Key Takeaways

• The Postal Service Health Benefits (PSHB) Program has officially replaced FEHB for USPS employees and retirees as of January 1, 2025, bringing with it both structural and regulatory differences.

• Medicare Part B enrollment now plays a more critical role in retaining full PSHB benefits, especially for annuitants and family members who are Medicare-eligible.

What Looked Like a Simple Switch Isn’t Quite So Simple

On the surface, the transition from the Federal Employees Health Benefits (FEHB) Program to the Postal Service Health Benefits (PSHB) Program seems like a mere rebranding effort. But once you examine the policy differences, eligibility rules, Medicare coordination, and enrollment mechanics, it becomes clear that the two programs operate under a very different set of rules.

For current USPS employees and retirees, understanding these changes is not optional. It directly impacts your healthcare access, premium contributions, drug coverage, and Medicare responsibilities.

Who the Switch Applies To

The PSHB transition applies to:

• All active USPS employees.

• All USPS annuitants, including those who retired before January 1, 2025.

• Eligible family members covered under USPS employee or retiree plans.

However, your personal experience with the transition depends heavily on your Medicare eligibility status, your retirement date, and your chosen PSHB plan.

The Effective Date

The switch took effect on January 1, 2025. Any changes you made during the PSHB Open Season (held from November to December 2024) are now active. If you made no changes, you were automatically enrolled in a comparable PSHB plan based on your 2024 FEHB selection.

Premium Structure: How Your Monthly Share Is Calculated

Your premium contributions under PSHB are determined similarly to FEHB but with USPS-specific averages. The federal government continues to contribute approximately 72% of the weighted average premium.

• Self Only plans now average over $860 monthly in total premium, with employees contributing around 28%.

• Self Plus One and Self and Family plans follow the same contribution ratio.

You may have noticed higher employee contributions in 2025, which reflect rising healthcare costs and the recalibration of plan categories under PSHB. While the government share remains strong, the fixed formula means you still carry a larger portion of the increased costs.

PSHB and Medicare Part B: A New Rulebook

If you or your covered family members are eligible for Medicare Part B, this part of the transition is likely the most consequential.

Mandatory Medicare Enrollment

Starting in 2025, PSHB requires Medicare Part B enrollment for:

• Medicare-eligible USPS annuitants and family members

• Unless they retired on or before January 1, 2025

• Or were aged 64 or older as of January 1, 2025

Those who fall into the exemption categories may continue coverage without enrolling in Part B. But for most others, declining Part B means forfeiting your eligibility for PSHB coverage.

Coordination with Medicare

If you are enrolled in both PSHB and Medicare Part B, many plans now coordinate benefits by:

• Waiving or reducing deductibles

• Lowering coinsurance and copayments

• Integrating prescription drug coverage through a Medicare Part D Employer Group Waiver Plan (EGWP)

This integration offers cost savings but only when both coverages are in place. Declining Medicare Part B can eliminate these advantages.

What Happens with Prescription Drugs Now

In 2025, Medicare-eligible enrollees automatically receive prescription drug coverage through a Part D EGWP that is bundled with their PSHB plan. This eliminates the standalone Medicare Part D enrollment requirement and provides:

• A $2,000 annual cap on out-of-pocket prescription drug costs

• A $35 cap on covered insulin products

• Access to an expanded pharmacy network

However, opting out of this drug coverage results in losing prescription benefits under your PSHB plan, and re-enrollment may be limited.

Cost-Sharing Differences: Copays and Deductibles

While the FEHB system allowed wide variation in cost-sharing models, PSHB plans are now more standardized, though still not uniform. Here are the ranges you can expect:

• In-network deductibles: $350 to $500 for low-deductible plans

• High-deductible options: $1,500 to $2,000 in-network

• Primary care copays: $20 to $40

• Specialist copays: $30 to $60

• Emergency room visits: $100 to $150

• Urgent care: $50 to $75

Out-of-network costs are notably higher, with coinsurance often ranging from 40% to 50%. Review your plan’s Summary of Benefits for precise cost details.

Annual Out-of-Pocket Maximums

The PSHB program imposes caps on annual out-of-pocket spending to protect against excessive costs:

• Self Only: $7,500 for in-network services

• Self Plus One & Self and Family: $15,000 in-network

Out-of-network spending may not count toward these limits, so it’s essential to use network providers whenever possible.

Enrollment Process: What Changed

For Employees

You now use LiteBlue to make PSHB changes during Open Season. The system is designed to reflect your current employment status and provide access to plan comparisons.

For Annuitants

Annuitants use KeepingPosted.org, the official portal for retirees. If you missed the 2024 Open Season, you must wait until the next one unless you experience a Qualifying Life Event (QLE), such as:

• Marriage or divorce

• Birth or adoption

• Change in employment status

Changes outside of Open Season require documentation and must be submitted within a strict timeframe (typically 60 days).

What Doesn’t Change Under PSHB

Some core features remain consistent with the FEHB model:

• Access to nationwide health plans

• Comprehensive coverage for medical, mental health, maternity, and preventive services

• Continued eligibility for Flexible Spending Accounts (FSA) and FEDVIP (vision and dental benefits)

Your retirement eligibility and annuity are also unaffected by the PSHB switch.

Special Enrollment Period for Medicare Part B

In 2024, OPM offered a one-time Special Enrollment Period (SEP) from April 1 to September 30 for affected annuitants and family members. This allowed enrollment in Medicare Part B without facing late penalties. If you qualified and missed it, you may now face a lifetime penalty added to your Part B premium.

If you believe you qualify for an exemption, check your retirement date or age as of January 1, 2025, and verify with the PSHB Navigator Help Line.

Reconsidering Your Plan: What to Do Next Open Season

Even if you were automatically enrolled in a corresponding PSHB plan, don’t assume it’s the right fit. During each year’s Open Season (November to December), review your plan for:

• Changes to cost-sharing

• Adjustments in provider networks

• Updated drug formularies

• Any new benefits tied to Medicare coordination

Take the time to compare your current coverage against available options using the official PSHB comparison tools.

What to Watch for in the First Year of PSHB

As 2025 continues, stay alert to updates from:

• OPM: Official policy clarifications

• Your PSHB plan provider: Annual Notice of Changes

• Medicare communications: Especially if you’re newly eligible

Also, consider contacting a licensed agent listed on this website if you need help evaluating your current plan or future changes.

Understanding the Shift Puts You in Control

The move from FEHB to PSHB is not just administrative. It reshapes how you plan for healthcare in retirement, how you coordinate with Medicare, and how you protect your finances from unexpected medical costs.

Whether you’re still working or already retired, getting familiar with the PSHB system now is the best way to avoid surprise costs and keep your healthcare predictable. If you need help choosing or reviewing your plan, speak with a licensed agent listed on this website who can guide you based on your situation.