Here’s Why Postal Retirees Are Scrambling to Understand the New PSHB Rules Before It’s Too Late

Key Takeaways

• The PSHB program officially replaced FEHB for Postal Service employees and retirees on January 1, 2025, and it introduces major differences in premiums, Medicare requirements, and prescription coverage.

• If you’re a Medicare-eligible retiree or dependent and you do not comply with new enrollment rules, you may lose your PSHB medical and drug benefits altogether.

What Exactly Changed in 2025

Starting January 1, 2025, the Postal Service Health Benefits (PSHB) program became the new standard for health insurance coverage for all Postal Service employees, annuitants, and their eligible family members. This transition replaced the long-standing Federal Employees Health Benefits (FEHB) program, though the two systems still share many similarities.

If you’re a retiree or nearing retirement, you need to understand what changed, who it affects, and what actions you may still need to take.

Why Was PSHB Introduced?

The PSHB program was created through the Postal Service Reform Act of 2022. The goal was to stabilize long-term funding for USPS health benefits and align them more closely with Medicare, especially for retirees.

Rather than remaining in FEHB plans alongside other federal employees, Postal Service participants now have a separate pool of plans administered exclusively under the PSHB system.

Who Is Affected by the New PSHB Rules?

The new rules apply to the following groups:

• Current USPS employees

• USPS annuitants (retirees receiving an annuity)

• Family members of USPS employees and annuitants

However, the most urgent impact is on retirees who are eligible for Medicare, especially those aged 64 or older as of January 1, 2025, or already enrolled in Medicare.

If you fall into this category, you may be subject to mandatory Medicare Part B enrollment to maintain full PSHB coverage.

Medicare Part B Now Plays a Central Role

One of the most significant changes is the required coordination with Medicare Part B.

What’s Required in 2025?

If you are a Medicare-eligible annuitant or a covered family member, you must be enrolled in Medicare Part B in order to maintain full PSHB medical and drug coverage.

If you are not enrolled, and you are not exempt, your PSHB plan may deny you full coverage and exclude you from prescription drug benefits through the PSHB-integrated Part D plan.

Who Is Exempt?

You are exempt from the Medicare Part B requirement if you:

• Retired on or before January 1, 2025

• Were aged 64 or older as of January 1, 2025

• Live abroad full-time

• Are eligible for health services through the Indian Health Service or the Department of Veterans Affairs

If you are exempt, you can remain in PSHB even without Part B, though cost savings will be reduced.

What About Prescription Drug Coverage?

The PSHB system now automatically integrates a Medicare Part D prescription drug plan for all Medicare-eligible annuitants and dependents.

This plan is part of an Employer Group Waiver Plan (EGWP), which is a specialized version of Part D. It provides:

• An annual $2,000 out-of-pocket maximum for prescriptions

• A $35 monthly insulin cap

• Coverage continuity through a nationwide pharmacy network

If you decline Medicare Part B, you will lose access to this integrated drug plan. That means you’d have no drug coverage under PSHB and limited options to restore it later.

Open Season and Timeline Requirements

The Open Season for PSHB ran from November to December 2024, during which enrollees could:

• Choose a PSHB plan

• Review Medicare requirements

• Enroll in Part B to ensure continued coverage

If you missed this window and didn’t enroll in Part B (without an exemption), you may now face:

• Delayed coverage

• Lifetime late enrollment penalties on your Part B premium

• Limited drug benefits

opm also ran a Special Enrollment Period (SEP) from April 1 to September 30, 2024, for those impacted by the new rules. That window has now closed.

Financial Effects You Should Understand

Higher Costs Without Medicare

If you don’t enroll in Medicare Part B when required, you could face significantly higher costs:

• You may pay higher deductibles and copayments

• Your plan may reduce cost-sharing benefits normally offered with Part B coordination

• You’ll lose access to the $2,000 cap on prescription drug costs

Possible Reimbursement for Part B Premiums

Many PSHB plans offer some form of premium reimbursement or cost reduction when you enroll in Medicare Part B. These savings often help offset the Part B premium, which is $185 per month in 2025.

However, reimbursement levels vary and are not guaranteed. Always check your individual PSHB plan’s benefits.

PSHB vs. FEHB: Key Structural Differences

While PSHB retains some FEHB structure, here’s how it now diverges:

• Separate Risk Pool: PSHB is distinct from the federal FEHB pool. Your premiums and benefits are calculated independently.

• Medicare Requirement: FEHB never required Medicare enrollment. PSHB does, unless you’re exempt.

• Prescription Drug Integration: PSHB plans include built-in Part D coverage. FEHB required you to seek this separately.

• Eligibility and Enrollment: Once you’re under PSHB, you cannot go back to FEHB unless you qualify under a family member’s plan.

Survivors, Spouses, and Dependent Concerns

Your spouse or surviving dependent may face coverage risks if:

• They are not enrolled in Medicare Part B and are not exempt

• You pass away, and they are not properly enrolled under a survivor annuity with PSHB enrollment

To avoid loss of coverage, be sure your retirement paperwork and PSHB enrollment types include your dependents with proper survivor benefits.

How to Confirm If You’re Compliant

If you’re unsure whether you’re in compliance with 2025 PSHB rules:

• Contact OPM or the PSHB Navigator Help Line at 1-833-712-7742

• Review your Medicare Part B status with SSA

• Confirm your PSHB plan election was made during Open Season

• Check your annuitant eligibility and family member enrollment

You can also visit the KeepingPosted.org website for retirees or LiteBlue for current USPS employees.

Common Missteps That Still Affect Many Retirees

Several retirees are discovering too late that they:

• Failed to enroll in Medicare Part B thinking it was optional like under FEHB

• Missed the Special Enrollment Period and now face penalties

• Were unaware of drug coverage loss when opting out of Part B

• Did not review PSHB plan options during Open Season and defaulted into a plan that doesn’t meet their needs

All of these issues can result in permanent reductions in coverage or increased out-of-pocket costs.

Steps You Can Still Take in 2025

Even though the major enrollment windows are now closed, you still have some options:

• Apply for Medicare Part B now: You may qualify under the General Enrollment Period from January 1 to March 31 each year, but coverage begins in July and late penalties may apply.

• Review your PSHB plan annually: Open Season still occurs every fall, typically November through early December.

• Evaluate your survivor benefit elections: Ensure your spouse or dependent child has proper PSHB eligibility.

• Seek help from a licensed professional: The rules are complex and the penalties are real. Personalized guidance can prevent costly errors.

Staying Informed Matters More Than Ever

The rollout of PSHB is one of the most sweeping changes to Postal Service retiree benefits in decades. If you’re unprepared, you could lose access to essential healthcare or face rising costs in retirement.

Keep yourself updated on your:

• Eligibility

• Medicare status

• Dependent enrollments

• Annual PSHB Open Season

Staying informed is not optional anymore. It’s how you protect your retirement income and medical coverage.

Make Informed Decisions Before It Affects Your Benefits

Retirees who treat PSHB like FEHB risk misunderstandings that could carry serious consequences. You must account for new Medicare mandates, prescription drug rules, and plan eligibility restrictions.

If you still have questions or want clarity based on your personal retirement timeline, talk to a licensed professional listed on this website. Don’t leave your future coverage to chance.