Key Takeaways

• Medigap is not necessary for most Postal Service retirees enrolled in the PSHB Program, especially if you are also enrolled in Medicare Part B.

• Paying for Medigap on top of PSHB and Medicare may lead to redundant coverage and unnecessary costs without added benefit.

Why This Topic Matters in 2025

As of 2025, the transition to the Postal Service Health Benefits (PSHB) Program is complete. You are no longer under the Federal Employees Health Benefits (FEHB) Program. With this change comes a need to reevaluate your health insurance decisions in retirement, particularly if you are already enrolled in Medicare.

One of the most common areas of confusion involves Medigap plans. Some retirees mistakenly believe they need a Medigap (Medicare Supplement) plan in addition to their PSHB and Medicare Part B coverage. While this may seem like a way to “fill the gaps,” it often results in duplicated coverage and wasted premiums.

Understanding What Medigap Is Designed to Do

Medigap is intended to supplement Original Medicare (Part A and Part B) by covering out-of-pocket costs such as:

• Deductibles

• Copayments

• Coinsurance

• Certain foreign travel emergency expenses

However, Medigap is specifically structured for individuals who only have Original Medicare. It is not meant to work alongside employer-sponsored plans like PSHB.

What You Already Have with PSHB and Medicare

If you are eligible for Medicare and enrolled in a PSHB plan, here is what your coverage typically looks like:

• Medicare Part A: Covers inpatient hospital stays and has no premium for most people.

• Medicare Part B: Covers doctor visits, outpatient care, and durable medical equipment. In 2025, the standard premium is $185, with a deductible of $257.

• PSHB Plan: Functions as your secondary coverage, paying most of the costs that Medicare doesn’t cover.

Many PSHB plans coordinate directly with Medicare, reducing or eliminating:

• Deductibles

• Coinsurance

• Copayments

• Prescription drug costs (through integrated Part D EGWP plans)

With this combination, your total cost exposure is already significantly reduced.

Medigap Cannot Coordinate with PSHB

One of the most important things you need to know is that Medigap policies cannot be used to supplement any plan that is not Original Medicare. That includes:

• Medicare Advantage (Part C)

• Employer group health plans like PSHB

Medigap carriers will not pay claims if you also have a PSHB plan. The policies are not designed to coordinate with other coverage. So, if you purchase a Medigap plan thinking it will pay secondary to your PSHB, you may be paying premiums for something that offers no real benefit.

The Financial Impact of Overlapping Coverage

Paying for Medigap coverage in addition to Medicare and PSHB can lead to high monthly premiums with little to no return. Here is how:

• Medigap premiums typically increase with age.

• You are already paying a PSHB premium, which provides comprehensive benefits.

• You are also paying for Medicare Part B, which is required for most PSHB annuitants to maintain their plan.

In total, this could mean three layers of premiums with only two working together. The Medigap plan sits unused but still draws monthly payments from your budget.

What You Could Be Overlooking

You might assume that adding Medigap offers extra security. However, here’s what that assumption often overlooks:

• Redundant coverage: Both PSHB and Medigap cover coinsurance and deductibles. But they cannot do so simultaneously.

• Lack of coordination: Medicare coordinates with PSHB plans. Medigap does not coordinate with either PSHB or Medicare when PSHB is in the mix.

• Prescription drug coverage: PSHB plans automatically include Part D benefits through the EGWP. Medigap plans do not include drug coverage.

2025 PSHB Integration with Medicare Part D

As of 2025, all PSHB plans provide integrated prescription drug coverage through an Employer Group Waiver Plan (EGWP). This means:

• You are automatically enrolled in Part D coverage.

• You get access to a nationwide pharmacy network.

• Your out-of-pocket costs are capped at $2,000 annually.

Medigap plans, on the other hand, do not include any prescription drug coverage. You would need to purchase a separate standalone Part D plan if you dropped PSHB and went with only Medigap and Original Medicare, which further complicates your healthcare strategy.

Eligibility Requirements Matter

There are also structural issues that make Medigap a poor fit for PSHB annuitants:

• Guaranteed issue rights are limited. If you enroll in Medigap later in retirement, you may face medical underwriting or higher premiums.

• Eligibility rules for PSHB require Medicare Part B enrollment for most annuitants age 65 and older.

• If you choose to keep PSHB and enroll in Medigap, you’re paying for overlapping coverage that won’t coordinate or reimburse each other.

What Happens if You Drop PSHB for Medigap

Some retirees may consider dropping PSHB in favor of Medigap and Original Medicare. While this is possible, it comes with trade-offs:

• You lose access to the federal government’s contribution, which covers roughly 72% of PSHB premiums.

• You must find and pay for a standalone Part D plan.

• You lose access to coordinated benefits, vision, hearing, and dental coverage included in many PSHB options.

• You may not be able to reenroll in PSHB unless you qualify under a specific life event.

PSHB offers robust protection tailored for Postal retirees. Dropping it to pursue Medigap often means you’re walking away from significant value.

Special Cases Where Medigap Might Be Considered

While generally not recommended, there may be rare scenarios where Medigap becomes part of your planning strategy:

• You live abroad and need coverage that works internationally.

• You’re considering dropping PSHB entirely and want only Original Medicare.

However, both of these options carry unique risks. If you’re outside the U.S., neither PSHB nor standard Medicare will offer much help, and Medigap offers only limited foreign travel emergency benefits. Always talk to a licensed agent listed on this website before making such a decision.

Annual Enrollment and Timing in 2025

The next PSHB Open Season occurs in November and December 2025. This is your opportunity to:

• Review your PSHB plan.

• Evaluate changes in benefits or costs.

• Adjust your coverage if needed.

Outside of Open Season, changes can only be made during qualifying life events (QLEs) such as marriage, loss of other coverage, or relocation.

Medigap enrollment, by contrast, does not follow the same federal calendar. You may apply at any time, but acceptance and pricing may depend on your health status unless you’re within your initial Medicare enrollment window.

Avoiding Common Mistakes When Planning Coverage

To ensure you’re making the most of your healthcare coverage in retirement, avoid these frequent pitfalls:

• Assuming more coverage always means better protection

• Overlooking how Medicare and PSHB already complement each other

• Ignoring the lack of coordination between Medigap and PSHB

• Failing to assess total monthly premium burden across all plans

• Not speaking with a licensed agent before making changes

Think of Medigap as an Either/Or Choice, Not a Both

The clearest way to think about this is: Medigap is an alternative to PSHB, not an add-on. If you’re covered by PSHB and Medicare, you’re already well-positioned. You don’t need to stack on another layer unless your situation is very unusual.

You have a strong, federally-supported health benefit in place. Adding Medigap to that typically results in:

• More complexity

• Higher costs

• No improvement in benefits

The smarter strategy is to review what your PSHB plan and Medicare already provide. Most retirees find that together, they offer excellent coverage with predictable costs and strong national access to providers.

Reassess Your Needs Before Adding Extra Plans

Before adding any additional insurance coverage, consider the following:

• What does your PSHB plan already cover?

• How does it coordinate with Medicare?

• Are there any remaining gaps in your coverage?

• Will another plan (like Medigap) actually fill those gaps or just overlap?

If the answer leads to duplication rather than enhancement, it’s likely not worth the additional cost.

Evaluate Before You Enroll

Take time to evaluate your healthcare strategy each year, especially as you approach or turn age 65. The interaction between PSHB and Medicare is already designed to give you strong coverage with minimal out-of-pocket exposure.

Adding a Medigap plan on top rarely improves your position. More often, it leads to redundant premiums, confusion during claims, and zero financial return. A better approach is to understand how your benefits already work together and confirm you’re getting the most value from them.

Reviewing Your Options the Smart Way

If you’re uncertain about what to keep, what to drop, or what to avoid, don’t guess. Speak to a licensed agent listed on this website who understands the coordination rules and financial implications. An expert can:

• Review your existing coverage

• Explain how PSHB and Medicare work together

• Help you identify unnecessary or duplicative plans

• Suggest more cost-effective alternatives if appropriate

Stay Covered Without Paying for What You Don’t Need

Medigap plans may seem like a safety net, but when you already have PSHB and Medicare, that net is often unnecessary. Instead of adding another plan that won’t integrate well, focus on understanding the strong benefits already available to you.

Your health, your budget, and your peace of mind depend on making the right choices. For personalized advice on your situation, contact a licensed agent listed on this website.