Key Takeaways

• Medicare and PSHB can complement each other, but only when you understand how eligibility, enrollment timing, and cost-sharing rules interact in 2025.

• Assuming that Medicare will automatically improve your PSHB benefits can lead to unexpected gaps in coverage or higher out-of-pocket costs if you’re not properly enrolled.

Medicare and PSHB: Two Systems, One Care Puzzle

As a Postal Service employee or annuitant, you’re part of a major shift in health coverage. Starting January 1, 2025, the Postal Service Health Benefits (PSHB) Program officially replaces your former FEHB plan. With this transition, Medicare becomes an even more important piece of your healthcare puzzle—especially if you’re already 65 or approaching that milestone.

But Medicare doesn’t simply slot in and enhance PSHB coverage on its own. The relationship is layered, and in some cases, missing the right enrollment window can leave you exposed to penalties, denied claims, or loss of certain benefits.

Understanding how PSHB and Medicare work together in 2025—and where they don’t—is critical to making smart, cost-effective decisions.

Who Must Enroll in Medicare Part B for PSHB?

In 2025, some Medicare-eligible annuitants and family members must enroll in Medicare Part B to maintain full PSHB benefits. This requirement stems from the Postal Service Reform Act and applies to:

• Annuitants who retire after January 1, 2025, and are already eligible for Medicare (i.e., age 65 or older).

• Covered family members who are Medicare-eligible.

However, there are important exceptions. You are not required to enroll in Medicare Part B if:

• You retired on or before January 1, 2025.

• You are an active employee who was age 64 or older as of January 1, 2025.

• You live overseas, where Medicare doesn’t provide coverage.

• You receive Indian Health Services or Veterans Affairs benefits as your primary care.

It’s important to know your status now, so you aren’t caught off guard when your PSHB plan begins coordinating with Medicare.

How Enrollment Timing Impacts Your Coverage

Medicare eligibility begins at age 65, and enrollment is generally tied to specific periods:

• Initial Enrollment Period (IEP): A 7-month window around your 65th birthday (3 months before, your birth month, and 3 months after).

• General Enrollment Period (GEP): January 1 to March 31 each year if you missed your IEP. Coverage begins in July, and late penalties may apply.

• Special Enrollment Period (SEP): If you delayed Part B because you were still working and had active employer coverage, you can enroll within 8 months of losing that coverage.

Missing your IEP without having creditable coverage can lead to a 10% lifetime penalty for each 12-month period you delayed Part B.

For PSHB enrollees, timing is everything. If you become Medicare-eligible but delay enrollment without an exemption, your PSHB plan may reduce benefits or deny certain claims. That’s not something you want to discover mid-treatment.

Medicare Part B: What It Covers (and Why It Matters)

Medicare Part B covers:

• Outpatient medical services

• Doctor visits

• Lab tests

• Preventive screenings

• Durable medical equipment

• Some home health services

Most PSHB plans in 2025 are designed to work with Medicare. When you are enrolled in both Part B and a PSHB plan, your total out-of-pocket costs may be lower, because:

• Medicare typically pays first.

• Your PSHB plan acts as secondary payer.

• Many PSHB plans waive deductibles, coinsurance, or copayments when Medicare pays first.

However, this coordination only happens if you are actively enrolled in both systems. Medicare doesn’t plug itself in behind the scenes—you need to take the right steps to set up this coordination.

What If You Skip Part B Enrollment?

If you’re required to enroll in Medicare Part B and fail to do so, your PSHB plan in 2025 may:

• Not pay claims Medicare would have covered

• Require you to pay the full cost of those services

• Deny coverage for outpatient services until you enroll

In effect, skipping Part B can turn your PSHB plan into incomplete coverage, exposing you to hundreds or even thousands in avoidable expenses.

And remember, enrolling later can mean:

• A lifetime late enrollment penalty

• A delayed coverage start date

• Limited access to prescription drug benefits integrated through Medicare Part D

PSHB and Medicare Part D Drug Coverage Integration

In 2025, PSHB plans that cover Medicare-eligible enrollees will provide prescription benefits through a Medicare Part D Employer Group Waiver Plan (EGWP). This adds several advantages:

• A $2,000 annual out-of-pocket cap on prescription drugs

• A $35 cap on insulin per monthly supply

• Expanded pharmacy networks nationwide

But you only qualify for these enhanced drug benefits if you are enrolled in both PSHB and Medicare Part B. Opting out of Part B may result in automatic disenrollment from the EGWP, meaning:

• No drug coverage under PSHB

• Limited opportunity to reenroll in the future

It’s not enough to keep your PSHB plan—you must ensure your Medicare enrollment is complete to access full pharmacy benefits.

What About Medicare Part A?

Medicare Part A (Hospital Insurance) is generally premium-free if you or your spouse worked and paid Medicare taxes for at least 10 years. Part A covers:

• Inpatient hospital care

• Skilled nursing facility care (with limits)

• Hospice care

• Some home health care

You should enroll in Part A as soon as you’re eligible, even if you’re still working or delaying Part B. Most PSHB plans coordinate with Part A automatically, and it adds no additional cost if you’re eligible.

Delaying Part A is only advisable if you’re contributing to a Health Savings Account (HSA), which is uncommon for annuitants.

Premium Costs: Separate but Related

Medicare premiums and PSHB premiums are billed separately, but one often offsets the other when used together.

In 2025:

• Medicare Part B standard premium is $185/month.

• Some PSHB plans offer partial reimbursement of your Part B premium.

• PSHB premium for annuitants averages $241/month for Self Only.

While these premiums are not linked, some PSHB plans offer financial relief when you enroll in Medicare, such as:

• Lower copays

• Reduced or waived deductibles

• Lower out-of-pocket maximums

In other words, paying for both Medicare and PSHB may cost more monthly but save more annually, depending on your healthcare usage.

Understanding Coordination of Benefits (COB)

When you’re enrolled in both Medicare and PSHB, Medicare pays first, and your PSHB plan pays second. This coordination reduces your share of the bill and avoids duplicated coverage.

To make this work smoothly:

• Notify your PSHB plan of your Medicare enrollment.

• Keep your Medicare card and PSHB ID card updated.

• Ask your providers to bill Medicare first, then your PSHB plan.

Without this coordination, providers might bill you directly—or worse, you might be stuck with the full charge.

What If You’re Still Working at 65?

If you’re an active Postal employee and turn 65 in 2025, you can delay Part B enrollment without penalty, as long as your PSHB plan is considered creditable coverage. When you retire, you’ll have an 8-month Special Enrollment Period to enroll in Part B.

But once you retire, the clock starts ticking. Failing to enroll in that SEP means:

• You’ll need to wait until the next General Enrollment Period.

• Your PSHB coverage may not fully pay for services Medicare would have covered.

Be proactive. Mark your retirement date and plan Part B enrollment to avoid gaps or penalties.

The Risk of Making Assumptions

It’s easy to think: “I already have a PSHB plan, so I’m fine.” But that assumption can backfire in 2025. Here’s why:

• Medicare Part B is mandatory for many new annuitants.

• Prescription benefits are now tied to EGWP enrollment, which requires Part B.

• Coordination of benefits only works if you set it up correctly.

Even if you’re not yet Medicare-eligible, it’s worth reviewing your situation:

• Will you turn 65 in the next 6–12 months?

• Are you planning to retire this year or next?

• Are your covered family members Medicare-eligible?

Knowing your timeline helps you prepare and avoid surprises.

Where to Turn for Help

The good news is, you’re not alone. Several resources can guide you:

• OPM and USPS websites offer plan comparison tools and Medicare coordination guides.

• The PSHB Navigator Help Line provides plan-specific assistance.

• Licensed agents can help you understand how Medicare and PSHB interact based on your unique situation.

Make use of these resources well before key milestones like retirement or Medicare eligibility.

Planning Ahead Makes the Difference

The relationship between Medicare and PSHB is not automatic or passive. It’s a partnership that you must actively set up to gain the full value. By understanding your enrollment timeline, coverage responsibilities, and cost implications in 2025, you can avoid late penalties, denied claims, and out-of-pocket shocks.

If you have questions about whether you need to enroll in Medicare Part B, how your drug coverage will change, or what plan coordination really looks like, reach out to a licensed agent listed on this website for guidance tailored to your needs.