Key Takeaways

• Medicare alone does not provide complete coverage. Without proper coordination with your PSHB plan, you may face higher out-of-pocket expenses than you expect.

• In 2025, PSHB plans are designed to work with Medicare Part B. If you assume Medicare is enough on its own, you could lose important benefits or pay more than necessary.

Why Medicare Alone Doesn’t Cover All Your Healthcare Needs

It’s a common assumption: once you turn 65 and enroll in Medicare, your health coverage is complete. Unfortunately, that belief is not just overly optimistic—it can be financially risky, especially if you’re enrolled in a Postal Service Health Benefits (PSHB) plan.

Medicare offers broad protection, but it has gaps. These include deductibles, coinsurance, prescription drug limits, and no cap on annual out-of-pocket costs unless paired with additional coverage. If you don’t understand how Medicare and PSHB work together, you could end up paying for services you assumed were covered.

What Medicare Part A and B Actually Cover in 2025

Let’s clarify what you’re getting under Original Medicare this year:

Medicare Part A (Hospital Insurance):

• Covers inpatient hospital stays, hospice care, and skilled nursing facility care.

• In 2025, the deductible is $1,676 per benefit period.

• After 60 days in the hospital, you’ll pay daily coinsurance, which increases the longer you stay.

Medicare Part B (Medical Insurance):

• Covers outpatient services, doctor visits, preventive care, and durable medical equipment.

• In 2025, you’ll pay a monthly premium of $185 and a deductible of $257.

• After meeting the deductible, Medicare generally covers 80% of costs, leaving you to pay the remaining 20%.

But here’s the catch: Medicare does not cap your out-of-pocket costs. That 20% coinsurance on services can add up quickly if you experience a major health event or require frequent care.

What PSHB Adds to the Equation

The Postal Service Health Benefits program offers broader coverage when paired with Medicare. But this only works in your favor if you’re enrolled in both. In 2025, many PSHB plans reduce or waive cost-sharing if you also have Medicare Part B. Some even reimburse part of your Part B premium or lower your deductible.

Here’s what your PSHB plan may do when combined with Medicare:

• Waive or reduce your deductible

• Lower your copayments and coinsurance

• Provide better prescription drug coverage through an integrated Medicare Part D plan

• Expand your network by covering services outside the PSHB plan network if Medicare pays first

If you skip Medicare Part B assuming your PSHB plan is sufficient, you could lose out on these built-in cost savings.

Why PSHB Requires Medicare Part B for Some

In 2025, a new rule applies: if you are a Postal Service annuitant and eligible for Medicare Part B, you must enroll in Part B to keep your full PSHB benefits—unless you fall under one of the exceptions.

Who must enroll in Medicare Part B:

• You retired after January 1, 2025, and

• You or your covered family member is eligible for Medicare Part A at no cost

Who is exempt:

• Retired on or before January 1, 2025

• Were 64 or older on that date

• Live overseas or are covered by the VA or Indian Health Service

Failing to enroll in Medicare Part B when required will leave you with limited or no PSHB coverage for medical services normally covered by Medicare.

Prescription Drug Coverage Isn’t Automatic Without PSHB + Medicare

If you assume Medicare will cover your prescriptions in full, think again. Medicare Part A doesn’t cover outpatient prescriptions. Medicare Part B only covers certain drugs under very specific situations—like chemotherapy or infusion therapy.

PSHB plans cover prescriptions through an integrated Medicare Part D Employer Group Waiver Plan (EGWP) for enrollees with Medicare. In 2025, this Part D coverage comes with a key benefit:

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

• A monthly payment option to spread your drug costs over the year

• Coverage at a broad national network of pharmacies

If you don’t enroll in Medicare, your drug coverage under PSHB won’t include these enhanced features, and you may pay more out-of-pocket.

Common Misunderstandings That Lead to Costly Mistakes

Many annuitants make assumptions about Medicare that don’t hold up when applied to PSHB. Let’s examine a few of them:

1. “Medicare is free and enough on its own.”

Medicare Part A is typically premium-free, but Part B comes with a monthly premium. If you skip Part B to avoid the cost, you risk losing significant PSHB benefits and facing large medical bills from uncovered outpatient services.

2. “I don’t need Medicare because I already have a PSHB plan.”

In 2025, this is only true for certain exempt groups. For most annuitants, failing to enroll in Medicare Part B means your PSHB plan may deny claims that Medicare would have covered, leaving you fully responsible.

3. “I’ll just wait and enroll in Medicare later.”

Delaying enrollment in Medicare Part B without valid exemption can result in permanent late penalties. You’ll pay more for the rest of your life, and you could also miss the window to coordinate effectively with your PSHB plan.

The Financial Impact of Misalignment

When your PSHB plan and Medicare aren’t aligned, you expose yourself to steep out-of-pocket costs:

• 20% of all outpatient care under Medicare Part B

• Full hospital coinsurance beyond 60 days

• Out-of-pocket drug expenses above the $2,000 Part D cap if you’re not enrolled

• No cost-sharing reductions, waived deductibles, or premium reimbursements

Worse, some PSHB plans will not pay anything for certain services if Medicare Part B is not in place when required. That’s more than just a gap—it’s a wall.

Timing Matters: Enrollment Periods You Must Know

Understanding when you’re allowed to enroll in Medicare—and how that affects your PSHB—is critical. Missing your window can mean paying more for less coverage.

Medicare Enrollment Periods in 2025:

• Initial Enrollment Period (IEP): 7 months around your 65th birthday (3 months before, the month of, and 3 months after)

• General Enrollment Period (GEP): January 1 – March 31 if you missed your IEP

• Special Enrollment Period (SEP): Available if you lost coverage or had other qualifying events

• PSHB Open Season: Runs annually from November to December, allowing you to switch plans or update your information

Enroll during the correct window to avoid delays, penalties, or loss of key benefits.

What You Can Do Right Now

If you’re approaching retirement or already Medicare-eligible, here’s what you should do:

• Verify your Medicare eligibility and enrollment status

• Check if you’re subject to the Part B requirement under PSHB

• Coordinate your PSHB plan choice with your Medicare enrollment

• Review plan brochures carefully—especially the coordination of benefits sections

• Ask about Medicare integration to know exactly what your plan offers when paired with Medicare

Don’t assume you’re covered just because you’ve always had federal health insurance. PSHB and Medicare in 2025 require more attention and coordination than ever before.

Getting the Right Coverage Means Asking the Right Questions

In 2025, you must take a proactive approach to your health coverage. Medicare no longer works as a standalone solution if you’re under the PSHB system. And PSHB assumes that if you’re eligible for Medicare, you’re pairing the two.

The good news? When aligned correctly, Medicare and PSHB can create one of the most powerful health coverage combinations available to retirees.

If you’re unsure how your current or future plan works with Medicare, get in touch with a licensed agent listed on this website. They can help you avoid coverage gaps, penalty costs, and lost benefits.