USPS Benefits Look a Lot Different in 2025—Here’s What Retirees Should Watch

richard jayne
June 22, 2025

Key Takeaways

The Postal Service Health Benefits (PSHB) Program has officially replaced FEHB for USPS retirees in 2025, introducing a new structure, enrollment process, and Medicare integration requirements.
Retirees should closely review their plan’s Medicare coordination rules, out-of-pocket limits, and prescription drug coverage to avoid unexpected costs or coverage gaps.

What Changed in 2025: The Shift to PSHB

As of January 1, 2025, the familiar Federal Employees Health Benefits (FEHB) Program is no longer available to USPS retirees. In its place, the Postal Service Health Benefits (PSHB) Program now covers all eligible USPS employees, annuitants, and their dependents. This transition was mandated by the

Postal Service Reform Act of 2022 and significantly impacts how retirees receive and manage their health coverage.

For you, as a current or future retiree, this means a new set of rules, a different enrollment platform, and possibly new plan options. If you retired before 2025 but continued your FEHB coverage through USPS, you’re now enrolled in PSHB.

Enrollment Was Automatic—but You Still Have Choices

In 2025, if you were already enrolled in an FEHB plan as a USPS retiree, you were automatically transitioned into a corresponding PSHB plan. However, that doesn’t mean you’re locked in forever.

You can switch plans during Open Season, which typically occurs from November to December.
Outside of Open Season, changes are only allowed during a qualifying life event (QLE), such as a change in family status or loss of other coverage.

Even though the transition was automatic, you should carefully review your current plan details. Some elements may have changed—such as copayment structures, deductibles, and provider networks—so don’t assume everything remains the same.

Medicare Part B: Now Mandatory for Some

One of the most significant changes in 2025 is the requirement to enroll in Medicare Part B. If you are a Medicare-eligible Postal Service retiree or family member, and you:

Retired after January 1, 2025, or
Were still an active USPS employee as of January 1, 2025, and are now retired,

…then you must enroll in Medicare Part B to maintain full PSHB coverage. Failure to do so could result in limited coverage under your PSHB plan.

However, some retirees are exempt from this requirement:

Those who retired on or before January 1, 2025,
Those who are not eligible for Medicare Part A without a premium,
Residents living abroad,
Those who receive care exclusively through VA or Indian Health Service.

If you’re not sure whether you’re required to enroll, it’s critical to clarify your status as early as possible.

Coordination of PSHB with Medicare

Once enrolled in Medicare Part B, your PSHB plan works alongside it. In most cases, Medicare becomes your primary payer, and PSHB covers the remaining costs. Many PSHB plans in 2025 now offer:

Waived or reduced deductibles when you have Medicare,
Lower copayments and coinsurance,
Integrated Medicare Part D prescription drug coverage.

In fact, most retirees are now automatically enrolled in a Medicare Part D Employer Group Waiver Plan (EGWP) through their PSHB plan unless they choose to opt out. Opting out may significantly reduce your drug coverage, so it’s best to understand what your plan offers before making that decision.

Drug Coverage Sees Big Changes

Prescription drug coverage under PSHB is now tied to Medicare Part D. This includes several 2025 updates:

An annual $2,000 cap on out-of-pocket drug costs,
A $35 monthly limit on insulin,
Expanded pharmacy networks,
The option to spread prescription costs over 12 monthly payments.

These changes are a direct result of federal reforms and are designed to protect retirees from unpredictable drug expenses. But they only apply if you’re enrolled in the Medicare Part D plan provided through your PSHB plan.

Plan Costs: Premiums, Deductibles, and Copays in 2025

The structure of costs under PSHB is generally similar to FEHB, but there are some key differences you should note:

Premiums: The government continues to cover about 70% of the plan premiums, leaving you responsible for the remaining share.
Deductibles: In-network deductibles range from $350 to $2,000 depending on the plan type. Medicare enrollees often benefit from waived deductibles.
Copayments: Office visits range between $20 and $60 for primary and specialist care. Emergency room visits may cost between $100 and $150.
Coinsurance: For in-network care, expect coinsurance between 10% and 30%. Out-of-network services can carry much higher costs.

Out-of-pocket maximums also vary. For 2025, PSHB limits are set at:

$7,500 for Self Only,
$15,000 for Self Plus One and Self & Family.

These caps are in place to protect you from extreme medical expenses but make sure you understand what services apply toward those limits.

What Retirees Should Watch Going Forward

As the PSHB program continues to evolve, here’s what you should pay close attention to:

Annual Plan Changes: Just like FEHB, PSHB plans will release brochures each fall outlining changes for the upcoming year. Always read the fine print.
Medicare Enrollment: If you’re approaching age 65, pay attention to your Initial Enrollment Period for Medicare. Missing this window can lead to late penalties and coverage gaps.
Prescription Benefits: Review your plan’s drug formulary and pharmacy network every year.
Provider Networks: Some plans have more limited networks in PSHB than they did under FEHB. Double-check that your preferred doctors and hospitals are still covered.
Out-of-Pocket Spending: Budgeting for deductibles, copays, and coinsurance is essential. If your plan changes these amounts, it could impact your annual costs more than the premium itself.

Survivor and Family Member Coverage

If you’re a retiree with Self Plus One or Self & Family coverage, your eligible family members continue to have access to PSHB as long as:

The appropriate survivor benefits were elected,
They were enrolled at the time of your death,
They do not lose eligibility due to age or life status changes.

It’s essential to keep enrollment documentation updated and understand what events require notifying your plan administrator.

Don’t Forget FEDVIP and Other Benefits

The transition to PSHB doesn’t affect your eligibility for the Federal Employees Dental and Vision Insurance Program (FEDVIP). You may continue dental and vision coverage through FEDVIP, and changes to that coverage are also made during Open Season.

Life insurance (FEGLI), flexible spending accounts (FSAFEDS), and long-term care insurance (FLTCIP) are also unaffected by the switch to PSHB. But reviewing those benefits annually ensures they still meet your needs.

Staying Proactive in a Changing System

2025 marks a major shift in how health benefits are delivered to USPS retirees. The new PSHB system is designed to work more closely with Medicare, modernize prescription coverage, and create consistency within the USPS workforce.

However, these changes also mean you’ll need to be more proactive:

Review your plan every year,
Understand Medicare’s role in your coverage,
Don’t ignore the Open Season deadlines,
Keep personal and family eligibility records up to date,
Reach out for help if anything is unclear.

The more you engage with your benefits, the more likely you are to avoid unpleasant surprises in your healthcare costs or coverage.

Making Sense of USPS Retiree Health Coverage in 2025

You’re not alone in navigating this new chapter. The PSHB program introduces complexity, but it also brings modernization and long-term cost protections—especially for those enrolled in Medicare.

If you’re unsure about your current coverage or how to coordinate it with Medicare, reach out to a licensed agent listed on this website for professional guidance tailored to your situation.