Key Takeaways

• Although PSHB may appear similar to FEHB on the surface, core differences in plan structure, Medicare integration, and cost-sharing impact your wallet and coverage experience more than you might expect.

• If you don’t actively reevaluate your plan choice, deductibles, and Medicare enrollment status, the financial consequences under PSHB could be far more significant than they were under FEHB.

Introduction: A Change That Deserves More Attention

The transition from the Federal Employees Health Benefits (FEHB) Program to the Postal Service Health Benefits (PSHB) Program in 2025 is not just administrative. It’s foundational. While many enrollees believe PSHB is just a renamed version of FEHB, this assumption risks leaving you unprepared for changes that affect both your care and your costs. To get the most out of your benefits, you need to understand what sets PSHB apart—especially the aspects few are talking about.

PSHB Isn’t Just a New Name—It’s a New System

At its core, PSHB was established to tailor healthcare benefits specifically for Postal Service employees and retirees. It replaces FEHB for USPS enrollees beginning January 1, 2025, and now operates under a separate pool with its own requirements, cost structures, and integration rules. That means it behaves differently from the legacy FEHB plans in ways that are easy to overlook—but financially meaningful.

Medicare Part B: A New Requirement That Changes Everything

One of the most significant—yet least appreciated—changes is the Medicare Part B requirement for many annuitants.

Who Must Enroll:

• If you are a Medicare-eligible annuitant or covered family member, you must enroll in Medicare Part B to maintain PSHB coverage.

• This rule applies unless you are exempt due to age (64 or older as of January 1, 2025), retirement date (on or before January 1, 2025), or certain qualifying conditions like living abroad.

Why It Matters:

Under FEHB, Medicare Part B was optional. Now, under PSHB, failing to enroll could mean losing access to your PSHB plan entirely. This single policy shift changes how you plan your retirement income, timing, and healthcare decisions.

Prescription Drug Integration Is No Longer Optional

PSHB integrates prescription drug coverage with Medicare Part D through an Employer Group Waiver Plan (EGWP). While FEHB offered this as an optional enhancement, it is now automatically included in PSHB for Medicare-eligible enrollees.

What That Means for You:

• If you enroll in Medicare Part B, you are also enrolled in the PSHB prescription drug plan.

• It includes annual caps on out-of-pocket costs (currently $2,000 in 2025), helping protect you from runaway drug expenses.

• If you opt out, you forfeit PSHB drug coverage and may not be allowed back in.

Automatic Enrollment Could Mask Poor Fit

In late 2024, USPS annuitants and employees received notices about automatic enrollment into a PSHB plan equivalent to their FEHB plan. This process was designed to maintain continuity—but it can be misleading.

The Risk:

• What was a good fit under FEHB might no longer meet your needs under PSHB due to new plan designs, changes in deductibles, or differing Medicare coordination.

• If you didn’t review your plan during the November–December Open Season, you may be in a plan with higher out-of-pocket costs or less coverage than expected.

Cost Sharing Has Shifted

Under PSHB, out-of-pocket costs like deductibles, copayments, and coinsurance vary more widely than they did under FEHB.

Typical Ranges in 2025:

• Deductibles: $350 to $2,000 depending on plan type (low vs high deductible)

• Coinsurance: In-network (10% to 30%), out-of-network (40% to 50%)

• Out-of-pocket maximums: $7,500 Self Only, $15,000 Self Plus One or Family for in-network care

What You Should Watch For:

• A plan that seems affordable at the premium level could carry high deductible or coinsurance burdens.

• If you or your dependents use specialty care or manage chronic conditions, those percentages quickly translate into thousands of dollars in direct costs.

Medicare Coordination Is No Longer Passive

Under FEHB, you could choose whether or not to coordinate with Medicare. Now, PSHB actively designs plans around Medicare Part B enrollment.

If You Enroll in Medicare:

• Many PSHB plans waive deductibles and reduce copays.

• Some may offer partial reimbursement for your Part B premium.

If You Don’t:

• You could be responsible for full cost-sharing amounts that would have otherwise been reduced.

• Your access to providers may narrow, and overall costs could rise.

Out-of-Network Penalties Are More Severe

Out-of-network charges under PSHB plans often carry higher penalties than similar plans under FEHB did. That’s because PSHB is operating within a tighter insurer pool focused on USPS-specific offerings.

What Changes:

• Out-of-network deductibles can be $1,000 to $3,000.

• Coinsurance jumps up to 50%.

• Balance billing is more likely and less restricted.

If you travel frequently or live in areas with limited provider networks, this difference could severely limit your access and increase your costs.

You Need to Reevaluate FEDVIP Separately

Although PSHB replaces FEHB for USPS, your Federal Employees Dental and Vision Insurance Program (FEDVIP) coverage remains unchanged. But here’s the catch: what made sense when paired with FEHB may no longer align as well under PSHB.

What to Rethink:

• If your PSHB medical plan covers vision or dental partially, you may be doubling up.

• Conversely, if PSHB reduces ancillary benefits, you may now need more from FEDVIP than before.

Special Enrollment Periods Are Now Crucial

Because of the Part B requirement, a Special Enrollment Period (SEP) was offered from April to September 2024. But many were unaware or uncertain of its implications.

If You Missed It:

• Late enrollment penalties for Part B could apply.

• Your PSHB eligibility might be at risk depending on your exemption status.

Going forward, understanding future SEPs and timing your Medicare enrollment strategically is essential to maintaining your PSHB benefits.

Survivor Benefits Require Extra Attention

Survivor eligibility rules under PSHB follow many FEHB guidelines but require reaffirmation in the new system.

To Ensure Coverage Continues:

• You must elect a survivor annuity.

• The survivor must be enrolled in your PSHB plan at the time of your death.

These conditions are not new, but the stakes are higher under PSHB, especially given the Medicare integration that can disqualify ineligible survivors from remaining in the plan.

You Can’t Rely on Past Habits

The assumption that “what worked under FEHB will work under PSHB” is no longer a safe mindset. New rules, timelines, and plan mechanics require active engagement.

Key Mindset Shifts:

• Don’t assume automatic enrollment = best fit.

• Medicare isn’t optional anymore (in most cases).

• Your total healthcare cost is not just your monthly premium. It includes deductible, coinsurance, and out-of-pocket max calculations that look very different under PSHB.

What You Should Be Doing Now

To adapt successfully to PSHB and avoid costly missteps, consider the following action points:

• Review your 2025 PSHB plan brochure thoroughly, not just the summary.

• Check if you are subject to the Medicare Part B requirement and confirm your enrollment status.

• Evaluate cost-sharing structures like deductible and coinsurance—not just the premium.

• Compare in-network vs out-of-network costs, especially if you have frequent provider visits.

• Assess your FEDVIP dental and vision coverage based on your current PSHB plan benefits.

Moving Forward Means Moving Differently

The shift from FEHB to PSHB brings with it a complex web of policy changes, plan mechanics, and cost implications that demand more than passive awareness. You can no longer rely on what worked in the past. Adapting to this new structure means you must examine your health coverage with new eyes and updated expectations.

To make confident decisions about your healthcare benefits, speak with a licensed agent listed on this website. They can help assess your eligibility, clarify Medicare requirements, and compare your current plan with other available PSHB options.