Key Takeaways

• In 2025, the prescription drug coverage under the Postal Service Health Benefits (PSHB) program works in tandem with Medicare Part D, but these two coverages are not interchangeable. Each plays a distinct role, especially for Medicare-eligible retirees.

• Enrolling in Medicare Part D outside of your PSHB plan can result in duplicate coverage, higher costs, or even disqualification from certain integrated PSHB benefits.

Understanding the Role of PSHB in Drug Coverage

As a Postal Service employee or retiree, you may already be familiar with the PSHB program introduced in 2025. It replaces the previous FEHB system for USPS participants and brings along some significant changes, especially when it comes to prescription drug coverage.

The PSHB plan includes integrated prescription drug benefits. If you are eligible for Medicare, this typically means automatic enrollment into a Medicare Part D Employer Group Waiver Plan (EGWP) that pairs with your PSHB plan. This combination is designed to reduce your costs and streamline coordination between federal and Medicare systems.

Key Features of PSHB Prescription Coverage:

• Automatic Medicare Part D enrollment through PSHB

• Annual out-of-pocket cap of $2,000 for prescription drugs

• Coverage for a wide range of formulary drugs, including generic and brand-name medications

• $35 monthly insulin cap in accordance with 2025 regulations

• Access to a broad pharmacy network nationwide

These features aim to ensure that your drug expenses remain predictable and affordable throughout the year.

What Medicare Part D Covers—and Why It’s Not the Same

Medicare Part D, by itself, provides prescription drug coverage through stand-alone plans or Medicare Advantage plans that include drug benefits. These are typically offered by private insurance companies approved by Medicare.

In 2025, the standalone Part D benefit continues to feature:

• A deductible phase (up to $590)

• An initial coverage phase

• Catastrophic coverage starting after $2,000 in out-of-pocket spending

However, if you are a PSHB enrollee and also eligible for Medicare, signing up separately for a retail Part D plan may do more harm than good.

Here’s why:

• It may override or cancel your PSHB-provided drug coverage.

• It could create confusion at the pharmacy counter regarding which plan is primary.

• You may pay extra premiums or face higher costs for duplicating coverage.

The EGWP Difference Under PSHB

EGWP stands for Employer Group Waiver Plan. This is the vehicle through which your PSHB plan delivers Medicare Part D benefits without requiring you to shop for a separate plan.

How EGWP Works in 2025:

• Automatically included for Medicare-eligible annuitants and family members

• Offers the same Part D standard coverage, enhanced with supplemental benefits

• Coordinates seamlessly with your PSHB plan to cover what Medicare doesn’t

• Requires you to remain enrolled in both PSHB and Medicare Part B to maintain eligibility

In essence, EGWP is Medicare Part D—but integrated, managed, and optimized for your specific PSHB benefits.

You Might Lose Drug Coverage If You Opt Out

If you choose to disenroll from Medicare Part D through your PSHB plan (EGWP), you’re not just leaving a drug plan. You’re giving up the integrated drug coverage entirely, which can have the following consequences:

• No access to your PSHB plan’s prescription benefits

• Higher out-of-pocket costs

• Limited opportunity to re-enroll, typically only during Open Season or after a qualifying life event

It’s important to understand that in the PSHB program, drug coverage is not optional if you are Medicare-eligible—it is part of the entire benefits package.

Timing Matters: Enrollment and Re-Enrollment Windows

In 2025, timing continues to play a critical role in maintaining drug coverage. The following timelines are important:

Medicare Part B & Part D Enrollment

• Initial Enrollment Period: 3 months before, the month of, and 3 months after your 65th birthday

• General Enrollment Period: January 1 to March 31 annually

• Special Enrollment Period (for PSHB): Triggered by retirement or loss of coverage

PSHB Open Season

• Occurs annually from November to December

• Only time to switch plans, re-enroll if previously declined, or update coverage elections

If you skip or delay enrollment in either Medicare Part B or PSHB’s Medicare Part D integration (EGWP), you risk losing access to important cost-saving features and may even face permanent late enrollment penalties.

PSHB Prescription Coverage Still Benefits Non-Medicare Enrollees

You don’t need to be Medicare-eligible to benefit from prescription coverage under PSHB. Active employees and annuitants under age 65 also receive drug coverage that typically includes:

• Flat copays or coinsurance for generics and preferred brands

• Tiered formularies

• Annual deductible and out-of-pocket maximums

• Access to a national pharmacy network

The difference is that these enrollees are not enrolled in the EGWP and do not benefit from the Part D-specific features like the $2,000 cap or catastrophic coverage phase. However, they are still protected under the PSHB umbrella.

Avoiding Costly Mistakes with Dual Enrollment

Enrolling in a standalone Part D plan while also being part of the PSHB program can lead to complications, such as:

• Termination of your PSHB prescription drug coverage

• Unexpected pharmacy denials

• Double premiums without added benefit

• Confusion in processing claims

Before making any enrollment decisions, verify your current plan status and whether you’re already receiving Part D benefits through PSHB. You can contact the plan administrator or a licensed agent listed on this website for clarification.

Benefits Coordination: How PSHB and Medicare Work Together

When properly aligned, PSHB and Medicare work as a cohesive system. Here’s how the coordination typically unfolds:

• Medicare Part A and B: Serve as primary coverage for hospital and medical services

• PSHB Medical Plan: Supplements Medicare by covering costs like deductibles and coinsurance

• Medicare Part D via EGWP: Provides primary drug coverage

• PSHB Drug Plan: Adds supplemental prescription coverage to reduce out-of-pocket costs

This structure gives you robust protection without overpaying or managing multiple private plans.

What to Do Before Making Any Changes

If you’re considering altering your drug coverage under PSHB, ask yourself the following:

• Are you already enrolled in Medicare Part B and PSHB?

• Have you been auto-enrolled in PSHB’s EGWP?

• Do you understand what coverage you would lose by opting out of Part D through PSHB?

• Have you checked your plan’s formulary to see if your prescriptions are covered?

• Do you know when the next Open Season is for making changes?

Clarity on these points helps ensure that your coverage decisions are well-informed and cost-effective.

Why PSHB and Part D Are Not Interchangeable

Even though both offer drug coverage, PSHB and Medicare Part D are not interchangeable for postal retirees. Their structures, coordination rules, and eligibility requirements differ significantly:

• PSHB’s EGWP is group-based and tied to your annuitant status

• Medicare Part D plans outside PSHB are individual and retail-based

• Costs, networks, and formularies vary between the two

• Disenrolling from PSHB’s drug plan means more than switching providers—it means forfeiting integrated benefits

You can’t swap one for the other without risking your overall coverage integrity.

Coordinating Benefits Protects Your Wallet and Health

The strength of the PSHB program lies in how it wraps together medical and drug benefits under a coordinated system. When you layer in Medicare, you build a comprehensive safety net for both routine and high-cost care.

In 2025, with drug prices still climbing nationwide, the $2,000 out-of-pocket cap for Medicare-eligible PSHB enrollees provides serious protection. But it only works if you’re enrolled properly and avoid duplicate coverage.

Make an Informed Move—Don’t Assume They’re the Same

Drug coverage is one of the most important aspects of your overall health benefits. With PSHB and Medicare Part D both in play, it’s easy to assume that either one will do the job. But that’s a costly mistake.

Be proactive. Understand how your PSHB plan integrates with Medicare Part D through EGWP. Confirm your enrollment status. And if you have questions or you’re considering making changes, speak to a licensed agent listed on this website. They can help you clarify your options before Open Season arrives.