Key Takeaways

• In 2025, Medicare Part D brings better financial protections, including a $2,000 annual cap on out-of-pocket drug costs, but complexities still exist in how coverage phases work.

• Postal retirees and workers enrolled in PSHB plans must still understand the details of Medicare drug coverage to avoid unexpected expenses.

How Medicare Part D Has Improved for 2025

This year, Medicare Part D coverage is offering significant financial relief. The most notable change is the implementation of a $2,000 out-of-pocket maximum for prescription drugs. Once you spend $2,000 on covered medications, your plan covers the rest for the calendar year. This change eliminates the confusion around the previous “donut hole,” which used to leave many beneficiaries facing high drug costs mid-year.

Other improvements include:

• More straightforward coverage phases.

• Increased access to lower-cost generic and biosimilar drugs.

• The new Medicare Prescription Payment Plan, which allows you to spread out your out-of-pocket prescription costs over the year.

However, even with these changes, the way Part D works can still feel overwhelming if you are not careful.

Understanding the Four Coverage Stages

Despite the improvements, Medicare Part D still operates in multiple stages that can be confusing. Here’s a breakdown you need to know for 2025:

1. Deductible Phase

At the start of the year, you pay out-of-pocket for your prescriptions until you reach your plan’s deductible. In 2025, the maximum deductible allowed is $590. Some PSHB plans may offer a lower deductible, but you must verify with your specific plan.

2. Initial Coverage Phase

After you meet your deductible, your plan starts to share the cost. You typically pay a copayment or coinsurance for each prescription. This phase continues until the total amount spent by you and your plan reaches approximately $5,030.

3. Catastrophic Coverage Phase (Revised for 2025)

Once your total drug costs reach the $2,000 out-of-pocket cap, catastrophic coverage begins. Now, instead of paying a small coinsurance amount, you pay nothing for covered drugs for the remainder of the year.

This redesign simplifies what used to be a confusing transition through the donut hole and into catastrophic coverage.

What the New $2,000 Out-of-Pocket Cap Means for You

For postal retirees and workers covered under PSHB plans, the $2,000 cap is a major win. It means:

• Predictable drug costs.

• Easier budgeting for your healthcare expenses.

• Protection against runaway costs if you require high-cost medications.

However, it is essential to understand what counts toward this $2,000 cap. Only costs for covered drugs under your plan’s formulary apply. Drugs not listed may not count, and your costs could still rise unexpectedly.

Potential Pitfalls You Should Still Watch For

Even with these improvements, there are still areas of confusion and potential extra costs:

Formularies and Tiers

Each Part D plan, including those linked with PSHB, has its own list of covered drugs called a formulary. Drugs are categorized into tiers:

• Lower tiers typically have generic drugs and lower copays.

• Higher tiers include brand-name and specialty drugs with higher out-of-pocket costs.

Before filling a prescription, check your plan’s current formulary. Formularies can change each year during Open Season.

Prior Authorizations and Step Therapy

Your plan may require you to:

• Get prior authorization before covering certain medications.

• Try less expensive drugs before approving more expensive options (step therapy).

This can delay your treatment if you’re not prepared.

Pharmacy Networks

Plans usually have preferred pharmacy networks. Using a non-preferred or out-of-network pharmacy could mean higher costs or no coverage for your prescriptions.

Make sure your local pharmacy is part of your plan’s preferred network to keep your costs down.

How PSHB Prescription Drug Coverage Works with Medicare Part D

Under PSHB, if you are Medicare-eligible, your plan automatically includes a Medicare Part D prescription drug benefit through an Employer Group Waiver Plan (EGWP). This design offers:

• Enhanced benefits beyond a typical individual Part D plan.

• Protection under the $2,000 out-of-pocket cap.

• An expanded pharmacy network.

In 2025, if you opt out of the Part D portion of your PSHB coverage, you will lose all prescription drug coverage under your PSHB plan for the year. Re-enrollment is extremely limited, so think carefully before opting out.

Enrollment and Coverage Timing You Need to Know

Here are important timeframes you must keep in mind in 2025:

• Medicare Part D Open Enrollment: October 15 to December 7, 2025.

• Coverage effective date for changes: January 1, 2026.

• Mid-Year Notification of Unused Benefits: Between June 30 and July 31, 2025, you will receive a personalized notice if you have unused supplemental benefits.

If you are enrolling for the first time or making changes, act during Open Enrollment to avoid gaps in your coverage.

Common Questions Postal Retirees and Workers Are Asking

What happens if I reach the $2,000 cap mid-year?

Once your out-of-pocket spending for covered drugs hits $2,000, you pay nothing for covered prescriptions for the rest of the calendar year.

Do all drugs I take count toward the cap?

Only drugs on your plan’s formulary count toward the $2,000 limit. Non-formulary drugs or non-covered medications do not apply.

Can I spread out my costs?

Yes. Thanks to the new Medicare Prescription Payment Plan, you can opt to pay monthly installments for your out-of-pocket costs rather than paying all at once when you fill a prescription.

Can PSHB plans change their drug coverage?

Yes. Formularies, tiers, and pharmacy networks can change each year. Always review your Annual Notice of Change (ANOC) sent by your PSHB plan during Open Season.

Steps to Take to Protect Yourself

• Review Your Formulary Annually: Changes can catch you off guard if you are not paying attention.

• Verify Your Pharmacy Network: Preferred pharmacies usually mean lower copays.

• Set Reminders for Open Enrollment: You only have a short window to adjust your coverage if needed.

• Consider the Payment Plan: If managing large payments is difficult, enroll in the Medicare Prescription Payment Plan.

Why Staying Informed Matters More Than Ever

The improvements to Medicare Part D in 2025 make prescription coverage more affordable and straightforward for PSHB enrollees. However, the system is still layered with complexities that can cost you if you are not proactive.

Remaining educated, asking questions, and carefully reviewing your PSHB plan’s materials each year can help you avoid unpleasant financial surprises. If you feel overwhelmed or unsure, consider reaching out for expert help.

Help Is Available When You Need It

Navigating Medicare Part D and your PSHB prescription drug benefits doesn’t have to be confusing. If you need assistance understanding your options or reviewing your plan details, connect with a licensed insurance agent listed on this website. They can help you make informed decisions that best fit your health and financial needs.