Key Takeaways

• When you’re enrolled in both Medicare and a Postal Service Health Benefits (PSHB) plan, Medicare generally pays first, and your PSHB plan pays second—but the coordination depends on your specific situation, including your work status.

• To get the most from both programs, you need to understand what each one covers, how deductibles and coinsurance are handled, and what changes occur after you enroll in Medicare Part B.

How Medicare and PSHB Coordinate in 2025

In 2025, many Postal Service retirees and their covered family members are experiencing this coordination for the first time. As part of the PSHB program that launched in 2025, Medicare-eligible annuitants and family members are generally required to enroll in Medicare Part B to maintain full PSHB benefits. But what actually happens after you do that?

Understanding how the two programs work together is essential to avoiding confusion—and avoiding surprise out-of-pocket costs.

Primary vs. Secondary Payer Rules

If you’re retired and enrolled in both Medicare and a PSHB plan, Medicare typically acts as the primary payer, and your PSHB plan becomes the secondary payer.

This means:

• Medicare pays first for eligible services under Parts A and B.

• Your PSHB plan pays second, often covering some or all of the remaining costs, such as deductibles, coinsurance, or services Medicare doesn’t fully pay for.

When Does PSHB Pay First?

There are a few exceptions where your PSHB plan might pay first:

• If you are still actively working and covered by a PSHB plan through your own current employment (not as a retiree).

• If your spouse is working and you’re covered under their active employee PSHB plan.

Once you’re retired, though, Medicare becomes the primary payer.

What Medicare Covers vs. What PSHB Plans Cover

To truly understand how coordination works, you need to know what each program covers.

Medicare Coverage (2025)

• Part A: Hospital insurance—covers inpatient hospital stays, skilled nursing facility care, hospice, and some home health care. Most retirees do not pay a premium for Part A.

• Part B: Medical insurance—covers doctor visits, outpatient care, preventive services, and durable medical equipment. The standard premium in 2025 is $185/month, with a $257 annual deductible.

• Part D: Prescription drug coverage—automatically provided through PSHB Medicare drug coverage for eligible members via a Medicare Part D Employer Group Waiver Plan (EGWP).

PSHB Coverage

Each PSHB plan is different, but generally:

• PSHB plans wrap around Medicare, filling in gaps such as coinsurance, deductibles, or services not fully paid by Medicare.

• Many PSHB plans offer lower cost-sharing (e.g., reduced deductibles or copayments) for those who are also enrolled in Medicare.

• Some plans waive deductibles entirely for Medicare enrollees.

How the Claims Process Works

Coordination happens automatically when both your Medicare and PSHB coverage are active. Here’s a general process:

1. Provider bills Medicare first.

2. Medicare pays its share of the approved amount.

3. Claim is forwarded to PSHB, which pays its portion.

4. You pay the remainder, if any.

This automatic coordination ensures that you don’t have to file secondary claims manually in most cases.

The Medicare Part B Enrollment Mandate in PSHB

As of January 1, 2025, Medicare-eligible Postal Service annuitants and their family members are generally required to enroll in Medicare Part B to keep full PSHB benefits.

Who Must Enroll in Part B?

• Those who are already 65 or older and eligible for Medicare.

• Those turning 65 after January 1, 2025.

Who Is Exempt?

You are not required to enroll in Part B if:

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

• You are a current employee who was age 64 or older on January 1, 2025.

• You live overseas and are not eligible for Medicare.

• You receive care primarily through the VA or Indian Health Services.

Failure to enroll when required may result in loss of drug coverage and limited re-enrollment opportunities later.

How Prescription Drug Coverage Works

When you have Medicare and PSHB, your prescription drug benefits are automatically integrated through a Medicare Part D EGWP (Employer Group Waiver Plan). You do not need to enroll in a separate Medicare Part D plan.

Key Features of EGWP in 2025:

• $2,000 out-of-pocket cap on prescription drug costs per year.

• $35 monthly insulin cap, if applicable.

• No coverage gap (donut hole)—once you hit the out-of-pocket cap, your plan covers 100% of your prescription costs for the remainder of the year.

This integration offers major financial protection, especially for those with chronic conditions or high-cost medications.

Common Mistakes That Cost You Money

Here are several coordination issues you want to avoid:

• Failing to enroll in Part B when required, leading to loss of drug coverage.

• Assuming Medicare and PSHB will cover all costs—you may still have some copayments or uncovered services.

• Not informing your provider that you have both Medicare and a PSHB plan—this can delay claims processing.

• Enrolling in a separate Part D plan—doing so may disqualify you from the integrated EGWP drug benefits under PSHB.

What You Still Have to Pay Out of Pocket

Even with both Medicare and PSHB coverage, you may face some remaining costs:

• Part B premium ($185 in 2025).

• Plan premiums for PSHB coverage.

• Copayments for certain services (e.g., emergency room visits).

• Out-of-network charges, depending on your plan.

However, these are usually lower than what you would pay with PSHB alone, without Medicare.

Timeline for Medicare and PSHB Coordination

Here’s how the timeline typically works for someone aging into Medicare:

• 3 months before turning 65: Your Initial Enrollment Period (IEP) for Medicare starts.

• The month you turn 65: Medicare coverage can begin.

• 3 months after turning 65: IEP ends. Late enrollment may lead to penalties unless you qualify for a Special Enrollment Period.

• January 1, 2025: Coordination rules under PSHB take effect.

• November–December annually: PSHB Open Season occurs—this is your time to make changes.

Understanding these timing milestones helps you avoid enrollment gaps or late penalties.

Tips to Maximize Your Coverage

• Compare PSHB plans during Open Season to make sure you’re choosing one that complements Medicare well.

• Keep your providers informed about both coverages to ensure smooth claims processing.

• Review your Annual Notice of Change (ANOC) letters from both Medicare and your PSHB plan.

• Use your Medicare Part B coverage for preventive services—they’re typically covered at no cost.

• Contact a licensed agent listed on this website for help understanding plan features and your coordination options.

Why Coordination Matters More Than Ever in 2025

The new PSHB system requires a deeper understanding of how it interacts with Medicare. By enrolling in Medicare Part B and selecting a PSHB plan that offers strong wraparound coverage, you can reduce your overall healthcare expenses while improving access to care.

Don’t assume the system will work automatically without your input—smart choices matter.

Make Your Coverage Work for You

The coordination between Medicare and PSHB isn’t just automatic—it’s strategic. When used together correctly, these programs can offer robust protection, reduce your medical costs, and simplify your care. But that only happens when you know the rules, stay informed, and act at the right times.

To ensure you’re making the most of your benefits, talk to a licensed agent listed on this website. They can help you compare plans, answer your questions, and guide you through the coordination process.