Key Takeaways

• Medicare Supplement (Medigap) plans may look like a secure option, but limitations around enrollment and coverage can leave you unexpectedly exposed.

• For Postal Service retirees with PSHB, integrating Medicare coverage correctly is essential to avoid surprises and prevent lapses in care or high out-of-pocket costs.

Understanding What Medicare Supplement Plans Are Supposed to Do

Medicare Supplement plans, also known as Medigap, were created to help cover the “gaps” in Original Medicare. These include costs like deductibles, coinsurance, and copayments. On paper, this sounds like a smart safety net. In fact, many retirees assume Medigap will handle whatever Medicare doesn’t.

As a Postal Service Health Benefits (PSHB) enrollee, you may be considering Medigap to enhance your Medicare coverage. But before you do, there are several realities you need to consider—and most of them don’t get discussed until you’re already enrolled.

Why Enrollment Timing Can Make or Break Your Options

When you first become eligible for Medicare Part B, you’re given a 6-month Medigap Open Enrollment Period. During this window, you can enroll in any Medigap plan available in your state without being subject to medical underwriting. That means you can’t be denied coverage or charged more due to pre-existing conditions.

But here’s what rarely comes up: if you miss this initial enrollment period, you may be denied coverage altogether or face much higher premiums later. Insurers are allowed to require medical underwriting once that window closes. If your health changes, you could find yourself ineligible or paying significantly more for the same coverage.

This is especially important for Postal retirees who delay enrolling in Part B due to having other coverage through PSHB. Once you decide to add Medigap, your eligibility may no longer be guaranteed.

Not All Plans Are Offered in Every State or Year

The list of available Medigap plans can vary widely depending on where you live. While Plan A is standardized and must be offered everywhere, the other lettered plans (B, D, G, K, L, M, N) are not guaranteed to be available in all locations. Some states have fewer choices than others.

Also, insurance companies are allowed to stop offering certain plans in the future. Even if you have one now, there is no guarantee it will be available for new enrollees in future years. If you’re planning to move to another state after retirement, you may lose access to your preferred plan or face different costs and underwriting rules.

Premiums Rise Over Time—Even Without Warning

Medigap premiums are not fixed. Most plans use one of three pricing methods:

• Community-rated (same premium for everyone)

• Issue-age-rated (based on age when you enroll)

• Attained-age-rated (based on your current age, increasing as you grow older)

Regardless of which pricing method your plan uses, premiums often rise annually due to inflation and other cost factors. In 2025, the average Medigap premium for a 65-year-old is already hundreds of dollars per month, and that doesn’t include your Medicare Part B premium.

These price increases may not be dramatic at first, but over a 10-to-15-year retirement, they can significantly impact your monthly budget—especially for retirees living on a fixed income.

Medigap Doesn’t Include Prescription Drug Coverage

One major oversight is that Medigap plans sold after 2006 do not cover prescription drugs. To get that coverage, you need to enroll in a separate Medicare Part D plan. This creates a split setup: one plan for supplemental medical coverage, and another plan for prescriptions.

While PSHB plans integrate drug coverage through a Medicare Part D EGWP (Employer Group Waiver Plan), opting for a Medigap plan could disrupt that integration. If you drop your PSHB plan entirely and rely only on Original Medicare plus Medigap, you will lose access to the EGWP and must enroll in a standalone Part D plan.

This matters because:

• You may face a late enrollment penalty if you don’t enroll in Part D when first eligible.

• Drug formularies and pharmacy networks differ across plans.

• You must manage and pay for two separate policies.

No Coverage for Extras: Dental, Vision, Hearing

Another common misunderstanding is what Medigap actually covers. These plans only help pay for services that Original Medicare covers. That means you get no help with:

• Routine dental checkups or procedures

• Eyeglasses or routine vision exams

• Hearing aids or hearing exams

For PSHB retirees, this is a downgrade. Many PSHB plans offer built-in benefits or optional riders for these services. Moving to a Medigap plan may mean having to find and pay for separate dental, vision, or hearing plans.

Switching Back Isn’t Always Simple

Some retirees think they can simply try Medigap and switch back to a PSHB plan later if needed. But PSHB doesn’t work like typical private coverage. If you drop your PSHB plan to enroll in a Medigap policy and later want to return, you may not be able to re-enroll unless you qualify under a specific life event or wait until the next Open Season.

Even during Open Season, re-enrollment may mean starting from scratch with a different plan or coverage level. And in some cases, if you don’t meet certain criteria, you may not regain the integrated benefits you once had.

Coordination with Medicare Isn’t Automatic

Medigap plans are designed to work with Medicare, but that doesn’t mean every bill will be processed smoothly. Providers may need to bill Medicare and your Medigap plan separately. You must also carry both ID cards with you and ensure your providers accept both.

In contrast, PSHB plans often provide more seamless coordination of benefits, especially when integrated with Medicare Part B and Part D through the EGWP.

The PSHB Advantage: Simplicity and Stability

As a Postal Service retiree, your PSHB plan offers several built-in advantages that Medigap doesn’t replicate:

• Government contributions help cover part of your premium

• Integrated drug coverage through the Medicare Part D EGWP

• Simplified billing and coordination of benefits

• Availability of dental, vision, and hearing add-ons

• Stable enrollment rights during Open Season or qualifying life events

While Medigap might appeal due to its standardized benefits, it often introduces more complexity and potentially higher out-of-pocket costs, especially when you consider separate Part D plans and missing extras.

Evaluating Your Timing: When Is Medigap Even Worth Considering?

You might consider Medigap if:

• You are newly eligible for Medicare and in your 6-month Open Enrollment window

• You live in a state where Medigap prices and availability are favorable

• You are in excellent health and foresee minimal future medical needs

• You are planning to relocate to an area where PSHB options are limited or unavailable

But even then, the trade-offs should be carefully reviewed. Medigap isn’t inherently bad—it just isn’t a one-size-fits-all solution, especially for PSHB retirees used to a more complete package.

What to Do Before You Make Any Changes

Before dropping PSHB or choosing Medigap:

• Confirm whether your PSHB plan offers premium reimbursement for Medicare Part B

• Review which benefits are waived or enhanced when you add Medicare

• Understand that returning to PSHB may be restricted after leaving it

• Compare Medigap costs over time—not just at age 65, but at age 75 and beyond

• Make sure to enroll in Part D if you opt for Medigap to avoid penalties

Smart Coverage Starts with Informed Decisions

Choosing how to supplement your Medicare coverage is one of the most important health-related financial decisions you’ll make in retirement. For Postal Service annuitants in 2025, understanding the limits of Medicare Supplement plans is just as important as knowing their advantages.

Medigap might sound like a great safety net—until it quietly falls short on dental, drug coverage, future flexibility, or affordability. Your PSHB plan may offer better coordination and long-term simplicity, especially if you’re already Medicare-eligible.

Before you make any decisions, get in touch with a licensed agent listed on this website who can walk you through all the variables and help you find the right fit for your healthcare needs in retirement.