Key Takeaways

• Even with the $2,000 out-of-pocket cap under Medicare Part D in 2025, many PSHB enrollees can still face substantial medication expenses throughout the year.

• Understanding what is and isn’t included in the cap, such as premiums, non-covered drugs, and plan-specific restrictions, is essential to avoid surprises.

The Out-of-Pocket Cap Isn’t the Whole Story

Starting in 2025, Medicare Part D introduces a $2,000 annual out-of-pocket limit for prescription drug costs. This change aims to provide financial relief to Medicare beneficiaries by eliminating the previously burdensome catastrophic phase. For Postal Service Health Benefits (PSHB) enrollees who are Medicare-eligible, this development might seem like a safety net. But here’s the reality: the cap doesn’t cover every angle of your drug costs.

What the $2,000 Limit Includes

The $2,000 cap applies only to what you pay out of pocket for covered Part D prescription drugs. That includes:

• Your deductible (if applicable)

• Copayments and coinsurance for drugs covered by your plan

• Any payments you make during the initial coverage and coverage gap phases

Once you reach this amount, your plan pays 100% of the covered drug costs for the rest of the calendar year.

What It Doesn’t Include

There are still multiple areas of drug spending that fall outside this cap:

• Monthly premiums for your PSHB plan (which includes integrated Part D coverage for Medicare-eligible enrollees)

• Drugs not on your plan’s formulary

• Drugs denied due to step therapy or prior authorization requirements

• Over-the-counter medications

• Prescription drugs filled outside the plan’s network

If you rely on medications that are excluded, or if you encounter delays due to utilization management requirements, your costs could go well beyond $2,000.

How PSHB Enrollees Access Part D Coverage

In 2025, Medicare-eligible annuitants under PSHB automatically receive prescription drug coverage through a Medicare Part D Employer Group Waiver Plan (EGWP). This coverage is integrated with your PSHB plan, meaning you do not have to separately enroll in a stand-alone Part D plan.

This setup is designed to coordinate benefits and reduce confusion. However, the protections it offers still come with cost-sharing rules, prior authorization, and network rules that affect how much you actually spend.

Coordination Doesn’t Mean Elimination of Costs

Even though the PSHB Part D coverage works with Medicare, it doesn’t eliminate:

• Your share of prescription drug costs up to the $2,000 out-of-pocket threshold

• Costs for drugs outside of formulary or denied through utilization controls

• Your monthly premiums under PSHB, which still reflect total plan coverage

Understanding these coordination details is important if you want to control your expenses.

Common Cost Triggers You Might Overlook

Some cost-sharing realities don’t fall neatly under the protection of the Part D cap. Here are some factors that regularly drive up spending:

1. Specialty Drugs

Drugs categorized as “specialty” typically have the highest coinsurance rates. Even if covered, they can quickly push you to the $2,000 threshold early in the year. But if a specialty drug is not on your plan’s formulary or requires special approval, you may face full retail costs with no cap protection.

2. Brand vs. Generic Preferences

If your prescriber writes for a brand-name drug when a generic is available, your plan may charge you a higher share—or deny it altogether unless a medical justification is submitted and approved.

3. Tiered Formulary Designs

PSHB Part D plans use a formulary system that categorizes medications into tiers:

• Preferred generics

• Generics

• Preferred brands

• Non-preferred brands

• Specialty drugs

The cost to you increases as you move up the tier structure. And while the $2,000 cap helps, reaching it faster on higher-tier drugs doesn’t mean your initial spending is insignificant.

4. Late-Year Prescriptions

If you don’t need many medications during the first part of the year but are prescribed costly drugs later on, you might not reach the cap—but you’ll still pay high monthly costs without full relief.

Drug Management Policies Still Apply

You may assume that once you’re in a PSHB plan with integrated Medicare drug coverage, access to medications is streamlined. However, most plans apply these control tools:

• Prior Authorization: Some drugs require your provider to get approval before the plan covers them.

• Step Therapy: You may be required to try lower-cost alternatives before getting approval for the originally prescribed drug.

• Quantity Limits: Limits on how much medication you can get at once can increase pharmacy visits or require multiple copays.

These measures can delay treatment and introduce unexpected costs.

Paying Attention to Network Rules

Part D plans under PSHB use pharmacy networks. If you fill a prescription at an out-of-network pharmacy, even accidentally, you could pay the full cost.

Even within the network, preferred pharmacies offer lower copayments than standard ones. Understanding your plan’s network tiers is essential to avoid excessive expenses.

2025 Timeline Matters

The calendar year—January 1 to December 31—is critical in determining your drug spending:

• The $2,000 cap resets every January

• If you reach the cap early, your drugs are covered at 100% for the rest of the year

• But if you only use occasional prescriptions, you may never reach the cap and will pay your share every time

Planning your refills, knowing when your higher-cost prescriptions begin, and preparing for price spikes later in the year can make a big difference in your annual costs.

What You Can Do to Control Your Costs

Taking proactive steps can help reduce your drug-related financial exposure:

Review Your Plan’s Formulary

Each PSHB plan provides an updated formulary. Confirm that your regular medications are listed and note their tier placement.

Ask About Generic Alternatives

Talk to your prescriber about generic or preferred brand options. These choices can reduce what you pay before hitting the out-of-pocket cap.

Use Preferred Pharmacies

Find out which pharmacies are considered “preferred” under your plan to receive the lowest possible copayments.

Explore Mail Order

Some plans offer reduced costs through mail-order options. This can be particularly useful for maintenance medications taken long-term.

Watch for Plan Changes During Open Season

PSHB Open Season runs from November to December. During this time, review changes to drug tiers, cost-sharing, and network participation. Even small updates can affect what you spend the next year.

Why Cost Clarity Matters More Than Ever

For PSHB annuitants, the new out-of-pocket limit under Medicare Part D is a welcomed improvement—but not a guarantee of savings. It is a cost-control mechanism with clear boundaries. Your actual spending depends heavily on:

• The medications you take

• Whether they’re covered and what tier they’re in

• Pharmacy network participation

• How often you need medications

• Whether approvals or denials delay access

The bottom line: you’re still financially responsible for many parts of the process. If you miscalculate your yearly costs by assuming the $2,000 cap applies to everything, you may find yourself unprepared.

If you’re uncertain about how your prescriptions will be covered, what tier they fall under, or whether you’ll face out-of-pocket surprises, it’s time to take action.

Speak with a licensed agent listed on this website to get personalized support and explore all your options under PSHB for 2025.