Key Takeaways

• Many postal retirees experience unexpected monthly contribution increases after Open Season due to plan changes, Medicare coordination rules, and assumptions made during enrollment.

• Understanding the structure of PSHB premiums, contribution tiers, and how Medicare enrollment affects costs is critical to avoiding surprises in 2025 and beyond.

Why Your Monthly Contribution May Look Very Different

When Open Season ends, you might expect a smooth transition into the new plan year with predictable deductions from your annuity. But for many postal retirees, January brings a surprise: your new monthly Postal Service Health Benefits (PSHB) contribution is significantly higher—or at least not what you assumed.

Let’s unpack why that happens and what you can do to stay in control of your healthcare costs under PSHB.

The Shift from FEHB to PSHB Changed More Than You Think

The transition from the Federal Employees Health Benefits (FEHB) Program to the Postal Service Health Benefits (PSHB) Program in 2025 isn’t just a name change. It comes with new contribution rates, mandatory Medicare coordination requirements, and structural differences in cost-sharing.

Here’s what changed in 2025:

• PSHB enrollees now fall under a separate risk pool exclusive to Postal Service workers and retirees.

• Medicare Part B enrollment is mandatory for many retirees and their covered family members unless they meet specific exemptions.

• Premiums are now based on updated actuarial projections for postal populations, which can shift cost-sharing differently than FEHB.

If you enrolled during Open Season without double-checking how these differences affect your total out-of-pocket costs, your annuity deduction may not match your expectations.

Medicare Part B Status Makes a Bigger Impact in PSHB

Under PSHB, your enrollment—or lack thereof—in Medicare Part B plays a direct role in what you’ll pay monthly. Here’s how:

• If you are enrolled in Medicare Part B, many PSHB plans offer reduced deductibles, coinsurance, and in some cases, partial reimbursement for your Part B premium.

• If you are not enrolled in Medicare Part B and don’t qualify for an exemption, your PSHB plan may charge you higher cost-sharing amounts or deny certain benefits.

This is a major reason some retirees are seeing jumps in their monthly contributions: plans now penalize or limit cost-saving features if you didn’t enroll in Medicare Part B by the deadline.

Tiered Contributions Are Not Based on Income—but They Still Vary

Unlike income-based programs, PSHB contributions are not adjusted based on your annual earnings or retirement income. Instead, they vary by:

• Enrollment Type (Self Only, Self Plus One, Self and Family)

• Plan Option (High Deductible vs. Standard vs. Value-tiered plans)

• Medicare Coordination (if enrolled, not enrolled, or partially enrolled family coverage)

For example, retirees who select Self and Family coverage but only one family member has Medicare Part B may still end up in a higher cost tier than expected.

It’s a nuanced system—your final cost depends on the makeup of your covered household and how your plan rewards or penalizes Medicare enrollment.

Open Season Selections Often Don’t Show Full Cost Impacts

During Open Season, many retirees use the comparison tools provided on plan websites or through OPM to evaluate options. However, these tools:

• Often display biweekly premiums rather than monthly totals.

• May not include the impact of Medicare enrollment status.

• Might not account for annuitant contributions vs. total plan premiums.

So if you assumed your monthly deduction would remain stable based on a familiar biweekly rate, you may be in for a surprise when January deductions reflect the full monthly annuitant share.

PSHB Rates Include Postal-Specific Adjustments

Another contributing factor to retiree sticker shock is how the PSHB rates were calculated. Because the program is exclusive to the Postal Service population, plans now consider postal-specific risk factors, age demographics, and regional utilization trends.

This results in:

• New premium structures with wider cost ranges between plan types.

• Higher out-of-pocket costs in certain plans for annuitants without Medicare.

• Significant differences in Self Plus One vs. Self and Family pricing depending on who is Medicare-enrolled.

If your household makeup or care needs changed between 2024 and 2025, your best-fit plan last year might now be less affordable.

Why Self Plus One May Cost More Than Self and Family

This is a recurring surprise under PSHB: Self Plus One coverage can sometimes be more expensive than Self and Family.

Why? Because plan rates are based on actuarial averages—and in many cases, covering two high-utilization individuals (such as two retirees without Medicare) costs more than covering a mixed family with children or Medicare-enrolled members.

If you selected Self Plus One thinking it would always be cheaper, this may be why your monthly deduction feels unexpectedly high.

Deductibles and Coinsurance Also Shifted in 2025

Besides premium changes, many PSHB plans also adjusted their cost-sharing:

• Deductibles for Self Only plans now commonly range from $350 to $1,500, depending on plan type.

• Coinsurance for in-network care typically ranges from 10% to 30%, but rises significantly out-of-network.

• Prescription coverage may have new tier levels or prior authorization rules that affect what you pay.

If you didn’t dive deep into the plan brochure or were auto-enrolled based on last year’s selection, you might now be facing a plan structure that’s far more expensive.

How to Avoid Next Year’s Shock

The next Open Season will again occur from November to December. To avoid repeating this year’s surprises, make sure to:

• Review the full monthly premium amount, not just the biweekly rate.

• Check the impact of your Medicare Part B status on the plan you’re selecting.

• Use the PSHB plan brochures to compare out-of-pocket maximums, copayments, and coinsurance—not just premiums.

• Confirm your household’s Medicare enrollment to avoid being placed in a higher tier.

• Reach out to a licensed agent listed on this website to help assess your full situation.

Plan Misunderstandings Are Costly—But Fixable

The PSHB rollout in 2025 introduced more complexity than many retirees were prepared for. But with the right information and some proactive planning, you can regain control over your contribution amounts.

In the months leading up to the next Open Season, use all available resources:

• The OPM PSHB plan brochures

• Your annuitant statements showing exact deductions

• Plan comparison tools—but only as a starting point

Most importantly, talk to someone who understands how the system works in practice. Because plan documents may not reflect your real-world costs until it’s too late to change them.

Don’t Wait Until the Next Deduction to Understand Your Costs

If your January or February annuity check reflected a higher-than-expected deduction, don’t just assume it’s a billing error or temporary adjustment. PSHB monthly contributions are now structured differently—and those differences will continue to evolve annually.

Understanding how coverage type, Medicare status, household makeup, and plan selection interact is essential to staying on budget.

You can take steps today to:

• Request a breakdown of your current annuitant contribution

• Reassess your Medicare Part B enrollment if eligible

• Prepare your questions for Open Season advisors in the fall

Don’t let another year go by with surprises. Take time now to clarify where your money is going and why.

Your Next Step Toward Predictable Contributions

What you pay monthly under the PSHB Program in 2025 is determined by more than just your chosen plan. Medicare enrollment status, family composition, and even the way contributions are tiered all play a role.

To make sure you’re not overpaying—or underinsured—get clarity now before the next Open Season arrives. A licensed agent listed on this website can walk you through how your plan stacks up, what your true costs are, and what changes you might want to consider next time.