Key Takeaways

• The Postal Service Health Benefits (PSHB) Program has officially replaced FEHB for USPS employees and retirees starting in 2025. While much looks the same on the surface, the rules beneath it introduce major operational and cost-related changes.

• If you rely on Medicare or are approaching retirement, your PSHB plan may work differently than you expect. Details like mandatory Medicare Part B enrollment and automatic drug coverage enrollment could impact your options later.

A Major Shift You Might Not Feel—At First

At first glance, PSHB may appear to mirror the Federal Employees Health Benefits (FEHB) Program. You still have access to multiple plans, Open Season enrollment occurs every November to December, and your premiums continue to be cost-shared by the government. But beneath these familiar features lie important structural changes that affect how you manage your health benefits in retirement and beyond.

The PSHB Program officially took effect on January 1, 2025. If you’re a current USPS employee, a retiree, or a family member covered under a USPS annuitant, your healthcare coverage now falls under PSHB rules—not FEHB.

Medicare Coordination Now Has Conditions

If you or a covered family member is eligible for Medicare Part A and Part B, the PSHB system now includes stricter coordination rules. Some of these are mandatory, and if you’re not aware of them, you may end up losing coverage or facing penalties.

Mandatory Medicare Part B Enrollment

One of the most significant changes is that certain Medicare-eligible Postal Service annuitants and family members must enroll in Medicare Part B to stay eligible for PSHB. This requirement applies to you if:

• You are a Medicare-eligible annuitant retiring after January 1, 2025

• You are a family member of such an annuitant and also Medicare-eligible

You are exempt from this requirement if:

• You retired on or before January 1, 2025

• You were at least age 64 as of January 1, 2025

• You reside outside the United States

• You qualify for health services through the VA or Indian Health Services

Failing to enroll in Medicare Part B if required can result in loss of your PSHB coverage altogether. This is a dramatic departure from FEHB, where Medicare Part B enrollment was always optional.

Automatic Enrollment in Medicare Part D Drug Coverage

If you are enrolled in Medicare, you will also be automatically enrolled in a Medicare Part D plan through the PSHB system known as the Employer Group Waiver Plan (EGWP). This prescription drug coverage is built into your PSHB plan and cannot be separately declined unless you opt out of PSHB drug coverage entirely, which could leave you without any medication benefits.

Keep in mind that if you opt out of this integrated drug coverage, you won’t be allowed to re-enroll in it later except under very limited conditions.

Your Premium May Look Familiar, but the Math Is Different

In 2025, PSHB premiums are still partially subsidized by the federal government. The government covers around 72 percent of the total premium cost on average. This is similar to how FEHB worked, but the structure around employer contributions and plan risk pools has changed.

Plans under PSHB are now exclusively for Postal Service employees and retirees. This separation from the wider federal workforce affects:

• Risk Pool Size: Smaller pools may impact cost-sharing formulas in future years

• Rate Adjustments: Premium increases are now calculated based solely on Postal Service demographics and utilization

• Government Contribution Base: The government share may adjust differently compared to FEHB due to this narrower participant base

So while your 2025 premium might not look dramatically different, the long-term trends could change more rapidly.

Open Season Works the Same—But Miss It and You’ll Pay

Just like in FEHB, the PSHB Open Season takes place every year between November and December. This is your opportunity to:

• Enroll in a new plan

• Change existing coverage

• Add or remove eligible family members

However, with the added Medicare coordination requirements, making a change is now more than just comparing premiums and copays. You must:

• Verify your Medicare enrollment status before switching plans

• Review drug coverage integration if you’re Medicare-eligible

• Ensure that any plan change won’t inadvertently disqualify you from required PSHB provisions

Outside of Open Season, changes can only be made due to Qualifying Life Events (QLEs). If you miss the Open Season window, you’re locked into your existing plan for another year.

Prescription Drug Benefits Are Now Embedded

Every PSHB plan that covers Medicare enrollees comes with built-in prescription drug coverage via EGWP. That means:

• You no longer need to shop for a separate Medicare Part D plan

• Your prescription costs are capped at $2,000 annually under the new 2025 rules

• Certain drugs, like insulin, are capped at $35 per month

If you are not enrolled in Medicare, your plan will still include a standard prescription benefit, but it may not offer the same caps or structure as the integrated EGWP model.

This embedded drug coverage structure ensures all enrollees receive consistent benefits, but it also means fewer options if you were previously customizing your Part D separately.

Enrollment Portals Have Changed

Another important shift is where and how you enroll. You no longer use the same FEHB platforms.

• Active USPS Employees must now use LiteBlue to manage PSHB elections

• Retirees and Annuitants should visit KeepingPosted.org to review or change their coverage

If you use the wrong portal or delay enrollment because of confusion, you risk default enrollment into a plan you didn’t choose.

Survivors Still Get Coverage—If the Setup Is Right

Survivor benefits under PSHB largely mirror FEHB rules, but with one crucial difference: You must have elected a survivor annuity to extend health coverage to your spouse or dependent after your death. Also:

• The survivor must have been enrolled in your plan at the time of death

• They must continue to pay the required share of the premium

Failing to elect survivor benefits during retirement setup could leave your dependents uninsured.

Your Deductible, Coinsurance, and Copay Structure May Change

Each PSHB plan still sets its own cost-sharing rules, but many have shifted the balance slightly:

• Deductibles are now commonly between $350 to $500 for in-network care

• Coinsurance ranges from 10 percent to 30 percent for in-network, and much higher for out-of-network

• Copayments for primary care average $20 to $40, while specialists often cost $30 to $60

You need to examine these numbers closely during Open Season, because the difference between two plans that seem similar on the surface could mean thousands of dollars in real costs if you need extensive care.

Timing Matters When You Retire or Become Medicare-Eligible

Your PSHB eligibility path can vary significantly depending on when major life events occur:

• If you retired in 2024 or earlier, you are exempt from the Medicare Part B requirement

• If you turn 65 in 2025 or later, you may be subject to mandatory Part B enrollment under PSHB rules

• If you are an active employee now and plan to retire in the next few years, your choices now will influence whether PSHB requirements apply later

Being proactive about your timeline can help you avoid unpleasant surprises in eligibility or coverage.

Health Reimbursement Benefits Are Plan Specific

Some PSHB plans offer reimbursements or incentives if you enroll in Medicare Part B, such as:

• Partial premium reimbursements

• Waived deductibles

• Lower copays or coinsurance

However, these benefits are not guaranteed and vary between plans. You need to read each plan brochure to determine what extras, if any, are offered.

You should never assume that Medicare coordination will automatically reduce your out-of-pocket expenses.

Your PSHB Plan Doesn’t Affect Other Federal Benefits

It’s also important to know that while PSHB replaces FEHB for USPS workers and retirees, it does not impact your:

• FEDVIP (Dental and Vision insurance)

• FEGLI (Life Insurance)

• FLTCIP (Long-Term Care)

• FSAFEDS (Flexible Spending Accounts)

These programs continue to operate independently, and you’ll still manage them through their respective portals.

Don’t Wait Until Open Season to Prepare

If you wait until November to begin evaluating your PSHB plan, you may already be behind. With the added Medicare and drug integration rules, it’s critical to:

• Assess your Medicare eligibility and enrollment

• Determine if you fall under any exemption categories

• Understand whether your current plan will be offered again

• Review cost-sharing changes and benefit updates

Failing to prepare early can result in unexpected out-of-pocket costs or missed opportunities to enroll in a more beneficial plan.

What This Shift Means for Your Long-Term Planning

The transition from FEHB to PSHB is not just an administrative reshuffle. It changes the foundational rules for how your health coverage works in retirement, how it coordinates with Medicare, and how drug benefits are delivered.

What doesn’t change is the need for strategic planning. Speak with a licensed agent listed on this website to help you navigate your eligibility, evaluate cost-sharing changes, and choose a plan that protects you well into retirement.