Postal Workers Are Facing a Totally Different Health System in 2025—And Many Still Aren’t Ready

Key Takeaways

• The transition to the Postal Service Health Benefits (PSHB) program in 2025 replaces FEHB for USPS employees and retirees, creating major changes in coverage rules, premiums, and Medicare integration.

• Many postal workers and annuitants risk losing critical benefits or paying more out-of-pocket if they do not understand enrollment deadlines, Medicare requirements, or how new PSHB plans are structured.

A Health Coverage Shift Decades in the Making

If you’re a postal worker or retiree, 2025 is not just another year of open enrollment. For the first time, you’re operating under a completely new system: the Postal Service Health Benefits (PSHB) program. It officially replaces your longstanding access to the Federal Employees Health Benefits (FEHB) program.

This transition stems from legislation enacted in 2022, but the impact is only now fully materializing. As of January 1, 2025, all USPS employees and annuitants must be enrolled in a PSHB plan to maintain health coverage going forward.

Understanding the structure, timing, and implications of this change is essential. Failing to act—or misunderstanding your eligibility—could result in loss of coverage or increased financial burdens.

Who Must Transition and Who Is Exempt

Most current USPS employees and annuitants must shift to a PSHB plan in 2025. However, there are specific groups exempt from mandatory participation in certain aspects:

• If you retired on or before January 1, 2025, and are not enrolled in Medicare Part B, you are exempt from the PSHB Medicare Part B requirement.

• If you are an active employee who was age 64 or older as of January 1, 2025, you are also exempt from this requirement.

• Those living abroad, or covered under Indian Health Services or the VA, may qualify for exceptions as well.

Still, even exempt individuals must enroll in a PSHB plan during the proper enrollment window to maintain uninterrupted coverage.

Timeline You Can’t Ignore

The 2024 Open Season, held from November to December, was the primary opportunity to choose a PSHB plan for coverage beginning January 1, 2025. If you did not take action during Open Season, automatic enrollment occurred based on your previous FEHB plan. But automatic enrollment doesn’t guarantee that your new plan meets your healthcare or financial needs.

You must review and confirm that your current PSHB plan aligns with your expected usage, provider networks, and prescription needs. If it doesn’t, your next opportunity to make changes will likely be during the 2025 Open Season, which will again occur in November to December.

Enrollment Isn’t Optional

Unlike in years past, when switching between FEHB plans was more about optimization, the move to PSHB is mandatory. Failing to enroll properly—or opting out of Medicare Part B when required—could lead to:

• Loss of drug coverage

• Higher out-of-pocket medical costs

• Delays in access to care

Moreover, individuals who qualify for Medicare but do not enroll in Part B where mandated may find that their PSHB plan will not cover key medical services.

New Medicare Part B Requirement

One of the most significant changes under PSHB is the required enrollment in Medicare Part B for certain annuitants and family members.

If you are:

• A Medicare-eligible USPS annuitant or family member

• And you retired after January 1, 2025

…you must enroll in Medicare Part B to retain full PSHB medical coverage.

If you don’t enroll in Part B when required:

• Your PSHB plan may deny coverage for services that Medicare Part B would typically pay for.

• You may also be excluded from PSHB drug coverage if you don’t participate in the integrated Medicare Part D offering.

There was a Special Enrollment Period (SEP) from April 1 through September 30, 2024, specifically for annuitants who needed to sign up for Medicare Part B. If you missed that SEP and are subject to the Part B requirement, you may now face penalties and delayed coverage.

Prescription Drug Coverage Changes

PSHB automatically includes Medicare Part D prescription drug coverage for Medicare-eligible enrollees. This is provided through an Employer Group Waiver Plan (EGWP), which offers:

• A $2,000 cap on annual out-of-pocket drug costs starting in 2025

• A $35 monthly cap on insulin

• No donut hole phase, making coverage more consistent

Opting out of this prescription coverage is allowed, but doing so means:

• You lose drug coverage under PSHB entirely

• You may not be able to re-enroll in PSHB drug coverage later

This change is particularly important if you rely on regular medications, as non-coverage could lead to significant costs.

Premiums, Deductibles, and Out-of-Pocket Limits

Although PSHB plans vary, the structure of cost-sharing has also changed. Some key differences include:

• Premiums: The government continues to cover roughly 70% of the total premium, but enrollees must pay their portion monthly. Biweekly and monthly premiums are published annually.

• Deductibles: Depending on the plan type (high-deductible vs. standard), individual deductibles may range from $350 to over $1,500.

• Out-of-Pocket Maximums: In-network caps for 2025 are generally $7,500 for Self Only and $15,000 for Self Plus One or Family.

• Copayments and Coinsurance: These vary but typically fall between 10% to 30% in-network and 40% to 50% out-of-network.

If you were used to your previous FEHB plan structure, you might find significant changes in how and when you pay for care.

Coordination with Other Federal Benefits

PSHB exists independently of other benefit programs. Here’s how it interacts with them:

• FEDVIP (Dental and Vision): No changes. You can still enroll separately.

• FEGLI (Life Insurance): PSHB does not affect eligibility or premiums.

• FSAFEDS: Active employees may continue to use flexible spending accounts.

• TSP (Thrift Savings Plan): No effect. PSHB changes are unrelated to retirement savings.

However, understanding which programs coordinate and which don’t is essential when budgeting your retirement income.

Key Support Resources and Portals

To help with the transition, several resources are now active:

• KeepingPosted.org: For annuitants to review their PSHB options and documents

• LiteBlue: The USPS employee portal for benefits, forms, and plan changes

• OPM Website: For plan brochures, FAQs, and cost comparisons

• PSHB Navigator Help Line: 1-833-712-7742 for direct questions

If you’re unsure whether you’re enrolled correctly or how Medicare integrates with your PSHB plan, now is the time to verify your status using these tools.

Inaction Could Cost You Later

The most common mistake so far has been assuming that automatic enrollment means you’re covered exactly as before. But many enrollees have realized too late that:

• Their providers are not in-network

• Their drug costs are higher than expected

• They missed the Medicare Part B SEP and now face penalties

Even if you think you’re set, it’s worth revisiting your plan details through your portal or with a licensed professional.

Prepare Proactively, Not Reactively

As with any major benefit overhaul, confusion is high in the first year. But the consequences of misunderstanding this shift can directly affect your access to care and retirement budget.

If you’re still working, now is the time to:

• Check whether you’ll be subject to the Medicare Part B requirement at retirement

• Use Open Season to evaluate your PSHB plan annually

• Coordinate your FEHB transition timeline with your retirement planning

If you’re already retired:

• Ensure your Medicare enrollment meets PSHB requirements

• Confirm that your providers accept your current PSHB plan

• Review your prescription drug coverage annually

The 2025 Health System Shift Demands a Close Look

The switch to PSHB is not just a formality. It reshapes how your care is delivered, how much you pay, and how Medicare ties into your retirement benefits. Now that it’s live, every postal employee and retiree must take ownership of their healthcare planning.

Don’t assume your current setup is working for you. Review your plan. Check your Medicare enrollment. And get help if you’re unsure.

To ensure your retirement healthcare is working as intended, reach out to a licensed professional listed on this website for personalized advice.