The Postal Service Health Benefits program, prescription coverage and Open Season 2025

OPM released its annual call letter to insurance carriers earlier this month where they outlined their areas of focus for plan year 2025. Most of the initiatives center on Medicare coordination with FEHB coverage, in particular how federal annuitants will receive prescription drug coverage. 

Next year will also be the first for PSHB, the new health-benefits program replacing FEHB coverage for USPS employees and retirees. The call letter provides our first look at how certain PSHB benefits will be structured. 

We’ll walk you through OPM’s areas of focus and provide some advice to help you prepare for Open Season 2025 this fall.

FEHB & PSHB Medicare Coordination

OPM wants carriers to provide enhanced outreach on how Medicare coordinates with FEHB or PSHB plan benefits. This content is not specifically defined, but it does indicate timely customer service to enrollees through multiple communication channels, especially for those auto-enrolled in a Part D Prescription Drug Plan or who choose to enroll in a Medicare Advantage plan. Additionally, OPM is looking for carriers to discuss the potential effects of Income Related Monthly Adjustment Amounts.  

IRMAA impacts individual filers with income at or above $103,000 and joint filers making $206,000 or more. They must pay an additional monthly amount when enrolled in Part B or Part D. Currently, the second page of every official FEHB plan brochure discloses the “Potential Additional Premium for Medicare’s High-Income Members,” and IRMAA can sometimes be found in Section 9 where Medicare benefit coordination is discussed. 

Another aspect is how FEHB/PSHB plan benefits change when Medicare becomes primary. Many, but not all, FEHB/PSHB plans will waive the deductible and out-of-pocket costs for doctor visits, hospitalizations, and more when you have Medicare Parts A & B. In some cases, an FEHB/PSHB plan will provide a Part B premium reimbursement, and annuitants with an HDHP or CDHP can use the HRA contribution from the plan for Part B premium reimbursement. Section 9 of the official plan brochure and plan marketing materials describe these benefit changes currently.

Expect to see updated plan marketing materials from carriers this fall with more detailed information on Medicare coordination.

FEHB Prescription Drug Coverage

There is no OPM requirement that carriers must submit machine-readable drug formularies. Without this data, individuals must search for each prescription drug’s information on a plan-by-plan basis. 

This experience varies greatly. On the easier side, BCBS has a pricing tool that allows you to select your drug, dosage, and pharmacy to see coverage and cost for mail-order or pharmacy pick-up. On the more difficult side, many other FEHB carriers rely on lengthy PDFs where you must find your drug, decode the tier classification, and cross-reference price information.

Prescription-drug research tools could be improving for plan year 2025. OPM has indicated their commitment to cost-effective care with emphasis on transparency. These tools should provide both current and prospective plan members with convenient access to the formulary, drug tier, and pricing for covered prescription drugs. 

Annuitants with Medicare will have many options to receive coverage from Part D next year. According to OPM, the Part D plan should provide as good or better coverage than the prescription drug coverage from the FEHB plan. Plans that choose to offer a Part D plan will be allowed to automatically enroll plan members with Medicare if they also provide a customer-friendly approach to opt-out. Also, FEHB Medicare Advantage plans remain one of the lowest-cost options for annuitants, and all bundle a Part D plan for prescription drug coverage.

Many federal annuitants will benefit from Part D coverage, especially those with high prescription drug costs. Next year is the first year that all Part D plans must include a $2,000 out-of-pocket maximum. But there are situations where you may be better off sticking with your FEHB plan for prescription-drug coverage.

1. While the Part D plans have no additional premium, if you’re subject to IRMAA, you’ll have to pay for coverage. In the first IRMAA income tier, that’s $12.90/month in 2024.
2. OPM states that Part D must include all drugs covered by the FEHB plan at the same or a lower cost. While that happens most of the time, there were examples in plan year 2024 where a drug was more expensive on Part D compared to the FEHB plan.
3. Popular GLP-1 weight loss drugs, like Wegovy, are not covered by Medicare. OPM requires every FEHB plan to cover at least one GLP-1 weight loss drug, but a rule dating back to Part D’s inception forbids Medicare from covering the drugs. Annuitants may lose GLP-1 coverage offered by their FEHB plan when auto-enrolled into a Part D plan.
4. If you use a manufacturer discount coupon offered by a pharmaceutical company, you’ll lose that option if you’re enrolled in a Part D plan.
5. Part D plans do not cover prescription drug costs incurred overseas. However, most travel insurance policies would reimburse healthcare costs not covered by your health plan.

PSHB Benefits

For plan year 2025, the benefits for any PSHB plan must be equivalent to the benefits offered by the FEHB program. For example, if FEHB GEHA High decides to offer a PSHB version, PSHB GEHA High will have the same benefits for plan year 2025. There will probably be differences in premiums, however, as USPS employees and retirees will create their own coverage pool separate from all other federal employees and annuitants. 

The OPM carrier letter states that Medicare-eligible USPS annuitants will receive prescription drug coverage through Part D, either from a supplemental Part D plan or as part of a PSHB Medicare Advantage plan. 

The Final Word

Prescription drug coverage will be a major theme for plan year 2025. Federal employees will need to wait and see if carriers offer improved tools this fall to help ease the burden of researching drug coverage and costs.

For annuitants, expect to see most FEHB plans offer a supplemental Part D plan this fall. This year only 17 FEHB plans offered a Part D plan. However, since Part D coverage is mandatory for USPS annuitants with Medicare in PSHB, it’s very likely that a plan offered in both FEHB and PSHB will have the same Part D option.

While Part D coverage will benefit many, especially since next year all will include a $2,000 out-of-pocket maximum, there are situations where Part D may not be the best choice. IRMAA, drug prices, weight loss drug coverage, pharmaceutical discount coupons, and international drug coverage might impact whether you’ll be better off with FEHB or Part D prescription drug coverage.

Kevin Moss is a senior editor with Consumers’ Checkbook. Watch more of his free advice and check if the Guide to Health Plans for Federal Employees is available for free from your agency. You can also purchase the Guide and save 20% with promo code GOVEXEC.