Key Takeaways

• Your PSHB premium contributions may rise in 2025 even if you stay in the same plan, due to cost-sharing formulas, inflation, and shifts in government contribution levels.

• Understanding what drives these increases can help you prepare your budget more accurately—and avoid surprises when Open Season returns in November.

Why Your Premiums Aren’t Standing Still

You may have expected your Postal Service Health Benefits (PSHB) plan to be a stable line item in your retirement or employee budget. After all, if you’re not changing your plan or coverage type, why should your monthly contribution go up? But in 2025, as in previous years, many Postal Service employees and retirees are finding that their share of PSHB costs is increasing—even when their benefits package looks identical on paper.

The reason isn’t always obvious, but it’s rarely arbitrary. Your rising contributions often reflect systemic cost trends and policy shifts that affect everyone in the program.

The Government Covers a Share—But That Share Can Shift

The federal government pays a significant portion of your PSHB premium, typically around 70% of the total premium. However, this contribution is tied to a formula based on the average of all plans offered—not just your plan.

• If average plan costs rise, your contribution rises too.

• If your specific plan increases faster than the average, your share grows disproportionately.

In 2025, the government’s base contribution formula hasn’t changed, but the rising average costs across plans have pushed up the employee and retiree shares. Even if your own plan’s total premium didn’t rise much, your share might have.

Cost Pressures from Healthcare Inflation

Healthcare inflation continues to be a major force behind rising contributions. Services, prescription drugs, and provider charges have all increased in 2025. These increases are reflected in plan bids and the premiums charged to enrollees.

Key inflation-related drivers in 2025 include:

• Increased hospital and outpatient service costs

• Higher provider reimbursements

• Rising drug prices, especially for specialty medications

• Greater utilization of mental health and chronic condition services

Even if you’re a light user of healthcare services, your contributions are tied to average costs and system-wide trends—not your personal usage.

Retirement and Medicare Status Also Play a Role

If you’ve retired and are eligible for Medicare, your PSHB plan coordinates differently than when you were working. While this coordination often reduces your out-of-pocket costs, it doesn’t necessarily reduce your premium contribution.

In fact, in 2025:

• Some PSHB plans offer lower cost-sharing when paired with Medicare Part B.

• Others may maintain higher premiums regardless of your Medicare status.

Because the premium structure isn’t always adjusted downward for Medicare-eligible retirees, your monthly payment can still increase annually.

Plan Adjustments You Might Not See Coming

Each year, plans submit proposals that include new features, adjusted provider networks, and updated formularies. These changes can affect plan costs without being obvious to you as the enrollee.

Common behind-the-scenes drivers of premium increases include:

• Adding enhanced mental health or telehealth benefits

• Expanding provider networks in underserved areas

• Adjusting cost-sharing incentives for chronic disease management

If your plan becomes more comprehensive—even modestly—those enhancements often come with a higher premium. You may not need or use those additions, but you’ll share in the cost.

Why Staying in the Same Plan Isn’t Always the Cheapest Option

There’s a common assumption that loyalty to a plan should result in stable pricing. Unfortunately, plan loyalty doesn’t insulate you from rising contributions. In 2025, many enrollees have stayed in the same plan for years and are now noticing an annual increase that outpaces inflation.

Reasons why sticking with the same plan might cost you more over time:

• That plan’s total cost might be rising faster than average.

• You may have aged into a different rating category.

• Your plan might have reduced its government contribution share by adjusting benefits.

The result? A quiet creep in costs—even without any change in your coverage type.

How Contribution Rates Are Calculated in 2025

Your share of the premium is determined using a complex formula set by the U.S. Office of Personnel Management (OPM). For 2025:

• The government pays 72% of the weighted average of all plan premiums but no more than 75% of any one plan’s cost.

• You pay the remaining share, which can vary significantly depending on your plan.

• High-deductible and lower-value plans often result in smaller employee contributions.

This means:

• If your plan costs more than the average, you pay more.

• If your plan costs less than the average, you pay less—but you may get fewer benefits.

Annual Increases That Feel Steep—but Are Legal

It’s worth noting that annual increases in your contributions are not capped. While there are rules about how much a plan can change in terms of coverage or provider access, there’s no legal limit on how much your portion of the premium can rise year over year.

This means:

• A plan that costs you $240/month in 2024 could cost significantly more in 2025.

• You are expected to monitor your plan’s annual increase through the annual notice and the Open Season materials.

Medicare Integration Doesn’t Always Offset Rising Contributions

You might think that having Medicare Part B would shield you from rising PSHB contributions. While Medicare does reduce your out-of-pocket costs for many services, it does not reduce your PSHB premium.

In fact:

• Most PSHB plans do not lower premiums for Medicare enrollees.

• Your combined premiums (PSHB + Medicare Part B) may feel burdensome if both increase.

However, some PSHB plans in 2025 offer additional incentives such as Part B premium reimbursement or waived deductibles. But again, this doesn’t prevent your base PSHB premium from rising.

Timing Matters: Plan Changes vs. Contribution Changes

Premium increases usually go into effect on January 1 of each year. The critical decisions, though, happen between November and December—the Open Season.

Here’s why the timeline matters:

• You won’t know the impact of a premium increase until plan brochures are released during Open Season.

• If you miss that window, you’re locked into the higher premium for the next calendar year unless you qualify for a special enrollment period.

That’s why reviewing your plan annually—even if you plan to stay—matters more than ever in 2025.

What You Can Do to Get Ahead of the Next Hike

Being passive with your PSHB plan can cost you. Proactive enrollees are better equipped to identify lower-cost options, maximize Medicare coordination, and avoid unnecessary benefit overlaps.

Here’s what you can do:

• Review your plan during Open Season—even if you’re not changing coverage.

• Compare your plan’s total premium with others in the same category.

• Assess your healthcare usage to see if you’re overpaying for unused benefits.

• Speak with a licensed agent listed on this website to break down cost vs. value.

There are often more affordable options that provide similar or better value—especially when you factor in how your plan coordinates with Medicare or how you actually use services.

Rising Contributions Don’t Always Mean Better Benefits

While some contribution increases are tied to enhancements in coverage, many are simply cost-of-business adjustments. The healthcare system in 2025 remains under financial pressure, and those costs filter down to you through your PSHB plan.

You may be paying more without receiving more.

This is why it’s so important to:

• Separate price from value.

• Look beyond plan names and focus on plan documents.

• Understand what your premium actually buys you in 2025.

Get Expert Help Before Costs Catch You Off Guard

You don’t have to decipher rising contributions alone. The numbers can be confusing, and your budget deserves more certainty. If your PSHB costs have crept up in 2025—and especially if you’re on a fixed retirement income—now is the time to reassess.

Speak to a licensed agent listed on this website who can help:

• Compare plans based on total cost, not just monthly premiums.

• Clarify how Medicare changes your PSHB plan’s value.

• Explain cost-saving strategies available during Open Season.

Taking control now could save you hundreds over the course of the year—and ensure your benefits actually fit your needs.