Key Takeaways

• While PSHB offers new advantages, switching from FEHB can leave unexpected gaps in your coverage, especially if you don’t meet specific eligibility conditions tied to Medicare enrollment.

• Certain benefits that were standard under FEHB—like seamless continuation of care or flexible drug coverage—may not translate exactly under PSHB, especially if you’re not actively reviewing your plan each year.

PSHB Is New, But It’s Not Automatically Better

The Postal Service Health Benefits (PSHB) program is officially underway in 2025, replacing FEHB for USPS employees and annuitants. While PSHB may offer cost efficiencies and plan features designed specifically for the postal workforce, that doesn’t mean the transition is risk-free.

One of the biggest risks is assuming that your new PSHB coverage will be identical to your old FEHB plan. In reality, differences in structure, coordination with Medicare, and coverage limitations can introduce overlooked gaps—especially for retirees or those nearing retirement.

What Changed in 2025

As of January 1, 2025, all USPS employees and retirees are required to enroll in a PSHB plan during the designated Open Season (November to December), unless they qualify for an exemption. PSHB is administered separately from the Federal Employees Health Benefits (FEHB) Program, though it is still overseen by the Office of Personnel Management (OPM).

Some PSHB features are improvements—such as Medicare coordination incentives and a postal-specific network—but others can leave you exposed if you’re not paying attention.

1. Medicare Part B Enrollment Rules Have Real Consequences

One of the biggest differences in PSHB compared to FEHB is that Medicare-eligible annuitants and their family members must enroll in Medicare Part B in order to maintain full PSHB benefits. There are exemptions for those who retired on or before January 1, 2025, or who meet certain age or residency criteria, but if you don’t qualify for an exemption and skip Part B, your PSHB plan may reduce or deny coverage.

This wasn’t the case under FEHB, where you could choose whether or not to enroll in Part B without losing access to your full health plan. Now, skipping Part B could leave you with:

• Denied claims for services PSHB plans expect Medicare to pay first

• Higher out-of-pocket costs for hospital or specialist visits

• Limited or no access to integrated drug coverage through EGWP

2. Coordination of Drug Coverage Is Less Flexible

PSHB plans integrate prescription drug coverage for Medicare-eligible enrollees through a Medicare Part D Employer Group Waiver Plan (EGWP). While this design offers advantages—like the $2,000 out-of-pocket cap in 2025—it also means you lose some of the flexibility you had under FEHB.

If you opt out of the EGWP or fail to enroll in Medicare Part B, your prescription drug coverage under PSHB could be terminated. Re-enrolling later isn’t always guaranteed, and you may face delays or coverage gaps.

You also can’t switch to a non-PSHB Medicare Part D plan without losing your PSHB drug benefits, unlike under FEHB where this was more permissible.

3. Limited Reimbursement or Waived Costs Without Medicare

Many PSHB plans offer attractive perks—like waived deductibles or reduced copays—but these benefits are often contingent on you being enrolled in both PSHB and Medicare Part B. Without Part B:

• You may lose access to those cost-saving features

• Your plan may only pay secondary to Medicare (even if you aren’t enrolled)

• Emergency or out-of-network care may be costlier

Under FEHB, these incentives were not tied to your Medicare status. The shift in structure introduces the possibility of higher personal spending if you don’t actively maintain your eligibility status.

4. You May Be Auto-Enrolled—But Not in the Plan You Expect

For those who didn’t actively choose a PSHB plan during Open Season, automatic enrollment placed them into a “default” option that mirrors their prior FEHB plan as closely as possible. However, “as closely as possible” isn’t always identical.

Differences can exist in:

• Provider networks

• Prescription formularies

• Coinsurance rates

• Out-of-pocket limits

If you assumed your default plan would cover the same doctors, prescriptions, or care settings as your FEHB plan, you could be in for a surprise at your next appointment or pharmacy visit.

5. Not All Providers May Accept the New PSHB Plan

Although PSHB plans are designed to mirror FEHB plan networks, some providers may choose not to participate in PSHB-specific networks. This can especially affect retirees living in rural or out-of-area locations, or those seeing niche specialists.

Unlike FEHB, which had broader national networks through longstanding relationships, PSHB is new—and it may take time before full provider integration is established across all states.

6. Mental Health and Preventive Care May Be Treated Differently

The transition to PSHB may affect how certain services are classified or reimbursed—especially mental health services, therapy, and preventive care screenings.

Under FEHB, these services were often covered with minimal copays or even fully covered under preventive care mandates. Under PSHB, changes in coding or benefit categorization may introduce:

• Higher copays for therapy or counseling

• Prior authorization requirements for preventive screenings

• Limits on telehealth coverage

These policy shifts might not be obvious until you try to access care.

7. Family Members May Be Disqualified Without You Realizing

Under PSHB, eligibility for dependent coverage follows federal rules but introduces added conditions. Family members—especially spouses—must meet very specific requirements to remain covered under your plan.

If your spouse becomes Medicare-eligible and isn’t enrolled in Part B, they could lose access to prescription coverage or face higher out-of-pocket costs. Similarly, surviving spouses may lose eligibility unless survivor benefits were elected properly during retirement.

This could leave families vulnerable to unexpected coverage loss or denied claims.

8. You Can’t Rely on FEHB’s Appeals Process

Under FEHB, enrollees could count on a standardized OPM-supervised appeals process for claims, coverage disputes, and provider disagreements. PSHB plans are still subject to OPM rules, but the framework is less familiar and could vary across carriers.

This means resolving disputes may:

• Take longer

• Be harder to understand

• Require more documentation

If you’re used to FEHB’s predictable resolution process, PSHB may feel less intuitive.

9. Coverage Gaps Can Affect Financial Planning in Retirement

If you entered retirement assuming FEHB would carry forward seamlessly, you may not have budgeted for the potential new expenses under PSHB. Especially if you’re not enrolled in Medicare Part B, the following could increase:

• Coinsurance rates (often 20%–30% without Part B)

• Deductibles (up to $2,000 under high-deductible plans)

• Out-of-network penalties

These hidden costs can quickly erode your retirement income unless your financial plan is updated.

10. Open Season Is More Critical Than Ever

In the FEHB system, it was common for retirees to stick with the same plan year after year. Under PSHB, that passive approach is riskier.

Because plan designs, Medicare requirements, drug formularies, and provider networks may change annually, skipping Open Season can result in being stuck with a plan that no longer suits your health needs or your budget.

In 2025 and beyond, Open Season (from November to December) must become a deliberate review process—not a box you check by default.

Understand the Details Before You Assume You’re Covered

As a USPS employee or retiree, the shift from FEHB to PSHB is mandatory for most, but that doesn’t mean the two systems are functionally identical. Coverage gaps, eligibility pitfalls, and Medicare coordination all introduce layers of complexity that weren’t part of the FEHB experience.

The key is not to make assumptions. Review your plan. Confirm your providers. Evaluate your Medicare enrollment. And most importantly—ask questions.

If you’re unsure whether your current PSHB plan truly meets your needs or if you’re at risk of losing key benefits due to missed Medicare enrollment or passive auto-enrollment, speak with a licensed agent listed on this website. They can walk you through your options based on your age, retirement status, and income.