Key Takeaways

• Despite the 2025 improvements to Medicare Part D, such as the $2,000 out-of-pocket cap, there are still areas where drug coverage under PSHB-related plans can leave you exposed to unexpected costs.

• Understanding the structure and phases of Medicare Part D is essential for Postal Service retirees and workers coordinating PSHB with Medicare to avoid gaps in prescription drug coverage.

Why the $2,000 Cap Doesn’t Mean All Is Covered

For 2025, Medicare Part D introduces a significant feature: a $2,000 annual cap on out-of-pocket costs for prescription drugs. At first glance, this may seem like a complete safety net. However, it’s important to recognize that this cap doesn’t automatically mean all costs vanish once you hit that number. It only applies to certain covered drugs, and only after meeting plan-specific deductibles and cost-sharing thresholds.

What’s more, the cap applies only to Medicare-covered prescriptions, and not all PSHB-integrated plans handle every drug the same way. Some medications may fall outside formulary lists, meaning you could still face full out-of-pocket costs for them.

Limits of the Out-of-Pocket Cap

• Applies only to Part D-covered medications.

• Requires you to reach the deductible and initial coverage thresholds first.

• Excludes non-formulary and non-covered drugs.

• Doesn’t prevent plans from requiring prior authorization or step therapy.

Understanding the Part D Phases—Still Critical in 2025

Medicare Part D still operates through a multi-phase structure in 2025. These stages affect how much you pay and when.

1. The Deductible Phase

In 2025, the maximum deductible allowed under Medicare Part D is $590. Some PSHB plans waive or reduce this deductible when coordinated with Medicare Part B, but that’s not guaranteed. Until you meet your deductible, you pay the full cost of your medications.

2. The Initial Coverage Phase

After the deductible, you enter the initial coverage phase. During this phase, you share costs with your plan through copayments or coinsurance until your total drug costs (including what your plan pays) reach a certain amount. Cost-sharing can vary significantly across PSHB plans.

3. The Catastrophic Phase—Now Replaced

In past years, Medicare Part D had a catastrophic phase with 5% coinsurance after exceeding out-of-pocket limits. Starting in 2025, this phase is replaced with the $2,000 out-of-pocket cap. Once you hit that cap, your Medicare Part D plan covers 100% of the cost of covered drugs for the rest of the year.

However, that protection does not include drugs not listed on your plan’s formulary.

What PSHB Enrollees Need to Know in 2025

As a Postal Service Health Benefits (PSHB) enrollee, understanding how your plan interacts with Medicare Part D is more important than ever. In 2025, prescription drug benefits for Medicare-eligible annuitants are managed through an Employer Group Waiver Plan (EGWP) that’s embedded into PSHB plans. This coordination provides additional benefits—but not absolute protection.

Coordination Sounds Great, But…

EGWP coverage generally:

• Integrates with Medicare Part D rules

• Includes the new $2,000 cap

• Offers network pharmacy access

• Covers insulin at capped prices ($35 or less in 2025)

But this coordination does not guarantee that all drugs will be covered, nor that your share will be negligible. Formularies still apply, and plan designs vary.

Out-of-Formulary Drugs and Tier Costs

Even in 2025, one of the most overlooked gaps in prescription coverage remains formulary limitations. Plans have tiered structures. Lower tiers usually include generics with lower copayments, while higher tiers include specialty drugs with substantial cost-sharing.

Problems You May Face:

• Your medication is placed in a non-preferred or specialty tier, leading to higher costs.

• Your drug is not on the formulary at all, and coverage is denied.

• You require prior authorization or must try cheaper drugs first (step therapy).

• Your doctor’s recommended dosage or formulation may not match what the plan covers.

If you continue a drug that’s not covered, it will not count toward the $2,000 cap.

Specialty Drugs and the Hidden Exposure

Specialty medications for conditions such as cancer, autoimmune diseases, or rare disorders often cost thousands per month. While hitting the $2,000 cap provides some relief, your financial exposure is still front-loaded. You may pay hundreds—or even the full cost—before you hit the cap.

Real-World Impact

• Delays in reaching the cap mean more out-of-pocket burden early in the year.

• Specialty tier copays often remain high until the cap is met.

• Coverage rules (such as prior authorization) may delay access to medications.

Pharmacy Access and Network Limitations

PSHB EGWP plans in 2025 come with an expanded pharmacy network, but limitations remain. You must use in-network pharmacies to get full benefits, and not every pharmacy will have the same formulary pricing agreements.

Be cautious if:

• You prefer using a local or independent pharmacy.

• You rely on long-term care or specialty pharmacies.

• You’re traveling or living in multiple states throughout the year.

Timing and Cost-Sharing Still Matter

Just because there’s a cap now doesn’t mean your costs are consistent throughout the year. Here’s why timing still plays a critical role:

• If you fill expensive prescriptions early, you may hit the $2,000 cap sooner—but still front-load your expenses.

• If you take many lower-cost medications, you might never reach the cap and continue paying copays throughout the year.

• Delays in prior authorizations or formulary changes can shift your cost responsibility mid-year.

PSHB Drug Coverage and Medicare Part B

Some medications you receive may be covered under Medicare Part B instead of Part D, such as injectables administered in a clinical setting. Understanding this distinction is important for cost planning.

Covered under Part B:

• Certain chemotherapy drugs

• Infused medications given at outpatient facilities

• Injectable osteoporosis medications

Covered under Part D:

• Oral cancer drugs

• Self-administered injectables

• Most maintenance medications

Knowing where your medications fall helps you anticipate what you’ll owe and which plan rules apply.

Tools You Can Use in 2025

To manage your prescription costs under PSHB and Medicare, consider using the following tools:

• Annual Notice of Change (ANOC): Review this document every fall to identify any drug coverage or formulary changes.

• Plan Finder Tools: Use plan-provided tools to review drug costs and pharmacy networks.

• Formulary Listings: Always verify whether your medication is included and what tier it’s in.

• Medication Therapy Management (MTM): If you qualify, this service can help reduce duplicative or unnecessary medications.

Review Drug Coverage Before and During Open Season

The annual Open Season from November to December is your window to review and change your PSHB plan. Prescription drug coverage varies across plans, even with Medicare integration.

You should:

• Compare formularies to ensure your medications are covered.

• Evaluate tier placements and copay expectations.

• Confirm your preferred pharmacy is in-network.

• Look at whether prior authorizations or step therapy apply to any current prescriptions.

Failing to review your plan annually can lead to coverage gaps that become expensive surprises.

The Broader Picture for PSHB Enrollees

The changes to Medicare Part D in 2025 do improve protection, particularly by capping total annual out-of-pocket expenses. But they don’t eliminate all risks, especially for those with chronic or complex medication needs.

Formularies, tiered cost-sharing, plan restrictions, and timing all affect how well your drug coverage actually works for you. Even if your plan integrates with Medicare, assumptions about comprehensive coverage can still leave you financially exposed.

Make Informed PSHB Decisions with Expert Help

You deserve clarity when it comes to your prescription coverage under PSHB and Medicare Part D. Don’t assume the 2025 changes solve everything. Instead, carefully review your plan, understand the phases, and pay close attention to what’s not covered.

If you’re unsure how your PSHB plan interacts with Medicare or how to evaluate your drug coverage, connect with a licensed agent listed on this website. They can walk you through the options and help you find a plan that meets your needs without leaving you vulnerable to hidden costs.