Key Takeaways

• The new $2,000 annual cap on prescription drug costs under Medicare Part D helps control out-of-pocket expenses but doesn’t eliminate all medication-related costs under PSHB.

• You may still face copayments, coinsurance, and exclusions depending on your PSHB plan, your Medicare enrollment status, and the specific drugs you take.

The $2,000 Drug Cap: What It Actually Covers

In 2025, Medicare Part D introduces a long-anticipated $2,000 annual out-of-pocket cap for prescription drug costs. For many Postal Service retirees and workers covered under the Postal Service Health Benefits (PSHB) Program, this sounds like a financial relief. And it is — but with important qualifiers.

The $2,000 cap applies only to Medicare Part D-covered drugs under standard benefit designs. Since most Medicare-eligible PSHB enrollees receive prescription coverage through an Employer Group Waiver Plan (EGWP) tied to their PSHB plan, the cap generally applies — but not without exceptions.

You’ll reach the cap only after going through the deductible and initial coverage phases, which still require you to pay a portion of drug costs. Once you hit $2,000 in out-of-pocket spending, catastrophic coverage kicks in — and your plan covers 100% of covered drugs for the rest of the year.

What Costs Count Toward the $2,000 Cap?

To understand what you’ll still pay, it helps to know which expenses do and do not count toward the cap:

Costs that count:

• Annual deductible (up to $590 in 2025)

• Copayments and coinsurance for covered Part D drugs

• Payments made by family members or charities on your behalf

• Costs paid during the initial and coverage gap phases

Costs that don’t count:

• Premiums for your PSHB or Medicare plan

• Non-covered drugs or drugs excluded from your plan’s formulary

• Drugs covered under Medicare Part B

• Over-the-counter (OTC) medications

Your PSHB Plan’s Role in How Much You Actually Pay

Not all PSHB plans structure their prescription coverage the same way. Many offer enhanced benefits that help reduce what you pay before hitting the cap, but some plans still require higher out-of-pocket costs.

Key factors that affect your cost-sharing under PSHB:

• Drug tier system: Higher-tier drugs typically come with higher copays or coinsurance.

• Preferred vs. non-preferred pharmacies: Using out-of-network or non-preferred pharmacies may increase your costs.

• Specialty drugs: These can have separate cost structures and may involve prior authorizations or quantity limits.

Your plan brochure outlines cost-sharing rules and should be reviewed annually during Open Season (November to December).

Medicare Enrollment Status Makes a Big Difference

The drug cap applies only if you are enrolled in Medicare Part D through your PSHB plan’s EGWP.

If you are Medicare-eligible but have not enrolled in Medicare Part B, and your PSHB plan requires it for full integration, you could lose access to these drug benefits altogether.

If you enrolled in Medicare Part A and B and your PSHB plan includes an integrated Part D EGWP, then you benefit from:

• The $2,000 cap on out-of-pocket drug spending

• Reduced or waived deductibles

• Lower copayments and coinsurance

• Coordinated pharmacy networks

Don’t Overlook Non-Medicare Drug Costs

The $2,000 cap applies only to Part D-covered drugs. But many postal workers and retirees also take medications that fall outside of this framework.

You could still owe full price or partial costs for:

• Drugs excluded from the Part D formulary

• Brand-name drugs replaced by generics not covered by your plan

• Medications prescribed for non-FDA-approved uses

• Weight-loss, cosmetic, or fertility drugs

Additionally, if your doctor prescribes something covered under Medicare Part B instead of Part D — like certain injectables or infusions — those costs are subject to the Part B deductible and 20% coinsurance, unless your PSHB plan covers the gap.

Timing and Enrollment Still Matter

The cap is annual, resetting every January 1. If you hit the $2,000 threshold in July, your catastrophic coverage begins immediately — but it ends on December 31. When the new year starts, your drug spending begins from zero again.

That means:

• January often brings higher out-of-pocket costs as deductibles reset

• Refilling expensive prescriptions in early months can front-load your expenses

• Coordinating care around the cap timeline may reduce your total costs

Plan ahead to refill high-cost medications before year-end, if possible, to minimize out-of-pocket spikes.

Common Scenarios That Can Still Surprise You

Even with the cap, there are several situations where you may encounter unexpected costs:

• You change plans mid-year: Any accumulated spending toward the cap doesn’t transfer to the new plan.

• You switch from a PSHB plan with EGWP to a standalone Part D plan: Benefits and cost-sharing may differ significantly.

• You take a mix of Part B and Part D drugs: Coordination issues between the two may delay reimbursement or coverage.

• You use a non-preferred or out-of-network pharmacy: Some PSHB plans penalize these transactions with higher costs.

The Payment Option That’s New for 2025

Another new feature this year is the Medicare Prescription Payment Plan, which lets you spread your out-of-pocket drug costs over the calendar year in monthly payments — rather than paying large amounts upfront.

If you’re eligible, this can help smooth out cash flow, especially if you hit the $2,000 cap early. But keep in mind:

• You must opt in to use this benefit

• Missed payments could impact future eligibility

• Your PSHB plan must participate in the program

Check with your plan or a licensed agent to confirm eligibility and enrollment steps.

Coordination with PSHB Benefits Still Matters

Even with the Medicare drug cap, your total prescription drug experience depends on how well your PSHB plan coordinates with Medicare. That includes:

• Formulary design: Does your plan offer broad coverage or restrict access to newer medications?

• Cost-sharing tiers: Are there reasonable copays, or are coinsurance percentages high for brand-name or specialty drugs?

• Pharmacy network: Does your preferred pharmacy qualify for the lowest pricing tier?

• Mail-order options: Are you getting savings by using the plan’s mail-order pharmacy, if offered?

These plan features can significantly affect your out-of-pocket costs — even if the cap limits your annual exposure.

The Big Picture: What You Should Do Now

To take full advantage of the new $2,000 drug cap and avoid unnecessary expenses:

• Review your PSHB plan’s drug formulary

• Make sure you’re enrolled in both Medicare Part A and Part B

• Confirm your plan includes Part D through an EGWP

• Use preferred pharmacies and generics whenever possible

• Plan your prescription refills to avoid start-of-year deductible spikes

• Ask about enrolling in the Medicare Prescription Payment Plan

If you’re uncertain about any part of this, a licensed insurance agent listed on this website can help clarify your options.

Understand the Limit—But Watch the Fine Print

While the $2,000 drug cap offers welcome relief for many PSHB enrollees, it’s not a complete safety net. You may still be responsible for costs that fall outside the cap’s protections or your plan’s scope. Each PSHB plan is different, and what you pay in 2025 depends on how well your plan coordinates with Medicare, what medications you use, and how you manage your coverage.

Use Open Season to re-evaluate your options, and reach out to a licensed insurance agent listed on this website to get the support you need.