Key Takeaways:
- PSHB premiums for federal retirees are established by federal rules and may change annually based on program costs and enrollment.
- Automatic payment methods and coordination with Medicare are crucial aspects of managing PSHB coverage in retirement.
7 Key Facts About PSHB Premiums in Retirement for Federal Employees
The transition from the Federal Employees Health Benefits (FEHB) Program to the Postal Service Health Benefits (PSHB) Program is a historic development in federal retiree health coverage. Enacted as part of the Postal Service Reform Act, the PSHB program introduces new rules for retired and retiring postal employees that started in 2025, with eventual effects for many federal retirees. Understanding PSHB premiums is essential for planning your retirement health expenses. Here are seven key facts every current or retired federal employee should know.
What Is the PSHB Program?
PSHB basics for federal retirees
The Postal Service Health Benefits (PSHB) Program is a new health insurance system designed exclusively for eligible United States Postal Service (USPS) workers, annuitants, and their families. Administered by the U.S. Office of Personnel Management (OPM), the PSHB program aims to continue comprehensive health coverage similar to FEHB, but with certain eligibility differences and new requirements, especially regarding enrollment when you retire.
Relationship to FEHB and Medicare
PSHB replaced FEHB coverage for qualifying USPS employees and annuitants beginning in 2025. For those who qualify, participation in PSHB becomes required rather than optional. Importantly, when you become eligible for Medicare Part B, PSHB rules generally require enrollment in both PSHB and Medicare Part B for continued coverage. This coordination is intended to reduce out-of-pocket costs for retiree enrollees and the program itself.
How Are PSHB Premiums Set?
Rules governing premium amounts
PSHB premiums are established each year through negotiations between OPM and participating health plan carriers. Federal law determines the structure of how much enrollees pay versus the portion the government subsidizes. Retirees will pay a share of the total premium, with the exact amount determined by the plan you select and the level of coverage.
Factors affecting costs in retirement
Premium costs are influenced by multiple factors, including the overall cost of the health plans, enrollee demographics, and anticipated health care utilization. Premiums often differ for self-only, self plus one, or family coverage. Changes in medical cost trends, plan operating expenses, and federal statutes may also affect the amount you pay as a retiree.
Who Pays PSHB Premiums After Retirement?
Federal employee and annuitant responsibilities
After retirement, most eligible federal annuitants pay their share of PSHB premiums from their monthly annuity payments. While the federal government continues to contribute a set portion of the premium, retirees are responsible for ensuring their share is paid to maintain continuous coverage. This applies even if you are no longer an employee and are now receiving benefits as a federal retiree.
Timing and payment methods
Typically, PSHB premiums for annuitants are automatically deducted from your federal retirement annuity each month. If your annuity is not sufficient to cover the premium, or if special circumstances apply, payment may be made directly to the program administrator. OPM provides detailed instructions regarding timing and method for these payments in official notices and program materials each year.
Do PSHB Premiums Change Over Time?
Annual premium adjustments
PSHB premiums are reviewed and reset annually based on negotiations between OPM and plan providers. Any changes are announced in advance of the open season for benefits enrollment. This open season is usually held once a year in the fall, and adjustments typically take effect the following January.
Why premium changes may occur
Premium changes may result from shifts in underlying medical costs, changes in the number of participants enrolling in the program, regulatory updates, or alterations in plan design. These adjustments are a routine part of federal health benefits programs and are designed to keep the plans aligned with broader health care trends, costs, and federal policy requirements.
How Does PSHB Coordinate With Medicare?
Enrollment timing and process
For eligible federal retirees aged 65 or older, PSHB coverage is integrated with Medicare. Most retirees who qualify for Medicare Part A are also encouraged, and in many cases now required, to enroll in Medicare Part B to preserve full PSHB benefits after 2025. Enrollment typically begins three months before your 65th birthday and continues for seven months around that date.
How coverage works together
When you are enrolled in both PSHB and Medicare Parts A and B, Medicare generally pays primary on medical claims, and PSHB serves as secondary insurance. This arrangement can reduce your out-of-pocket expenses for many covered services, but also means you will need to manage the premium obligations for both Medicare Part B and your selected PSHB plan. The exact coordination details are outlined in program materials and OPM guidance each year.
Are PSHB Premiums Deducted Automatically?
Automatic deduction for annuitants
For most federal retirees, PSHB premiums are automatically deducted from your federal retirement annuity by the OPM. This makes the process straightforward, ensuring there are no interruptions in your health coverage due to missed payments, provided your annuity covers the full amount required.
What if annuity isn’t sufficient?
If your monthly annuity falls short of the required PSHB premium, OPM will contact you with instructions for direct payment. In this case, retirees may pay via electronic funds transfer or other approved methods established by the program administrator. Prompt attention to OPM notices and ongoing monitoring of your payment status help prevent accidental coverage lapses.
What Happens if You Miss a Payment?
Coverage grace period rules
If a PSHB premium payment is missed, the program allows a limited grace period before coverage is suspended or terminated. OPM will notify you of unpaid premiums, providing you with a window (typically about 30 days, although this can vary) to resolve the issue by submitting the required payment.
Options for reinstating coverage
If coverage is suspended due to non-payment, official guidance outlines the process to request reinstatement. You may need to demonstrate that the lapse was unintentional and submit any overdue premiums within a certain timeframe. OPM regularly provides updates on administrative procedures to help retirees maintain or reinstate their PSHB health coverage when payment problems occur.
