Key Takeaways
-
The new $2,000 out-of-pocket cap on prescription drugs under Medicare Part D applies automatically inside PSHB plans for Medicare-eligible annuitants and eligible family members in 2025.
-
While this cap offers major financial relief, it only works if you are enrolled in Medicare Part B and remain covered by the integrated Part D EGWP included in your PSHB plan. Opting out disqualifies you from these savings.
Understanding the $2,000 Cap Inside PSHB
The Medicare Part D out-of-pocket maximum of $2,000 is now active in 2025 and applies across all standard Medicare drug coverage, including the Employer Group Waiver Plans (EGWPs) embedded in PSHB plans. If you’re a Medicare-eligible Postal Service retiree or an eligible family member enrolled in both Medicare Part B and a PSHB plan, this cap may protect you from paying high prescription costs year-round.
But there’s a key qualifier: you must be enrolled in Medicare Part B and not opt out of the Part D coverage offered through your PSHB plan. If you waive Part D or are ineligible due to not enrolling in Part B, this $2,000 protection does not apply.
How the Drug Cap Works in 2025
The 2025 structure eliminates the confusing phases of the older Part D model (like the coverage gap or “donut hole“). Now, the system is simplified into three stages:
-
Deductible Phase: You pay up to the annual deductible amount, which is $590 for 2025.
-
Initial Coverage Phase: After meeting the deductible, you pay copayments or coinsurance until your total out-of-pocket costs reach $2,000.
-
Catastrophic Phase: Once you hit the $2,000 ceiling, your plan pays 100% of your covered prescription drug costs for the rest of the calendar year.
This applies directly to the PSHB Part D EGWP coverage, meaning once you hit $2,000 in out-of-pocket spending, your plan takes over completely. No more 5% coinsurance. No more donut hole. And no reset until the next calendar year.
Who Gets This Cap Automatically
Not everyone in PSHB will qualify automatically. Here’s who does:
-
You must be enrolled in Medicare Part A and Part B.
-
You must not opt out of the integrated Part D coverage in your PSHB plan.
-
You must be an annuitant or family member who is Medicare-eligible.
The cap is built into the Part D EGWP prescription benefit. If you meet the above conditions, you are automatically enrolled and protected by the $2,000 maximum.
What Happens If You Opt Out of Part D
If you opt out of the Medicare Part D EGWP coverage under PSHB, you lose the benefit of the $2,000 cap. Here’s why:
-
PSHB plans treat Medicare as primary coverage for those enrolled.
-
Without Part D, you rely solely on PSHB for drug coverage, which may not include the $2,000 cap.
-
Your costs may continue with no defined out-of-pocket limit, especially for brand-name or specialty drugs.
Additionally, opting out can result in delayed or restricted access to medications, smaller pharmacy networks, and higher copays or coinsurance.
Why Medicare Part B Is the Gateway to Drug Savings
You can only be enrolled in the PSHB Part D EGWP if you are already enrolled in Medicare Part B. This is a strict condition as of 2025.
Here’s why it matters:
-
Medicare Part B is the foundational requirement for Medicare coordination inside PSHB.
-
Without it, you can’t be placed in the PSHB EGWP, which includes the Part D benefit.
-
Therefore, no Part B = no Part D = no $2,000 drug cap.
It’s also important to note that retirees who turned 64 before January 1, 2025, or who retired before that date, may be exempt from mandatory Part B enrollment—but if you aren’t enrolled, you lose access to Part D benefits inside PSHB.
What Costs Count Toward the $2,000 Limit
The $2,000 cap in 2025 includes the following types of expenses:
-
Your share of prescription drug deductibles
-
Copayments and coinsurance for covered drugs
-
Any payments made during the initial coverage phase
-
Costs paid for formulary medications through plan-approved pharmacies
It does not include:
-
Premium payments
-
Costs for drugs not on your plan’s formulary
-
Out-of-network pharmacy purchases (unless approved)
-
Over-the-counter medications or non-covered services
Knowing what counts toward your cap helps you track your progress throughout the year.
Timing and Reset of the Drug Cap
The $2,000 cap operates on a calendar-year basis, meaning:
-
Your out-of-pocket drug expenses reset every January 1.
-
You must meet the deductible and cost-sharing thresholds again each year.
This annual reset is standard across all Part D coverage—including PSHB’s embedded EGWP plan. Planning ahead in December can help you schedule refills and avoid falling just short of the cap.
What If Your Costs Don’t Reach $2,000?
Not everyone will hit the cap. If your medication needs are limited or your drugs are mostly generics, you may only pay a few hundred dollars per year.
However, high-usage enrollees—those with chronic conditions, insulin dependence, or expensive specialty medications—can easily reach the $2,000 cap within the first few months of the year.
Whether you reach the cap or not, the key benefit of PSHB Part D coverage is knowing your exposure is limited. There’s a financial ceiling you won’t exceed in a given year, offering critical protection.
Monthly Payment Option for High Costs
Another major change in 2025 is the Medicare Prescription Payment Plan, which allows you to spread your out-of-pocket drug costs across the year in equal monthly installments.
This option is available through the PSHB plan’s EGWP as long as you’re enrolled in both Part B and Part D. The goal is to reduce the burden of large, one-time prescription payments by allowing a budget-friendly option.
Enrollment in this monthly payment plan is optional and can be initiated during a qualifying period if you anticipate high annual drug costs.
When the $2,000 Cap Doesn’t Apply
Several situations will exclude you from benefiting from the $2,000 out-of-pocket maximum:
-
You aren’t enrolled in Medicare Part B.
-
You opted out of Part D coverage under PSHB.
-
You receive prescriptions outside of the plan network.
-
You use non-formulary drugs without an approved exception.
In these cases, your PSHB plan may still offer drug coverage, but it won’t be Part D-compliant. That means no $2,000 cap, no catastrophic phase, and potentially much higher costs.
How to Stay Eligible for the $2,000 Protection
To keep your eligibility intact for the $2,000 drug cap, you should:
-
Ensure you’re enrolled in Medicare Part B.
-
Avoid opting out of your PSHB plan’s drug coverage.
-
Stay within your plan’s formulary and pharmacy network.
-
Contact your plan about the monthly payment option if needed.
It’s also worth checking whether your drugs are covered, how much they cost under the plan, and what to expect if you need specialty medications.
Annual Review Matters More Than Ever
Each year during the PSHB Open Season from November to December, you have the opportunity to:
-
Switch to another PSHB plan
-
Update coverage if your medication needs change
-
Ensure you’re still Part B and Part D eligible
Plans may adjust their formularies, copay tiers, and pharmacy networks each year, which could affect how quickly you reach the $2,000 cap—or whether your drugs are still covered at all.
Reviewing your Annual Notice of Change and talking to a licensed agent listed on this website is one of the most effective ways to avoid surprises.
What This Means for You Going Forward
The $2,000 drug cap inside PSHB may be one of the most important changes to your prescription benefits in years. It can drastically reduce your costs—but only if you meet the requirements and remain enrolled properly.
If you’re unsure about your current enrollment status, your eligibility for Part B or Part D, or your plan’s drug benefits, don’t delay. Reach out to a licensed agent listed on this website to get clarity before it affects your wallet.
