Key Takeaways

• Delaying Medicare Part B enrollment without qualifying for a Special Enrollment Period can lead to permanent late enrollment penalties added to your monthly premium.

• For Postal Service annuitants under PSHB, enrolling in Medicare Part B is not just about avoiding penalties—it’s often essential to keep full access to prescription drug and cost-sharing benefits.

Why Medicare Part B Isn’t Optional for Many Postal Retirees

If you’re a Postal Service retiree or family member covered under the Postal Service Health Benefits (PSHB) Program, Medicare Part B plays a much larger role in your health coverage than you might expect. While the decision to enroll may seem optional at first glance, the long-term consequences of ignoring it—especially after you’re first eligible—can be serious, costly, and lasting.

The PSHB Program requires many Medicare-eligible annuitants and family members to enroll in Medicare Part B to maintain their full benefits. And even if you are exempt, skipping Part B could still disrupt your coverage or leave you paying far more out of pocket.

Understanding the Part B Late Enrollment Penalty

Medicare Part B comes with a penalty for late enrollment, and it is not a one-time fee. It’s a lifetime premium increase that you’ll pay as long as you remain enrolled in Part B. Here’s how it works:

• If you delay enrolling in Medicare Part B and do not qualify for a Special Enrollment Period, you’ll pay an additional 10% for each full 12-month period that you could have had Part B but didn’t.

• The penalty applies for life—not just for a few years.

• For example, delaying enrollment by 2 years (24 months) means you’ll pay 20% more on top of your monthly Part B premium—for as long as you have coverage.

And in 2025, with the standard Part B premium set at $185 per month, even a 20% penalty translates to an additional $37 every month—forever.

When You’re First Eligible for Medicare Part B

For most people, the Initial Enrollment Period (IEP) for Medicare begins 3 months before the month you turn 65, includes your birthday month, and ends 3 months after. That’s a 7-month window.

If you miss this opportunity and aren’t covered by active employment (or your spouse’s) from a qualified group health plan, you may have to wait for the General Enrollment Period, which runs January 1 through March 31 each year—with coverage not starting until July 1.

This delay not only exposes you to out-of-pocket costs without Part B coverage but also locks in those lifetime penalties.

PSHB Makes Medicare Part B Even More Crucial

Starting in 2025, the PSHB Program replaced FEHB for Postal Service annuitants and employees. Under the PSHB rules:

• Most Medicare-eligible annuitants and family members must enroll in Medicare Part B to maintain access to full PSHB coverage.

• If you are eligible for Medicare and do not enroll in Part B, your PSHB plan may not pay for certain services that Medicare would normally cover.

• PSHB plans for Medicare enrollees are designed to work with Medicare. When Medicare is your primary payer, your PSHB plan acts as secondary—often reducing or waiving copayments, deductibles, and coinsurance.

Skipping Part B could mean you miss out on those savings—and potentially face gaps in coverage.

Who Is Exempt From the PSHB Part B Requirement?

There are a few exceptions. You are not required to enroll in Medicare Part B under PSHB if:

• You retired on or before January 1, 2025, and are not already enrolled in Part B.

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

• You live abroad, making Medicare enrollment unavailable.

• You receive healthcare exclusively through the VA or Indian Health Service.

However, even if you qualify for an exemption, you still need to weigh the financial consequences of not enrolling in Part B—especially the lifetime penalty and reduced coordination with your PSHB plan.

How to Avoid the Penalty If You’re Still Working

If you’re still working for the Postal Service and have health coverage through your employment, you may be eligible for a Special Enrollment Period (SEP) once you retire.

Here’s how it works:

• You can delay enrolling in Part B without penalty while you (or your spouse) are actively working and covered by an employer plan.

• Once you stop working, you have 8 months to enroll in Part B under a SEP.

• If you miss this SEP, the late enrollment penalty kicks in and your next chance to enroll won’t come until the next General Enrollment Period.

It’s critical to understand that retiree coverage through PSHB doesn’t count as active employment coverage for SEP eligibility.

Impact on Prescription Drug Coverage

PSHB plans automatically provide Medicare-eligible annuitants with Part D prescription drug coverage through an Employer Group Waiver Plan (EGWP)—but only if you’re enrolled in Medicare Part B.

If you decline Part B, you lose this drug coverage.

That means you may be forced to:

• Pay full retail price for prescriptions,

• Enroll in a standalone Part D plan and pay a separate premium,

• Or go without drug coverage entirely.

Missing out on EGWP coverage could cost more than just convenience—it could be financially devastating if you rely on regular medications.

Re-enrolling After a Missed Opportunity Isn’t Immediate

Once you miss your Initial Enrollment Period and don’t qualify for a Special Enrollment Period, you’ll need to wait for the next General Enrollment Period (GEP), which runs from January 1 to March 31 each year.

Coverage under Part B will then begin on July 1, leaving you uncovered for several months—and that delay increases the number of penalty months added to your future premiums.

The sooner you recognize the oversight and take action, the fewer the consequences.

Even Exempt Individuals Should Do the Math

If you qualify for an exemption under PSHB rules, it’s still worth evaluating whether enrolling in Part B might ultimately save you money.

By coordinating benefits with Medicare, your PSHB plan might offer:

• Waived or reduced deductibles,

• Lower copayments and coinsurance,

• Additional cost protections in high-usage years.

Although Part B comes with a monthly premium, you’ll want to compare that cost with your expected healthcare usage. In many cases, the numbers favor having both Part B and your PSHB plan working together.

What You Can Do Right Now

To protect yourself from unnecessary penalties and preserve full access to PSHB coverage:

• Know your Medicare eligibility date. Mark your Initial Enrollment Period on your calendar.

• Check if you qualify for a Special Enrollment Period due to active employment.

• Understand whether you’re exempt from the PSHB Medicare Part B requirement.

• If you’re not exempt, enroll in Part B on time to avoid benefit reductions.

• Review your retirement date and age to determine whether your PSHB plan will require Medicare Part B enrollment.

• Talk to a licensed agent listed on the website for help with comparing your options and making the right enrollment decisions.

Protecting Your Health and Financial Future Through Informed Enrollment

Medicare Part B might feel like just another monthly bill, but failing to enroll at the right time can bring years—if not decades—of higher costs and limited access. As a PSHB enrollee, you need to consider not only the penalties but also the way your plan is designed to work alongside Medicare. Coordinated coverage often leads to lower expenses and better benefits.

If you’re nearing Medicare eligibility or already eligible but haven’t taken action, don’t wait. Get in touch with a licensed agent listed on this website to receive personalized support and guidance tailored to your situation.