Key Takeaways

• Your share of PSHB premiums depends heavily on how much the government contributes, and that amount can vary significantly depending on the plan you choose.

• Understanding the structure of government contributions in 2025 helps you make an informed decision and avoid unnecessary out-of-pocket costs.

How Government Contributions Shape Your Health Plan Costs

If you’re a Postal Service employee or retiree, you’re likely aware that 2025 marks the full transition to the Postal Service Health Benefits (PSHB) Program. While many things may seem similar to your old FEHB coverage, there are key differences—and one of the most impactful is how government contributions affect your overall healthcare costs.

Government contributions are not a flat amount for everyone. They’re based on a formula tied to the average plan premiums across all PSHB offerings. Understanding how these contributions work, and how they interact with your chosen plan, can be the difference between affordable coverage and unexpectedly high monthly costs.

What Does the Government Actually Pay in 2025?

In 2025, the government continues to cover roughly 70% of the total premium cost for PSHB plans, just like it did under FEHB. However, it’s important to note that this 70% is not 70% of your plan’s premium—rather, it’s based on a weighted average of all PSHB plan premiums.

Here’s what that means for you:

• If you choose a plan that costs more than the average, you’ll pay more out-of-pocket.

• If you pick a plan that costs less than the average, you’ll pay less.

• The government sets a cap—no more than 75% of any one plan’s premium will be covered.

So while the formula may look familiar, the numbers behind it are new in 2025 and worth reviewing.

Why the Plan You Choose Matters More Than Ever

Because of how the contributions are calculated, your monthly premium is now more closely tied to the specific plan you choose. Unlike a flat employer contribution that stays the same regardless of your plan, the PSHB model rewards strategic decision-making.

Your decision in Open Season could have long-term financial consequences. If you’re not aware of how the government contribution interacts with your plan choice, you might select a plan that offers familiar benefits but costs you far more than necessary.

Some general differences between plans include:

• High-Deductible Plans tend to have lower premiums but may come with higher out-of-pocket costs before coverage kicks in.

• Standard or Low-Deductible Plans generally come with higher premiums but lower out-of-pocket spending at the point of service.

• Plans that coordinate well with Medicare (for annuitants) may include additional cost-sharing reductions if you are enrolled in both.

Employee vs. Annuitant Contributions

Your employment status also plays a role in how contributions work.

For current USPS employees:

• You pay your share through payroll deductions.

• Your cost depends on the plan tier you select: Self Only, Self Plus One, or Self and Family.

• Choosing a plan well below the average premium can lower your payroll deductions significantly.

For retirees (annuitants):

• You pay premiums monthly, typically via deduction from your retirement annuity.

• Contributions can be a larger percentage of your fixed income, so careful plan selection is even more important.

• The same 70%-75% government contribution rules apply.

In 2025, the average annuitant pays about 30% of the plan premium, but this figure varies depending on which plan tier and coverage option you select.

Medicare Integration and Government Contributions

For Medicare-eligible annuitants, government contributions still apply even if you’re enrolled in Medicare Part B. But some PSHB plans offer cost-saving incentives if you have both PSHB and Medicare coverage.

These may include:

• Lower deductibles

• Reduced coinsurance

• Waived copayments

That said, the government contribution only affects your PSHB premium. It doesn’t factor into Medicare Part B premiums, which you pay separately. But if a PSHB plan offers better coordination with Medicare, the net cost can be substantially lower.

What Happens If You Choose a More Expensive Plan?

Choosing a higher-cost plan means you’re responsible for the difference between the plan’s premium and what the government pays. Since the government caps its share at 75%, there’s a ceiling to how much support you get.

For example:

• If a plan premium is significantly above average, you could end up paying well above the 30% that many assume is standard.

• The extra amount isn’t subsidized—it comes directly from your pocket.

This is especially important to consider for Self Plus One and Self and Family coverage, where premium differences can multiply quickly.

Cost Predictability and the Importance of Annual Review

While government contributions offer some stability, premiums and plan structures can change from year to year. That’s why Open Season (held annually from November to December) remains critical.

During Open Season, you should:

• Review the total premium costs of each plan

• Compare how much the government contributes

• Estimate your monthly cost under each option

• Evaluate changes to deductibles, copays, and coinsurance

The difference between sticking with your current plan and switching to a more cost-effective option could be hundreds—or even thousands—of dollars annually.

Evaluating Your Options: What to Look For

When weighing your PSHB plan options, you’ll want to assess more than just premiums. Government contributions affect your base cost, but other features can impact total value.

Key areas to examine:

• Coverage Tiers: Self Only, Self Plus One, or Self and Family

• Plan Type: HMO, PPO, High-Deductible, Standard

• Medicare Coordination: Especially if you’re already enrolled in Medicare Part B

• Provider Networks: Local vs. nationwide coverage options

• Prescription Coverage: Formulary and co-payment structure

• Special Features: Telehealth access, chronic condition support, wellness incentives

Each plan’s brochure will detail the benefits and cost structure, and reviewing those with the government contribution in mind gives you a full financial picture.

Government Contributions Are Not All the Same

It’s a common misconception that all employees and retirees receive the same dollar amount from the government toward their premiums. In truth, the amount varies not only by plan but also by coverage type.

For 2025, the formula works like this:

• The government calculates a weighted average premium based on all PSHB plans.

• They apply the contribution percentage (up to 75%) to this average.

• Your actual contribution depends on whether your chosen plan costs more or less than the average.

So while the rules are the same, the outcome is not. That’s why being proactive is so important.

Making the Most of Your Government Contribution

With healthcare costs rising and plan designs changing, the smartest strategy in 2025 is to use the government’s contribution to your advantage.

You can do this by:

• Comparing plans side-by-side based on your usage patterns

• Selecting a plan close to the average premium to maximize the government’s share

• Considering lower-cost options that still meet your medical and prescription needs

• Reviewing plan brochures with a clear eye on cost-sharing features

• Re-evaluating annually to adjust for changes in your health or financial situation

Taking these steps ensures you’re not just covered—but covered in a way that makes financial sense.

Government Support Makes a Difference—If You Use It Wisely

The PSHB program in 2025 continues to offer strong support through government contributions. But how much you benefit depends entirely on your plan choice. Understanding how contributions are calculated—and how they apply to your specific situation—gives you control over your healthcare budget.

If you want to make sure you’re choosing a plan that takes full advantage of your government contribution, speak with a licensed agent listed on this website for professional guidance tailored to your needs.