Key Takeaways

• Skipping Medicare Part B might seem like a way to cut costs in 2025, but doing so can lead to permanent late enrollment penalties, reduced PSHB benefits, and large out-of-pocket medical bills.

• For many Postal Service annuitants and family members, enrolling in Part B is now required to maintain full PSHB coverage, and opting out can trigger coverage limitations or loss of prescription drug benefits.

The “Optional” Illusion: What Part B Really Means Under PSHB

When you first become eligible for Medicare at age 65, it might appear that Part B is optional. After all, you have your Postal Service Health Benefits (PSHB) plan, and you might wonder: “Why pay another premium for coverage I might not need?”

Here’s why that thinking can cost you more than you realize.

For Medicare-eligible Postal Service annuitants and family members, Part B isn’t just a supplement. In many cases, it’s the key to unlocking full PSHB benefits, minimizing out-of-pocket costs, and avoiding late penalties that last for life.

Understanding the Role of Medicare Part B in 2025

Medicare Part B covers doctor visits, outpatient services, durable medical equipment, and preventive care. In 2025, the standard monthly premium is $185, and the annual deductible is $257.

Many PSHB plans in 2025 are structured to coordinate with Medicare. This means:

• When you enroll in both Medicare Part A and Part B, your PSHB plan often reduces your cost-sharing.

• Some PSHB plans waive or lower deductibles and copayments for enrollees with Part B.

• If you skip Part B, your PSHB plan might pay as if Medicare is your primary insurer—leaving you responsible for the unpaid share.

What Happens If You Skip Part B?

Not enrolling in Medicare Part B when first eligible can lead to:

Permanent Late Enrollment Penalties

• For every 12-month period you delay enrollment without qualifying coverage, you pay a 10% penalty on your Part B premium.

• These penalties are permanent and continue for as long as you have Medicare.

Reduced PSHB Benefits

• Some PSHB plans are designed assuming you have Medicare Parts A and B.

• If you decline Part B, your plan may not cover certain costs that Medicare would have paid first.

• You could face coinsurance of 80% or more on services that Medicare would have paid in full.

Loss of Integrated Prescription Drug Coverage

• In 2025, most Medicare-eligible annuitants and family members are automatically enrolled in a Medicare Part D Employer Group Waiver Plan (EGWP) through their PSHB plan only if they have Part B.

• Opting out of Part B may lead to the loss of drug coverage, which cannot be restored mid-year.

New Medicare Enrollment Requirements for PSHB in 2025

As of January 1, 2025, a major change affects PSHB enrollees:

• If you’re a Medicare-eligible Postal Service annuitant or family member, you must enroll in Medicare Part B to remain eligible for full PSHB coverage.

• Exceptions exist if you retired on or before January 1, 2025, or were age 64 or older as of that date.

• Other exceptions include living overseas, qualifying for VA/Indian Health Services, or already being enrolled in TRICARE.

If none of these apply and you don’t enroll in Part B, your PSHB plan may reduce benefits or deny enrollment in future years.

Special Enrollment Periods and Avoiding Penalties

If you missed your Initial Enrollment Period (IEP) at age 65, you may still qualify for a Special Enrollment Period (SEP):

• You can enroll in Part B without penalty if you had employer-sponsored coverage and apply within 8 months of losing that coverage.

• For Postal Service annuitants who delayed Part B because of FEHB coverage, this SEP applies only if you did not retire before 2025 and your coverage qualified as creditable.

Timing is critical: if you miss your SEP, you must wait for the General Enrollment Period (January 1 to March 31), with coverage starting July 1—and penalties apply.

The Hidden Costs of Relying on PSHB Alone

It may seem reasonable to rely solely on your PSHB plan, especially since it continues into retirement. But here’s what changes when Medicare becomes involved:

• Your PSHB plan assumes you have Medicare. It often acts as secondary payer.

• Without Part B, your plan shifts into the primary role—but it may not be designed to do so.

• You could be responsible for up to 80% of outpatient service costs, durable equipment, lab tests, and more.

In other words, skipping Part B could shift thousands in medical bills to your pocket.

Prescription Drug Coverage Tied to Part B

Prescription drug coverage in 2025 under PSHB is provided through a Medicare Part D EGWP:

• To get this drug benefit, you must have Medicare Part A and Part B.

• If you skip Part B, your PSHB plan may automatically opt you out of the EGWP drug coverage.

• Once opted out, re-enrollment is not allowed until the next year.

That means:

• No access to discounted or subsidized drug prices.

• No protection from the $2,000 annual out-of-pocket cap.

• You may need to pay full retail prices or seek separate, often more expensive, private coverage.

How Part B Can Help Lower Your Costs

Although you pay a monthly premium for Part B, having it can actually reduce your overall healthcare costs:

• Lower copayments: PSHB plans often offer lower copays when Medicare is primary.

• Reduced deductibles: Some plans waive deductibles entirely for those with Part B.

• Coordination of benefits: When Medicare pays first, your PSHB plan covers the rest.

• Out-of-pocket maximums: Medicare Part B limits your exposure with predictable cost structures when paired with PSHB.

So while the Part B premium may feel like an added burden, it typically results in smaller bills when you need medical care.

Medicare and PSHB: A Dual System That Works Better Together

Think of Medicare and PSHB as two gears in a machine. Separately, they function. But together, they run more smoothly:

• Medicare pays first for covered services.

• PSHB fills in the gaps, often covering coinsurance, copays, and other leftovers.

• Without Medicare, that entire front-end coverage gap becomes yours to pay.

This dual-coverage approach is the foundation of how many PSHB plans are designed in 2025.

Exceptions and Exemptions: Who May Not Need Part B

You may be exempt from the Part B requirement if:

• You retired on or before January 1, 2025.

• You were age 64 or older on January 1, 2025.

• You reside permanently outside the U.S..

• You receive care from the VA or Indian Health Services.

• You already qualify for TRICARE for Life (which includes Part B).

However, these exceptions are narrow. For most, enrolling in Part B is the only way to retain full access to PSHB benefits and drug coverage.

Don’t Wait for a Health Event to Make the Switch

Waiting until you need medical care to enroll in Part B can be costly:

• Enrollment may be restricted until the next General Enrollment Period.

• Penalties may raise your monthly premium permanently.

• You could miss out on drug coverage and integrated benefits.

By the time the bills arrive, the “optional” nature of Part B quickly turns into a financial trap.

Choosing Part B Today to Protect Tomorrow

Enrolling in Medicare Part B as soon as you’re eligible aligns your coverage with your PSHB plan, reduces your exposure to unexpected medical bills, and ensures you retain prescription drug benefits. While it adds a new monthly premium, it often prevents far greater out-of-pocket expenses and gaps in coverage.

Your PSHB plan is built to work with Medicare—not instead of it.

If you’re on the fence about enrolling in Part B, speak with a licensed agent listed on this website for guidance tailored to your situation.