Key Takeaways

• Your PSHB premiums are increasing in 2025, but your coverage might not be improving. In many cases, you’re paying more without receiving additional value.

• Understanding how cost-sharing, inflation, and administrative adjustments work is essential to grasp why your financial burden is growing.

The Reality of Rising PSHB Contributions

If you’ve been paying attention to your Postal Service Health Benefits (PSHB) contributions in 2025, you’ve likely noticed a steady rise. What’s less obvious is why those contributions continue to grow—even when the benefits themselves appear to remain static.

This disconnect is not just a coincidence. It’s the result of structural, economic, and regulatory forces that keep pushing your share of the costs upward. Whether you’re an active USPS employee or a retiree, understanding how and why these increases happen can help you make more informed decisions during Open Season and beyond.

What You’re Paying in 2025

In 2025, the average monthly PSHB premium contribution for annuitants is:

• Self Only: Around $241

• Self Plus One: Around $521

• Self and Family: Around $567

These figures represent your share after the government covers about 72% of the total cost. But even with that government contribution, you’re likely feeling the pinch more than ever before. That’s because costs are rising across the board due to several compounding factors.

1. Inflation Isn’t Just About Groceries

Inflation affects healthcare too, and it’s one of the primary reasons you’re paying more for the same benefits in 2025. Medical inflation typically outpaces general consumer inflation. From 2020 to 2024, annual medical cost growth hovered around 6–8%. While inflation cooled slightly in 2024, it did not reverse.

Now in 2025, higher labor costs, increased prices for pharmaceuticals, and expensive technologies are feeding directly into the base costs that PSHB plans must cover. That, in turn, means higher premiums for you.

2. Premium Calculations: Your Share Keeps Growing

Even though the government covers a significant portion of your PSHB premium, your percentage isn’t fixed to a dollar amount. It’s based on the weighted average of all plans. As that average increases, so does your contribution—even if you stay in the same plan year after year.

The formula is simple:

• Government pays 72% of the weighted average premium, up to a cap

• You pay the remaining balance, including any excess if your plan costs more than the average

So if your plan sees a 12% hike in total cost and the government’s cap hasn’t increased proportionally, you’re picking up more of the tab.

3. Plan Changes Without Benefit Gains

You might assume that higher premiums mean better benefits. Unfortunately, that’s rarely the case in 2025. Many PSHB plans have not expanded coverage or improved cost-sharing.

In fact, some have increased:

• Deductibles

• Out-of-pocket maximums

• Coinsurance percentages

All while premiums have gone up. In short, you’re paying more, not just in premiums, but potentially in cost-sharing when you actually use your coverage.

4. Shifting Risk to You

Many PSHB plans are shifting financial risk away from the insurer and onto you, the enrollee. This often takes the form of:

• Narrower provider networks

• Increased coinsurance for specialty care

• Higher costs for out-of-network services

So while your premium increases, your financial exposure also grows if you need complex or unexpected care. That undermines the sense of security your health plan is supposed to provide.

5. Medicare Integration Confusion

If you’re a retiree eligible for Medicare in 2025, things get even more complex. Many PSHB plans are now integrated with Medicare Part B and Part D through Employer Group Waiver Plans (EGWPs).

If you’re enrolled in Medicare Part B, you might benefit from:

• Lower deductibles

• Waived cost-sharing

• Prescription drug savings through EGWP integration

However, if you’re not enrolled in Part B (and not exempt), your PSHB premiums are still rising, and you may now be responsible for higher out-of-pocket costs. The confusion around Medicare requirements has left some retirees paying more without understanding why they’re not getting more value.

6. Retirees Aren’t Getting the Same Deal

In 2025, retirees are often paying a higher share of the premium compared to active postal employees. That’s because:

• Employer contributions for annuitants are structured differently

• Retirees don’t benefit from pre-tax payroll deductions

So even if your plan remains the same as your working years, your take-home cost in retirement can be significantly higher—despite having a fixed income.

7. Out-of-Pocket Maximums Aren’t Always Protection

An in-network out-of-pocket maximum of $7,500 (Self Only) and $15,000 (Self Plus One or Family) is supposed to be a safety net. But in 2025, more care is falling into categories where:

• It doesn’t count toward the maximum (e.g., out-of-network care)

• It has separate deductibles or tiers (especially for drugs)

This leads to scenarios where you feel like you’ve hit your limit, but the bills keep coming. Even worse, those on high-deductible plans often face upfront expenses before coverage kicks in.

8. Pharmacy Costs Keep Creeping Up

While the $2,000 cap on out-of-pocket prescription drug spending under Medicare Part D is a welcome change in 2025, this only applies to retirees enrolled in Medicare and an EGWP plan.

Others may still face:

• Tiered formularies that push brand-name drugs into higher-cost categories

• Step therapy or prior authorization barriers

• Increased coinsurance for specialty medications

So even if your premium increase is modest, the amount you spend at the pharmacy counter could grow substantially.

9. Employer Contribution Caps Limit Relief

While the government does pay the lion’s share of PSHB premiums, that support has limits. The contribution formula is tied to the weighted average across all plans, but it’s capped.

If you select a plan above that average, you pay not just your 28% share, but also the difference above the cap. In 2025, many enrollees are seeing plans fall into this overage zone. The result: disproportionately high contributions, even for modest coverage.

10. Administrative and Compliance Costs

Every year, healthcare providers and insurers face more regulation, compliance mandates, and reporting requirements. These administrative costs trickle down into your premiums.

With the launch of the PSHB program in 2025, new systems, integration with Medicare, and compliance with federal rules are adding to backend costs. And while these don’t directly impact your day-to-day care, they still affect what you pay monthly.

11. You’re Not Alone—But You Might Be Paying More Than Others

Even within the PSHB system, premium costs vary based on plan, location, and enrollment type. If you’re covering a spouse or dependents, or if you live in an area with higher medical costs, your contribution could be considerably above the average.

This variation can make it difficult to compare apples to apples during Open Season. What seems like a manageable increase to one enrollee could represent a budget-breaking expense for another.

12. No End in Sight Unless You Reassess

The uncomfortable truth is that your contributions may keep increasing in the years ahead. Unless there’s a systemic change in how PSHB premiums are structured—or you reevaluate your plan choices—you could be stuck in a cycle of growing costs without growing benefits.

Key points to reassess each year:

• Does your current plan still meet your health needs?

• Are you eligible for Medicare Part B and not enrolled?

• Are you choosing a plan that’s well above the weighted average?

• Are you using all the benefits and programs your plan offers?

Doing this analysis can help ensure that your money is being spent wisely.

What This Means for Your Future Healthcare Budget

You’re not imagining it: your PSHB contributions are rising in 2025, and not always for good reason. From inflation and Medicare integration issues to administrative costs and shifting risk, multiple factors are squeezing more from your paycheck or annuity.

This is the time to take control. Review your options, question whether your current plan still aligns with your needs, and seek help if you’re unsure. A licensed agent listed on this website can walk you through your choices and help you make sense of your options before the next Open Season.