The PSHB Transition Could Catch You Off Guard—Unless You Know These Postal Retirement Facts

Key Takeaways

• The new Postal Service Health Benefits (PSHB) program replaces FEHB coverage for postal retirees starting in 2025. Automatic enrollment applies in most cases, but only if you meet specific criteria.

• Medicare Part B enrollment is now mandatory for many postal annuitants to retain full PSHB coverage, with strict exceptions and enrollment windows.

What Is the PSHB Program and Why It Matters in 2025

The PSHB program officially took effect on January 1, 2025, transforming how health benefits work for Postal Service employees and retirees. Managed by the U.S. Office of Personnel Management (opm), this program separates Postal Service coverage from the Federal Employees Health Benefits (FEHB) Program.

If you’re retired or nearing retirement from USPS, this change directly affects your coverage, plan options, and premium contributions. Unlike FEHB, PSHB is uniquely structured to coordinate more closely with Medicare once you become eligible.

Who Is Affected by the Transition

If you are a Postal Service annuitant, a USPS employee planning to retire soon, or a family member covered under a USPS plan, you need to review your situation carefully. Here’s who is directly affected:

• All career USPS employees and annuitants

• Survivors of annuitants if enrolled under a USPS plan

• Family members currently on a postal employee or retiree’s plan

You are not affected if:

• You are covered under a non-postal federal family member’s FEHB plan

• You are not eligible for Medicare and not yet retired

How Enrollment Changed in 2025

From November to December 2024, the first PSHB Open Season was held. It allowed eligible individuals to select a PSHB plan effective January 1, 2025. If you did not take any action, you were automatically enrolled in a comparable PSHB plan—but only if you met the auto-enrollment criteria.

The default enrollment was designed to match your FEHB plan as closely as possible. However, because plan structures, provider networks, and coverage levels vary under PSHB, automatic enrollment may not fully reflect your needs in 2025 and beyond.

If you’re not satisfied with the plan assigned to you, your next chance to make changes will be during the upcoming Open Season in late 2025. Until then, plan changes are only allowed under Qualifying Life Events (QLEs).

Medicare Part B Now Plays a Bigger Role

One of the most significant differences between FEHB and PSHB is the mandatory coordination with Medicare Part B for annuitants. As of 2025, certain postal retirees must be enrolled in Medicare Part B to retain full PSHB coverage.

This mandate applies to you if:

• You are entitled to Medicare Part A

• You retired after January 1, 2025

• You are a family member of a postal annuitant who falls under the requirement

If you meet these conditions and do not enroll in Part B, you will lose access to significant portions of your PSHB benefits, especially for outpatient services.

Who Is Exempt from the Medicare Part B Requirement

OPM outlined several exceptions to the Part B requirement. You are not required to enroll in Medicare Part B for PSHB if any of the following apply:

• You retired on or before January 1, 2025

• You are age 64 or older as of January 1, 2025, and still employed by USPS

• You live outside the United States and are not eligible for Medicare coverage there

• You are enrolled in other qualifying coverage such as through the VA or Indian Health Services

If you’re exempt, you can keep PSHB coverage without enrolling in Medicare Part B. However, joining Part B may still offer cost-saving benefits depending on your health care needs.

How Costs Are Shared in 2025

Premiums under PSHB continue to follow a shared model similar to FEHB. The Postal Service still contributes about 70 percent of the total premium cost.

Typical enrollee premium contributions in 2025 (monthly):

• Self Only: Approximately $241

• Self Plus One: Approximately $521

• Self and Family: Approximately $567

These costs can vary depending on your specific plan and coverage level. High-deductible and standard options are still available, but they may offer different coverage levels, coinsurance, and provider access.

Cost-sharing structures include:

• Copayments for primary care, specialists, urgent care, and ER visits

• Deductibles that differ between in-network and out-of-network services

• Coinsurance percentages that apply once deductibles are met

• Out-of-pocket maximums, which cap how much you spend annually

Prescription Drug Coverage Now Integrates with Medicare Part D

PSHB automatically includes prescription drug benefits, but for Medicare-eligible annuitants, this is now administered through an Employer Group Waiver Plan (EGWP) under Medicare Part D.

This offers:

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

• Access to a broad pharmacy network

• Integration with Medicare’s insulin price cap

If you opt out of Part D coverage under PSHB, you lose prescription benefits and may not be allowed to re-enroll unless you qualify for a future SEP.

Missed the Special Enrollment Period for Medicare Part B?

A special enrollment period (SEP) ran from April through September 2024, allowing eligible annuitants to enroll in Medicare Part B without a late enrollment penalty. If you missed this SEP and are now subject to the Part B requirement, you’ll have to wait for the General Enrollment Period (January 1 to March 31 each year) and may incur a permanent late penalty.

Late penalties increase your monthly Part B premium for life. The longer you delay, the higher the penalty climbs. If you’re unsure whether you fall under the mandate or are exempt, it’s time to verify that now.

What You Can Do Before the Next Open Season

If you’re unhappy with your current PSHB plan or confused about your Medicare coordination, don’t wait until the last minute. Here’s what you should prioritize:

• Confirm Your Enrollment: Make sure you’re actually enrolled in a PSHB plan and that the plan meets your current needs.

• Review Medicare Part B Status: Determine whether you’re required to have Part B, whether you’re exempt, or whether it might be beneficial to enroll anyway.

• Check Plan Details: Go through your 2025 PSHB plan brochure. Look for changes in provider networks, cost-sharing, drug coverage, and added benefits.

• Plan for Open Season: Open Season for 2026 coverage will occur in late 2025. Mark your calendar and make a note to reevaluate your plan.

• Seek Professional Help: If you’re overwhelmed, consult with a licensed professional listed on this website who understands PSHB, Medicare, and retirement planning.

Mistakes That Could Cost You

While PSHB offers many protections and benefits, a few common missteps could leave you undercovered or facing higher costs:

• Assuming you were automatically enrolled when you didn’t qualify for auto-enrollment

• Missing the Part B SEP, triggering lifelong penalties

• Choosing a plan without comparing cost-sharing details

• Forgetting to review your ANOC letter, which outlines annual plan changes

• Failing to coordinate benefits with a spouse’s Medicare or FEHB coverage

Each of these mistakes is avoidable if you take the time to double-check your enrollment status and future obligations.

Why Staying Informed Matters More in 2025

This year’s transition isn’t just a procedural shift. It affects:

• How your health care is coordinated with Medicare

• How much you pay in premiums and out-of-pocket costs

• Whether you retain continuous prescription drug coverage

• Your eligibility for future enrollment windows

Unlike prior years, failing to act or stay informed now could mean losing coverage or facing higher financial burdens long-term.

Take Steps Now to Stay Ahead

The PSHB program is here to stay, and 2025 is just the beginning of a new structure for postal retiree health benefits. You don’t need to navigate this alone.

Work with a licensed professional listed on this website who can walk you through:

• Whether your current plan meets your evolving retirement needs

• How to interpret Medicare and PSHB rules

• What to expect from the 2026 Open Season

Being proactive now can save you from future coverage gaps, late penalties, and unnecessary expenses.