Key Takeaways

• Your share of PSHB premiums in 2025 may seem like a flat percentage, but it often disguises the real cost to your monthly healthcare budget.

• Understanding how contributions work—both from you and the government—can help you plan better for the expenses you’ll actually face throughout the year.

Why Contributions Deserve More Attention Than You Think

If you’re a Postal Service employee or retiree enrolled in a Postal Service Health Benefits (PSHB) plan, you’ve likely been told the government covers about 70% of your premium. That’s true, but it’s only part of the story. Your portion—whether it’s 30% or slightly more depending on the plan—directly affects your paycheck or annuity. And it’s not just the premium that costs you.

In 2025, your healthcare contributions form the bedrock of your personal budget planning. With healthcare expenses consistently rising and PSHB plans undergoing structural changes from the FEHB model, it’s time to look deeper.

Understanding the Government’s Contribution in 2025

The federal government, through the Postal Service, contributes roughly 70% of the total premium cost for your PSHB plan. That means:

• The amount you pay is heavily influenced by the total premium of your chosen plan.

• A higher-tier plan doesn’t just mean better benefits—it also means a higher out-of-pocket share, even if the percentage remains the same.

The government contribution is also capped. If the plan you choose exceeds the weighted average of all plans, you’ll pay the difference in addition to your regular share. So choosing a higher-cost plan means you shoulder a higher percentage of the excess beyond the cap.

Your Share: Monthly Premiums vs. Total Out-of-Pocket Costs

While you may see your biweekly or monthly premium deduction and assume that’s your total cost, it’s only part of the picture. Your contribution includes:

• Monthly premiums: Direct deductions from your paycheck or annuity.

• Copayments: Fixed costs for primary care, specialist visits, urgent care, etc.

• Coinsurance: A percentage of certain service costs, particularly for hospitalizations, surgeries, and diagnostics.

• Annual deductibles: The amount you must pay before your plan begins sharing costs.

• Prescription drug costs: Vary depending on the tier of medication and whether you’re Medicare-eligible.

These elements add up. Even if your plan offers low premiums, frequent use of services can push your yearly healthcare expenses higher than expected.

The 2025 PSHB Structure and What It Means for You

Starting January 2025, the transition from FEHB to PSHB plans introduced structural adjustments. These include:

• Tiered premium structures for Self Only, Self Plus One, and Self and Family plans

• Mandatory Medicare Part B enrollment for certain Medicare-eligible annuitants to maintain PSHB coverage

• Employer Group Waiver Plans (EGWPs) integrated into prescription drug coverage

• Annual out-of-pocket caps for prescription drugs, now set at $2,000

All these adjustments mean that your premium contribution isn’t just a standalone figure—it’s the entry point to a larger, more complex payment system.

Premium Contributions for Annuitants vs. Active Employees

Whether you’re retired or still working affects how you contribute:

• Active Employees: Premiums are deducted pre-tax, which may reduce your overall tax burden. However, rising premium rates still cut into your take-home pay.

• Annuitants: Pay premiums post-tax from their monthly annuity. This makes every dollar more significant because it’s not tax-sheltered.

In 2025, annuitants are seeing average monthly contributions ranging between $241 and $567 depending on coverage level. That’s before factoring in additional costs from copays, coinsurance, or deductibles.

How Contributions Relate to Your Income and Retirement Planning

For many Postal retirees, PSHB contributions form a sizable part of their fixed monthly budget. Here’s why this matters:

• Inflation-adjusted annuities may not always keep pace with rising healthcare costs.

• COLA increases for annuities can be offset by premium increases.

• TSP withdrawals and other savings might need to stretch further if your healthcare expenses grow over time.

Understanding exactly what percentage of your retirement income is consumed by healthcare contributions can help you forecast and prepare for long-term affordability.

Contribution Timing: Why Your Pay Period Matters

PSHB premiums are deducted biweekly for employees and monthly for annuitants. This means:

• 26 deductions per year for employees, aligning with each pay period.

• 12 deductions per year for annuitants, aligning with their annuity payments.

If your plan increased in cost for 2025, your biweekly or monthly deduction also increased. Because these amounts are automatically deducted, it’s easy to miss how much more you’re paying unless you compare this year’s deductions against last year’s.

Contribution Gaps: What Happens If You Miss a Payment?

If you go on Leave Without Pay (LWOP), separate from service, or experience a delay in annuity processing, there could be gaps in contribution payments. The impact?

• Retroactive premium bills: You may owe the missed contributions once you return or your annuity starts.

• Possible coverage loss: If missed payments aren’t resolved, coverage could be suspended or terminated.

Always keep track of your pay and annuity statements, especially during transitions.

Medicare Integration and How It Affects Your Costs

If you’re Medicare-eligible in 2025 and enrolled in Medicare Part B, your PSHB contributions might work in your favor. Many PSHB plans offer:

• Part B premium reimbursements

• Waived deductibles and lower copayments

• Reduced coinsurance

However, these benefits only apply if you are properly enrolled. Otherwise, you may end up paying higher overall costs even if your premium contribution stays the same.

The bottom line: The full value of your contributions often hinges on how well your plan coordinates with Medicare.

What to Watch for in 2025 Open Season

During Open Season, you have the opportunity to assess and adjust your PSHB coverage. Consider the following:

• Total annual contribution: Add up your monthly premium, deductible, and projected copayments.

• Plan benefits vs. contribution: Is your contribution buying you the services you need?

• Changes from 2024: Review your plan brochure for updates in coverage, cost-sharing, and network access.

Even a small premium increase can become significant over 12 months—especially for annuitants.

Long-Term Budget Planning With PSHB Contributions

Healthcare contributions aren’t a static expense. They grow, sometimes quietly, and can undermine your long-term budget if not accounted for. Some ways to prepare:

• Create a healthcare budget for the year based on your plan’s known costs

• Track your actual spending on health services to compare against your estimate

• Evaluate plan options every Open Season, not just for premiums but for total cost-of-use

If you’re nearing retirement, factor in how contributions will change when you shift from employee to annuitant status.

Why Your Contribution Percentage Isn’t the Full Story

Saying you only pay 30% of a premium doesn’t capture the complexity of your actual financial responsibility. Here’s why:

• 30% of a higher-cost plan might be more than 40% of a lower-cost plan

• Additional out-of-pocket expenses make your real costs much higher than the premium share alone

• Medicare integration (or lack thereof) can significantly shift the financial equation

Don’t get lulled into a sense of affordability based solely on percentages. Contributions are layered and vary by usage, plan structure, and eligibility.

When Every Dollar Counts, Contributions Are More Than Math

In 2025, your contributions to PSHB plans are more than a line item—they shape your healthcare access and financial well-being. As plans evolve and costs rise, staying engaged with the true impact of your contributions becomes essential. Whether you’re working or retired, understanding the difference between your share, your benefits, and your total healthcare costs is critical to staying financially secure.

Make Your Contribution Work for You

You don’t have to figure this out alone. The numbers can be misleading if viewed in isolation. Your healthcare coverage is a network of trade-offs, and your contributions are at the center. If you’re unsure whether your plan is still the right fit for your needs and budget, get in touch with a licensed agent listed on this website for personal guidance.