Key Takeaways

• In 2025, the PSHB program integrates with Medicare Part D to offer enhanced prescription drug coverage that may outperform what FEHB plans typically provide.

• Many enrollees who remain with FEHB may miss out on lower out-of-pocket prescription costs, simpler payment structures, and expanded pharmacy access available through PSHB.

Understanding the Prescription Drug Gap Between FEHB and PSHB

If you’re a Postal Service employee or retiree, the shift from the Federal Employees Health Benefits (FEHB) program to the Postal Service Health Benefits (PSHB) program isn’t just a matter of paperwork. It may significantly affect your prescription drug coverage, especially if you or your dependents rely on ongoing medication. The differences matter most when you’re eligible for Medicare.

In 2025, PSHB plans are required to integrate with Medicare Part D. This means if you’re Medicare-eligible and enrolled in a PSHB plan, you automatically receive prescription drug coverage through a Medicare Employer Group Waiver Plan (EGWP). FEHB plans, on the other hand, typically include drug coverage as part of the overall plan without dedicated Part D integration.

How PSHB Plans Use Medicare Part D to Improve Benefits

PSHB plans use Medicare Part D to their advantage in 2025. Here’s how:

• $2,000 Out-of-Pocket Cap: Starting in 2025, Medicare Part D includes a new annual cap of $2,000 for out-of-pocket prescription drug costs. Once you hit that threshold, your plan covers 100% of remaining drug costs for the rest of the year.

• No Coverage Gap (Donut Hole): The traditional coverage gap has been eliminated. You won’t face increased costs midway through the year like you might have under older models.

• Insulin Costs Capped: Through the Part D structure, insulin is now capped at $35 per month for all covered individuals.

• Monthly Smoothing Option: A new payment structure allows you to spread prescription drug costs over 12 months instead of paying large amounts upfront.

These changes reduce the volatility of monthly medication expenses and provide more predictability—especially beneficial if you’re managing multiple chronic conditions.

Where FEHB Falls Short on Prescription Drug Coverage

Although FEHB plans do include prescription coverage, they do not benefit from the structural advantages of Medicare Part D. If you’re Medicare-eligible but stay with an FEHB plan that doesn’t integrate with Part D, here’s what you may face:

• No Out-of-Pocket Cap: While FEHB plans have overall out-of-pocket limits, they don’t specifically cap prescription drug costs the way PSHB (through Medicare Part D) does.

• Lack of EGWP Benefits: You miss out on Medicare-negotiated rates and rebates built into EGWP plans, which can lead to higher medication costs.

• Pharmacy Network Limitations: FEHB plans may have narrower pharmacy networks compared to those available under PSHB-integrated Part D plans.

• Formulary Restrictions: Some FEHB formularies are more restrictive, limiting access to specific brand-name or specialty drugs.

What Happens If You Opt Out of Medicare Part B?

The PSHB program requires many Medicare-eligible Postal retirees and their covered family members to enroll in Medicare Part B to maintain full coverage. If you opt out of Part B:

• You may lose access to the integrated prescription drug benefits under the EGWP.

• Your PSHB plan will still provide prescription drug coverage, but it will not be enhanced by the Part D benefits.

• You won’t benefit from the $2,000 out-of-pocket prescription cap.

There are exemptions—for instance, if you retired on or before January 1, 2025—but the majority of Medicare-eligible Postal retirees must be enrolled in Part B to get full PSHB drug benefits.

Comparing Out-of-Pocket Costs: PSHB vs. FEHB

While every plan is different, general trends are clear for 2025:

• PSHB (with Medicare Part D):

  • Deductibles are typically waived or reduced for Medicare enrollees.

  • You receive coordinated benefits across Medicare and PSHB.

  • You are protected by the $2,000 annual prescription drug cap.

• FEHB (Medicare-eligible without Part D):

  • You may face higher upfront drug costs.

  • There’s no separate prescription drug out-of-pocket maximum.

  • You don’t have access to monthly payment smoothing options.

The cumulative result is that many FEHB enrollees may end up paying more over the course of the year for essential prescriptions—especially for high-cost or specialty drugs.

Pharmacy Access and Medication Availability

The EGWP plans under PSHB typically offer:

• Broader Pharmacy Networks: Including nationwide chains, mail-order options, and specialty pharmacies.

• Improved Medication Access: Formularies under Medicare Part D are standardized and regulated, offering consistency in drug availability.

• Stronger Appeal Rights: Part D comes with formal appeal processes for denied prescriptions, providing more avenues to contest decisions.

FEHB plans vary significantly. Some may offer excellent pharmacy access, while others are more limited in geographic or formulary reach. It often depends on the individual plan—not the systemwide consistency you see under PSHB.

Timing Matters: Why 2025 Is a Turning Point

Because 2025 is the first full year of PSHB implementation, many retirees and employees are seeing the differences play out in real time. Here’s what you need to keep in mind:

• If You’re Already Medicare-Eligible: You likely need to be enrolled in Medicare Part B to maintain PSHB coverage. The drug benefits kick in as soon as both PSHB and Medicare coverage are active.

• If You Turn 65 This Year: You’ll enter the Initial Enrollment Period (IEP) for Medicare and may face penalties if you delay Part B. Timely enrollment ensures you get the full suite of PSHB prescription benefits.

• If You’re Not Yet Medicare-Eligible: You’ll continue with standard PSHB drug benefits for now, but once eligible, your decision on enrolling in Medicare Part B will affect whether you get the enhanced EGWP benefits.

Pitfalls to Avoid When Comparing Plans

When weighing FEHB against PSHB for prescription drug benefits, be mindful of these common oversights:

• Assuming All Plans Are the Same: They aren’t. PSHB’s integration with Medicare Part D is a structural advantage FEHB doesn’t offer.

• Forgetting About Drug Caps: The $2,000 annual cap under PSHB is a critical benefit for high-cost drug users.

• Neglecting Medicare Coordination: FEHB plans don’t coordinate as tightly with Medicare, which may lead to duplicative or less efficient coverage.

• Overlooking Network Differences: A larger pharmacy network under PSHB can save you both time and money.

How to Know If Switching Makes Sense for You

Your best course of action depends on a few key factors:

• Are you Medicare-eligible? If yes, PSHB is structured to deliver greater prescription cost savings.

• Do you take multiple prescriptions? The more medications you rely on, the more you benefit from Part D cost protections.

• Is pharmacy access important to you? If you value wide access to retail and mail-order options, PSHB offers more flexibility.

Making an Informed Decision in 2025

You still have time to review and adjust your health benefits. While the Open Season typically runs from November to December each year, certain qualifying life events may also permit changes. Don’t assume your current plan is still your best option. The rollout of PSHB, especially with its Medicare Part D integration, marks a significant shift in how prescription benefits are delivered.

Even if your prescription needs are currently low, planning ahead can help you avoid surprises later—particularly if your health status changes or you begin new therapies.

Better Prescription Coverage Starts With the Right Plan Choice

The PSHB program offers more than just a name change. Its prescription drug benefits, particularly for Medicare-eligible enrollees, represent a step forward in affordability, consistency, and access. While FEHB served Postal retirees well in the past, its lack of integration with Medicare Part D means you could be missing out on major cost-saving features by staying put.

Don’t leave your decision to chance or guesswork. Speak with a licensed agent listed on this website to review your current plan and explore whether switching to PSHB with Medicare Part D integration is the smarter financial move.