Key Takeaways

• PSHB plans in 2025 often include many of the benefits that Medicare Supplement (Medigap) policies offer, potentially making separate Medigap coverage unnecessary.

• Enrolling in both PSHB and Medigap can result in duplicate coverage and extra monthly premiums without delivering added value.

Why This Overlap Matters in 2025

As a Postal Service retiree or employee transitioning into retirement, you now fall under the Postal Service Health Benefits (PSHB) Program rather than the older FEHB system. In 2025, the PSHB program integrates closely with Medicare, especially if you’re 65 or older. That integration often makes purchasing a standalone Medicare Supplement (Medigap) policy not only redundant—but possibly a waste of money.

The issue isn’t just about overlap. It’s about paying for coverage you already have under PSHB without realizing it. Before you sign up for any private Medigap plan, it’s essential to understand what your PSHB plan already provides.

What PSHB Offers When You Have Medicare

If you’re enrolled in Medicare Parts A and B, PSHB plans coordinate benefits in a way that drastically reduces your out-of-pocket costs. Many plans under PSHB are designed with Medicare in mind and automatically act as your secondary insurance.

Here’s what PSHB may already provide if you’re enrolled in Medicare:

• Waived or reduced deductibles

• Lower coinsurance or copayments

• Coverage for services Medicare doesn’t fully cover, like skilled nursing facility care beyond what Part A pays

• Out-of-pocket caps that protect you from unexpected large medical bills

• Automatic enrollment in a Medicare Part D prescription plan (EGWP), eliminating the need to purchase standalone drug coverage

These features mirror what Medigap policies are typically designed to cover—except you’re already receiving them under PSHB if you’re Medicare-eligible.

Comparing Coverage Features: PSHB vs. Medigap

Let’s break it down. Medigap plans are designed to fill gaps in Medicare Parts A and B. PSHB plans—when integrated with Medicare—do this automatically.

What Medigap Covers:

• Part A coinsurance and hospital costs

• Part B coinsurance or copayments

• First three pints of blood

• Part A hospice care coinsurance

• Skilled nursing facility care coinsurance

• Part A and B deductibles (depending on plan letter)

• Foreign travel emergency care

What PSHB May Already Cover:

• Most or all of the above (as secondary payer to Medicare)

• Annual out-of-pocket maximums

• Lower prescription drug costs through EGWP

• Additional dental, vision, and hearing coverage not included in Medigap

The only major difference is that PSHB plans include benefits Medigap does not—particularly in prescription drug coverage and often in supplemental benefits like dental or hearing services.

Why People Still Buy Medigap—And Why It May Be Unnecessary for You

Many retirees mistakenly believe Medigap is required to complete their Medicare coverage. That’s not the case if you’re under PSHB. Others may simply be unaware that their PSHB plan offers coordinated benefits when paired with Medicare.

Another reason some purchase Medigap is because of fear—fear of unknown medical bills, hospital stays, or complex care needs. But PSHB plans often have annual out-of-pocket maximums for in-network care, which standard Medigap plans don’t provide.

In 2025, most PSHB plans set a maximum cap of $7,500 for Self Only and $15,000 for Self Plus One or Self and Family—limiting your financial exposure. Once this cap is reached, your plan typically covers 100% of additional costs.

What Happens When You Have PSHB, Medicare, and Medigap

If you enroll in all three, Medigap becomes unnecessary—and potentially unusable. Medigap policies only coordinate with Medicare. They do not pay second to PSHB. That means your claims may be processed as follows:

1. Medicare pays primary

2. PSHB pays secondary

3. Medigap has nothing to pay—because there’s no remaining balance

Despite this, you’d still be required to pay monthly Medigap premiums, even if the policy never pays a claim. In essence, you’re paying for peace of mind that’s already built into PSHB.

Consider the Costs: Duplicate Premiums Without Value

Every Medigap policy carries a monthly premium. These premiums can increase with age and may vary by region. If your PSHB plan already coordinates with Medicare and offers reduced cost-sharing, adding a Medigap policy can duplicate costs without doubling your benefits.

Let’s consider the financial impact:

• Monthly PSHB premiums: You’re already paying this as a retiree.

• Medicare Part B premiums: Required for your Medicare eligibility under PSHB.

• Optional Medigap premiums: Paid out of pocket with no added value if PSHB already pays your secondary costs.

The result? Triple premiums, double insurance, and single-layer benefits.

How PSHB Prescription Benefits Outpace Medigap

One of the major gaps in Medigap coverage is drug costs. Medigap doesn’t cover outpatient prescriptions. You would need a separate Part D plan for that, and that adds yet another premium.

PSHB solves this by bundling prescription benefits into your plan via a Medicare Part D Employer Group Waiver Plan (EGWP). This provides:

• Access to a national pharmacy network

• Lower copayments on brand-name and generic drugs

• A $2,000 out-of-pocket cap under 2025 Medicare rules

• Simplified coordination between medical and drug coverage

This is not just convenient—it’s significant cost protection that Medigap simply doesn’t offer.

Timelines and Enrollment Considerations

Understanding your enrollment timeline is essential. If you’re newly retired or approaching Medicare eligibility, here’s how it works:

• Three months before turning 65: You can enroll in Medicare Parts A and B.

• By age 65: Enrollment in Medicare Part B is required to maintain PSHB coverage (unless exempt).

• During PSHB Open Season (November to December): You can select a plan tailored for Medicare coordination.

Timing is everything. Buying a Medigap plan outside of your Medigap Open Enrollment Period could also mean facing medical underwriting, especially if you try to drop it later after realizing PSHB already covers your needs.

Misunderstandings That Lead to Extra Costs

It’s easy to misunderstand how PSHB and Medicare work together. Some retirees assume:

• PSHB alone won’t be enough

• Medicare always needs Medigap

• More insurance equals more protection

In reality, you need smart, not more. The protections built into PSHB when paired with Medicare are often more comprehensive than a Medigap policy. And while Medigap might be necessary for individuals with only Original Medicare, your situation under PSHB is different.

What to Do Before Buying Any Supplemental Plan

Before you sign up for a Medigap plan:

• Review your PSHB plan brochure and check the section on Medicare coordination

• Talk to a licensed agent listed on this website to confirm whether your specific plan covers what you need

• Compare out-of-pocket limits between Medigap and PSHB

• Make sure you’re not already paying for benefits twice

Informed decisions in 2025 mean knowing what you already have.

When PSHB Already Does the Work of Medigap

There’s no doubt that Medigap plans serve a valuable purpose—for people who only have Original Medicare. But if you’re a USPS retiree or annuitant enrolled in PSHB and Medicare Parts A and B, you’re already receiving many of those same protections—and in some cases, even more.

Get clarity on what’s included in your current plan before you add another layer of insurance. It could save you hundreds in premiums each year while still giving you the coverage confidence you want in retirement.

Speak with a licensed agent listed on this website for one-on-one help reviewing your PSHB and Medicare coordination options before making any supplemental purchase.​​​​​​​