PSHB plans, especially when paired with Medicare Parts A and B, often makes Medigap an unnecessary layer of coverage. Let’s break this down.

How PSHB Integrates with Medicare in 2025

If you’re a Medicare-eligible Postal Service annuitant or family member, you may already be required to enroll in Medicare Part B to keep your PSHB coverage. Here’s how integration works:

• Medicare pays first for approved services.

• PSHB pays second, often covering much of the remaining balance.

• You pay little to nothing, depending on the services received.

This coordination significantly reduces your share of costs for hospital stays, doctor visits, and outpatient care.

In many PSHB plans, when Medicare is primary, the following apply:

• Deductibles may be waived.

• Copayments and coinsurance are reduced or eliminated.

• Prescription coverage shifts to a Medicare Part D Employer Group Waiver Plan (EGWP), offering lower drug costs and a $2,000 annual out-of-pocket cap.

What Medigap Plans Are Designed to Cover

Medigap policies were created to work alongside Original Medicare only. They do not function with Medicare Advantage plans or employer-sponsored plans like PSHB. A standard Medigap policy typically helps cover:

• Part A coinsurance and hospital costs

• Part B coinsurance or copayments

• First three pints of blood

• Skilled nursing facility coinsurance

• Part A deductible

• Foreign travel emergency care (limited)

These are meaningful benefits if you’re relying solely on Original Medicare. But if PSHB already reduces or eliminates many of these costs when Medicare is primary, the overlap becomes evident.

What You Actually Pay with PSHB + Medicare in 2025

The out-of-pocket cost-sharing when you have both PSHB and Medicare is often far lower than what you’d experience with Original Medicare alone. In fact, many PSHB enrollees with Medicare Part B find that:

• Inpatient care is fully covered between Medicare and PSHB.

• Outpatient visits are often covered without additional copays.

• Emergency services have reduced or waived cost-sharing.

• Prescription drugs are included through integrated Part D coverage with a $35 monthly cap on insulin and $2,000 total spending cap annually.

Because PSHB coordinates so well with Medicare, adding a Medigap policy could mean you’re paying monthly premiums for very little extra protection.

Where Redundancy Happens Most

1. Hospital Deductibles

Medigap plans cover Medicare Part A deductibles. But many PSHB plans already pay these deductibles when Medicare is primary. So, the Medigap benefit becomes redundant.

2. Doctor Visit Copays

Medicare Part B generally covers 80% of approved services. Medigap fills in the remaining 20%. However, PSHB often picks up this 20% already, leaving no gap for Medigap to fill.

3. Emergency Room Charges

Medigap may help reduce ER costs. But PSHB plans with Medicare frequently waive or lower these charges as part of their second-payer structure.

4. Prescription Drug Coverage

Medigap doesn’t cover prescriptions. You still need Part D. But PSHB already provides integrated Part D coverage through an EGWP, with improved benefits for enrollees who have Medicare. Paying for a Medigap plan on top of that doesn’t address prescription needs at all.

Why People Still Buy Extra Coverage

Even with these redundancies, some people still buy a Medigap policy out of fear or habit. Common motivations include:

• Worry about unexpected costs: Even though PSHB fills most gaps, the fear of an uncovered service can prompt someone to buy another plan.

• Misunderstanding coverage: It’s not always clear how well PSHB coordinates with Medicare, so people assume more is better.

• Advice from non-PSHB-aware agents: Not all insurance brokers are familiar with how federal or postal health benefits work.

In many cases, these motivations don’t hold up once the actual benefits and coordination are understood. Instead of added value, the result is often an extra premium that adds cost without meaningful benefit.

The Financial Trade-Off in 2025

Let’s say your Medigap policy premium is several hundred dollars per month. What do you gain for that money if your PSHB plan already:

• Covers Medicare deductibles

• Eliminates coinsurance

• Caps prescription spending

• Reduces or waives ER and urgent care copays

You could end up paying thousands per year for coverage that overlaps with what you already receive at no added benefit. And worse, Medigap premiums typically increase with age, unlike many employer-based plans like PSHB that offer stable group pricing.

Situations Where Medigap May Still Be Considered

There are few but rare exceptions where a Medigap plan may be worth exploring alongside PSHB. These include:

• Living abroad full-time: PSHB may not cover services received overseas, and some Medigap plans offer limited foreign travel emergency care.

• Loss of PSHB eligibility: If you’re planning to drop PSHB for cost reasons or if your dependent eligibility ends, Medigap might be a future fallback.

• Refusal to enroll in Medicare Part B: If you decide against enrolling in Part B and rely on PSHB as primary, your cost-sharing may be higher. In this case, adding supplemental coverage may help, though it’s not the ideal setup.

Even in these cases, the added cost of Medigap needs to be weighed carefully against the benefit.

Alternatives That Actually Support Your Coverage

Instead of adding redundant insurance, consider these options to strengthen your healthcare coverage wisely:

• Use Flexible Spending Accounts (FSAFEDS): You can set aside pre-tax dollars for out-of-pocket medical expenses, which may help absorb any occasional cost gaps.

• Explore FEDVIP for dental and vision: Medigap does not include dental or vision coverage. FEDVIP plans offer these benefits and are compatible with PSHB and Medicare.

• Choose a PSHB plan that integrates well with Medicare: Review plan brochures and look for those that explicitly waive deductibles and lower cost-sharing for Medicare enrollees.

What You Should Do Before Buying Any Extra Plan

If you’re considering a Medigap policy on top of your PSHB and Medicare coverage, take the following steps first:

• Compare your current out-of-pocket spending: How much are you really paying each year beyond premiums?

• Review your PSHB plan brochure: Check how the plan coordinates with Medicare and which costs are waived.

• Speak with a licensed agent listed on this website: Only an agent who understands the PSHB structure can help you see if Medigap makes sense in your situation.

Informed choices now can prevent unnecessary costs and confusion later.

The Value of Staying Informed About PSHB and Medicare

As of 2025, the Postal Service Health Benefits Program is specifically designed to work well with Medicare. When you choose your plan wisely and understand how coordination works, you often don’t need extra insurance like Medigap.

Unnecessary policies can create additional financial burden, increase complexity, and provide little to no additional care value. Staying with PSHB and Medicare often gives you comprehensive protection without the need for more.

If you’re unsure whether you have the right setup, now is the time to review your coverage. Open Season runs from November to December each year, giving you a chance to reevaluate and make changes. You can get help from a licensed agent listed on this website to walk through your options.