Key Takeaways

• If you’re a Postal Service retiree and are eligible for Medicare, enrolling in Part B is not optional if you want to maintain full PSHB coverage.

• Many retirees are caught off guard because they assume PSHB will offer the same benefits as FEHB without needing Medicare enrollment. That assumption is no longer safe.

The Shift from FEHB to PSHB: What Changed

Starting January 1, 2025, all Postal Service retirees and annuitants are covered under the new Postal Service Health Benefits (PSHB) Program, which replaced FEHB for USPS employees and retirees. Although the PSHB Program is modeled on FEHB, there are important differences. The most critical one for Medicare-eligible retirees is the integration requirement with Medicare Part B.

Under FEHB, many retirees had the choice to enroll in Medicare Part B or not. They could continue their federal health coverage regardless. However, under PSHB rules, Medicare-eligible annuitants and their eligible family members are now generally required to enroll in Part B to retain full PSHB benefits.

This shift has surprised many retirees who expected the same flexibility they had under FEHB.

Who Must Enroll in Medicare Part B

The requirement to enroll in Medicare Part B applies to most annuitants and family members who:

• Are enrolled in a PSHB plan

• Are eligible for Medicare Part A (typically at age 65 or through disability)

Exceptions to the Requirement

You are not required to enroll in Part B if:

• You retired on or before January 1, 2025

• You were an active Postal Service employee and at least age 64 as of January 1, 2025

• You live abroad and cannot use Medicare benefits

• You are covered through the VA or Indian Health Services

However, even if you fall under one of these exceptions, it’s still strongly recommended to evaluate Medicare enrollment because of the cost-sharing advantages it offers under most PSHB plans.

Why Retirees Are Caught Off Guard

Several factors contribute to the confusion around the new Part B requirement under PSHB:

1. Historical Precedent Under FEHB

For decades, retirees could choose to delay or skip Medicare Part B without losing their FEHB coverage. That precedent created a sense of security and flexibility. PSHB breaks from this precedent, creating a new dynamic that not all retirees are prepared for.

2. Misunderstanding the Enrollment Timeline

Some retirees misunderstand when to enroll in Medicare. Medicare Part B enrollment typically begins during the seven-month Initial Enrollment Period around your 65th birthday. If you miss this, you may have to wait for the General Enrollment Period (January 1 to March 31), with coverage starting July 1.

Late enrollment may result in penalties and a temporary gap in coverage coordination, even if your PSHB plan remains active.

3. Confusing Medicare with PSHB Benefits

Many retirees mistakenly believe that PSHB plans will cover all medical costs comprehensively, even without Medicare. While PSHB plans are robust, they often expect coordination with Medicare once you’re eligible.

This means:

• Your PSHB plan may pay secondary to Medicare

• Your cost-sharing may be higher if Medicare is not in place

• You may lose access to specific Part B-enhanced benefits, such as reduced deductibles or copays

4. Insufficient Communication During the Transition

While the Office of Personnel Management (OPM) and USPS provided general notices about the PSHB transition, many retirees missed the significance of the Medicare Part B integration requirement. Notices may have been brief or not fully understood.

Some retirees assumed no action was needed because they were already enrolled in a FEHB plan and planned to remain so. Unfortunately, PSHB’s requirements differ significantly in this regard.

What Happens If You Don’t Enroll in Part B

If you’re required to enroll in Medicare Part B and do not:

• Your PSHB plan may not cover services as expected

• You could face higher out-of-pocket costs

• Some PSHB plans may deny coordination of benefits or restrict access to enhanced features

You could also be locked out of future enrollment opportunities or face Medicare late enrollment penalties:

• Late Enrollment Penalty: For each 12-month period you delay enrolling in Part B, you may pay a 10% increase in your premium for life.

• Enrollment Delays: Outside of your Initial Enrollment Period, you must wait for the next General Enrollment Period, which only happens once per year.

PSHB Prescription Drug Coverage and Medicare Part D

For Medicare-eligible PSHB enrollees, prescription drug coverage is automatically provided through a Part D Employer Group Waiver Plan (EGWP). This coordination offers enhanced benefits such as:

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

• A $35 cap on insulin products

However, access to these benefits may be tied to active enrollment in Medicare Part B. Opting out of Part B can jeopardize the prescription coverage integration under PSHB.

How to Prepare if You’re Nearing Medicare Eligibility

If you are approaching age 65 or are otherwise about to become Medicare-eligible, take these proactive steps:

1. Mark Your Initial Enrollment Period

You can enroll in Medicare Part B during the 7-month window:

• Three months before your 65th birthday month

• The month of your 65th birthday

• Three months after

To avoid delays and penalties, enroll early within this window.

2. Evaluate Your PSHB Plan’s Medicare Coordination

Some PSHB plans offer better cost-sharing if you have both Medicare and PSHB. These may include:

• Waived deductibles

• Reduced copays and coinsurance

• Additional cost savings on services like hospital stays and durable medical equipment

3. Factor in Long-Term Affordability

In 2025, the standard Medicare Part B premium is $185 per month. While this adds a monthly cost, many PSHB plans lower your cost-sharing so significantly that your total health expenses may still be lower than if you had skipped Part B.

4. Understand the Repercussions of Declining Part B

If you choose not to enroll in Part B when required, you may lose prescription drug coordination, face higher medical costs, and experience more complicated claims processing.

Delaying enrollment also locks you into potential penalties that last as long as you’re enrolled in Part B.

What If You’re Already Past 65 and Not Enrolled?

If you are already over 65 and did not enroll in Part B, but now realize it’s required under PSHB, your window to fix the issue may still be open.

You can enroll during the General Enrollment Period from January 1 to March 31. However, your coverage won’t start until July 1, and you may face late penalties.

Depending on your situation, you may also qualify for a Special Enrollment Period if you had creditable coverage elsewhere. It’s best to contact Medicare or a licensed agent for help reviewing your eligibility.

What to Watch for During Open Season

During the PSHB Open Season from November to December each year, retirees have the opportunity to:

• Review their current PSHB plan

• Switch to another PSHB plan with better Medicare coordination

• Evaluate cost-sharing and premium differences

• Confirm Medicare Part B enrollment status

This is also your chance to determine whether your plan includes prescription benefits tied to Part B enrollment.

Resources for Help and Clarification

Navigating Medicare and PSHB together isn’t always straightforward. If you’re unsure about your enrollment requirements or which plan suits your needs best, you can:

• Visit the OPM website for PSHB FAQs

• Call the PSHB Navigator Help Line

• Speak directly with a licensed agent listed on this website

These resources can provide detailed, personalized advice to help you avoid common pitfalls.

Don’t Wait Until It’s Too Late to Act

Whether you’re just turning 65 or already retired, the new PSHB landscape makes it crucial to understand how Medicare Part B fits into your health coverage.

The penalties and cost implications of skipping Part B are too significant to ignore. More importantly, the integration of Medicare and PSHB is designed to work as a unit. Missing one part of the equation can cause your entire coverage strategy to fall apart.

Take the time now to:

• Review your Medicare eligibility

• Plan ahead for enrollment timelines

• Compare PSHB plans based on their Medicare integration

For help reviewing your plan options or understanding your next steps, contact a licensed agent listed on this website. They can guide you through the process and help protect your coverage.