Key Takeaways

• The transition from FEHB to PSHB in 2025 is not just a rebranding; it introduces cost structure changes that could impact your overall healthcare expenses.

• Understanding the new plan details now can help you avoid unexpected out-of-pocket costs and make informed choices during Open Season.

The Shift from FEHB to PSHB: More Than Just a New Acronym

If you are a postal retiree or an active postal worker, you already know 2025 marks a significant change: the move from the Federal Employees Health Benefits (FEHB) Program to the Postal Service Health Benefits (PSHB) Program. On the surface, the benefits might appear familiar, but once you dig deeper, you’ll find that the shift affects more than just the name on your insurance card.

Why the Shift Happened

The PSHB Program was created under the Postal Service Reform Act of 2022. The goal was to establish a separate health benefits program exclusively for Postal Service employees, retirees, and eligible family members. By 2025, PSHB fully replaces FEHB for postal workers and retirees.

While the aim is greater financial stability for USPS and potentially more tailored coverage for postal workers, for you, the enrollee, it brings a new set of rules, costs, and considerations.

What Stays the Same

Before we dive into the major cost changes, here’s what you can still count on:

• Plan Choices: Many plans under PSHB are similar to those you knew under FEHB.

• Comprehensive Coverage: Medical, dental, vision, and prescription drug benefits remain available.

• Employer Contribution: USPS continues covering about 70% of your premium costs.

• Annual Open Season: You can still review and switch your plan each fall.

However, beyond these similarities, several key differences have serious implications for your wallet.

The Real Cost Shifts You Need to Know

1. Medicare Part B Enrollment Requirements

Starting in 2025, most Medicare-eligible postal retirees and their covered family members must enroll in Medicare Part B to maintain full PSHB coverage. This is a major departure from FEHB, where Medicare Part B enrollment was optional.

What this means:

• You’ll need to pay the standard Medicare Part B premium ($185 per month in 2025).

• Higher-income retirees may pay even more because of Income-Related Monthly Adjustment Amounts (IRMAA).

• Without enrolling in Medicare Part B, your PSHB plan could deny coverage for services Medicare would have covered.

2. Prescription Drug Coverage Changes

Prescription coverage is now integrated with a Medicare Part D Employer Group Waiver Plan (EGWP) for Medicare-eligible enrollees.

Key cost changes:

• Out-of-pocket costs for prescription drugs cap at $2,000 annually in 2025.

• A new Medicare Prescription Payment Plan option allows spreading drug costs over the year.

While this change generally limits catastrophic drug spending, your pharmacy experience and out-of-pocket payments might differ from FEHB days.

3. Cost-Sharing Adjustments

Expect differences in deductibles, coinsurance, and copayments:

• Deductibles: In-network deductibles range between $350 and $500 for low-deductible plans and much higher for high-deductible options.

• Coinsurance: Typical in-network coinsurance rates are between 10%-30%.

• Copayments: Office visits generally cost between $20-$60, depending on the type of provider.

Under FEHB, some plans had lower or no deductibles. Now, hitting a deductible before your coverage kicks in may become a regular part of budgeting for healthcare.

Changes to Premium Contributions

Although USPS still pays about 70% of total premium costs, your share may have shifted slightly under PSHB plans.

For annuitants in 2025, here are the typical monthly contributions:

• Self Only: About $241

• Self Plus One: About $521

• Self and Family: About $567

These figures represent an increase compared to what many postal retirees paid under FEHB in 2024.

Enrollment Timing and Rules

You were automatically enrolled in a PSHB plan comparable to your 2024 FEHB plan if you did not actively select a plan during the November-December Open Season. However, it’s crucial to understand:

• If you don’t meet the Medicare Part B enrollment requirement (unless exempt), you risk losing parts of your PSHB coverage.

• You can still change your PSHB plan every fall during Open Season, but otherwise, you are locked into your selection unless you experience a qualifying life event.

New Financial Risks to Watch Out For

1. Late Enrollment Penalties

If you delayed enrolling in Medicare Part B past your initial eligibility period, you might face permanent late enrollment penalties. That penalty is 10% for each 12-month period you were eligible but not enrolled.

2. Higher Out-of-Pocket Maximums

While some PSHB plans have caps on your maximum yearly expenses, those caps can be high. For instance:

• Self Only: $7,500 (in-network)

• Self Plus One or Family: $15,000 (in-network)

Previously, under FEHB, some plans offered much lower caps. In 2025, understanding your plan’s maximum limit is critical to financial planning.

Medicare Coordination Complicates Matters

If you are Medicare-eligible, your PSHB plan assumes Medicare is the primary payer. Without Medicare Part B, you could be responsible for full costs that Medicare would otherwise have covered. This creates a two-tier cost structure:

• With Medicare Part B: Lower deductibles, copayments, and coinsurance.

• Without Medicare Part B: Higher out-of-pocket exposure.

The Advantage of Reviewing Plan Brochures Carefully

The PSHB system allows you to view detailed brochures before and during Open Season. These brochures contain:

• Specific deductible amounts

• Copayment and coinsurance tables

• Out-of-pocket maximums

• Coverage limitations

Taking the time to review these documents closely can prevent expensive surprises down the road.

Exemptions to the Medicare Part B Rule

Some postal retirees and family members are exempt from the mandatory Medicare Part B enrollment, including:

• Those who retired on or before January 1, 2025.

• Employees aged 64 or older as of January 1, 2025.

• Those living permanently overseas.

• Certain individuals receiving care from VA or Indian Health Service facilities.

If you qualify for an exemption, the cost shifts may affect you less—but you still need to pay attention to plan differences.

2025 and Beyond: What Happens Next

The PSHB program is intended to remain in place indefinitely, with ongoing adjustments likely each Open Season. Future changes could include:

• Updated premium contributions

• Shifting cost-sharing structures

• Evolving prescription drug coverage options

• Plan availability adjustments in specific regions

Staying informed each year is more important than ever.

Your Best Moves This Year

• Verify Medicare Part B enrollment if you are eligible.

• Review your PSHB plan brochure carefully to understand your financial responsibilities.

• Track your deductible progress early in the year to avoid billing surprises.

• Compare PSHB plans during Open Season to make sure your plan still meets your healthcare needs.

Being proactive now can help you avoid costly mistakes later.

Staying Financially Protected in the PSHB Era

The FEHB-to-PSHB shift in 2025 is not just a cosmetic update; it represents a fundamental cost redistribution. Premiums, deductibles, copayments, and Medicare requirements create a new landscape that could either protect or strain your health care budget depending on how well you plan.

To ensure you have the best coverage for your needs, it’s highly recommended that you speak with a licensed insurance agent listed on this website. An expert can walk you through your options and help you align your healthcare plan with your financial goals for 2025 and beyond.