Key Takeaways

• Medicare Part B can unexpectedly increase your healthcare expenses, especially if you’re not aware of specific rules and timelines.

• Postal Service Health Benefits (PSHB) and Medicare coordination can help control your costs, but you need to understand how they interact to avoid surprises.

Medicare Part B: The Hidden Costs No One Tells You About

When you think of retirement and Medicare Part B, you’re probably picturing predictable expenses. After all, you’ve spent years preparing. But did you know Medicare Part B comes with some surprising costs that could catch you off guard if you’re not careful? As a USPS employee or retiree in 2025, managing your healthcare budget is crucial, especially with the recent changes under the Postal Service Health Benefits (PSHB) program.

Let’s explore seven common ways Medicare Part B costs might surprise you, and how to navigate around them.

1. Late Enrollment Penalties—They Last Forever!

Did you know that delaying your Medicare Part B enrollment could cost you extra every month—for the rest of your life? If you don’t enroll in Medicare Part B during your Initial Enrollment Period, which starts three months before your 65th birthday and ends three months after, you’ll face a permanent penalty.

• The penalty adds an additional 10% to your monthly premium for each 12-month period you delay.

• If you wait two years past your initial eligibility, you’re looking at an extra 20% on top of your premium—indefinitely!

Avoid this costly surprise by enrolling on time or ensuring your PSHB plan coordinates smoothly with Medicare Part B.

2. The Income Trap—Higher Income, Higher Costs

Medicare Part B premiums aren’t the same for everyone. Your income plays a significant role. If your modified adjusted gross income (MAGI) from two years prior (2023, in this case) crosses certain thresholds—$106,000 for individuals or $212,000 for couples filing jointly—you’re subject to higher premiums due to Income-Related Monthly Adjustment Amount (IRMAA).

• Higher-income earners pay considerably more than the standard Part B premium ($185/month in 2025).

• IRMAA surcharges can escalate rapidly as your income increases.

To avoid unexpected jumps, consider income strategies with a tax professional to manage your MAGI strategically in the years before enrolling in Medicare.

3. Deductibles Aren’t Fixed Forever

You might assume Medicare deductibles stay consistent—but they don’t. In 2025, Medicare Part B has an annual deductible of $257, up significantly from previous years. While a few hundred dollars might seem minor, unexpected increases over the years can strain your budget, especially on a fixed retirement income.

• Regularly review annual Medicare updates each fall during the Open Enrollment period (October 15–December 7).

• Check if your PSHB coverage complements Part B by covering part or all of this deductible.

4. Prescription Drugs Aren’t Always Covered

Here’s another eye-opener—Medicare Part B covers some prescription drugs, typically those administered in a doctor’s office, but not medications you pick up at the pharmacy. Without the right supplemental coverage, your prescription expenses could skyrocket.

• Confirm whether your PSHB plan’s prescription drug coverage integrates with Medicare Part D (or if it includes a Medicare Part D Employer Group Waiver Plan).

• Evaluate your drug coverage carefully during PSHB Open Season (November 11–December 13).

5. Co-Insurance Costs Can Add Up Quickly

With Medicare Part B, you’re responsible for 20% of the cost for outpatient services and procedures after you meet your deductible. While 20% might sound manageable, expenses can quickly escalate, especially with ongoing treatments or complex medical procedures.

• Check your PSHB coverage for coordination that may significantly reduce your co-insurance responsibilities.

• Consider supplemental coverage options that minimize these expenses.

6. Medicare Doesn’t Cover Dental, Vision, or Hearing

If you’re expecting Medicare Part B to cover routine dental visits, vision checks, or hearing aids, think again. None of these essential health services fall under Medicare Part B. Without supplementary coverage, these out-of-pocket expenses can become significant.

• Ensure your PSHB plan provides adequate coverage for dental, vision, and hearing.

• During PSHB Open Season, compare plans carefully to confirm these critical services are covered.

7. Medicare Part B Isn’t Automatic—You Need to Act

One of the biggest misconceptions is thinking you’ll be automatically enrolled in Medicare Part B. While automatic enrollment applies to those already receiving Social Security benefits, many USPS retirees, especially those delaying Social Security, need to actively enroll.

• Mark your calendar for your Initial Enrollment Period around your 65th birthday.

• Be proactive in enrolling to prevent coverage gaps and penalties.

How PSHB and Medicare Coordination Saves You Money

As a USPS employee or retiree, one significant advantage you have is the Postal Service Health Benefits (PSHB) program, which launched in January 2025, specifically designed to integrate effectively with Medicare. This integration can provide substantial savings if done correctly.

• Many PSHB plans offer reduced deductibles and co-insurance when you enroll in Medicare Part B.

• Certain plans even provide reimbursement or partial credits toward your Medicare Part B premium.

• You benefit from the Medicare Part D Employer Group Waiver Plan automatically provided through most PSHB plans, significantly lowering your prescription drug costs.

Make sure you carefully read your Annual Notice of Change (ANOC) to stay updated with how your PSHB coverage interacts with Medicare. This notice typically arrives by early fall each year, giving you ample time to plan ahead during the Open Season.

Timelines Matter—Stay Ahead of Surprises

In the Medicare world, timing is everything. To avoid costly mistakes, you must understand critical enrollment periods:

• Initial Enrollment Period (IEP): Seven months around your 65th birthday.

• General Enrollment Period (GEP): January 1–March 31, if you miss IEP (coverage starts July 1).

• Annual Open Enrollment: October 15–December 7, ideal for adjusting plans based on changing needs.

Each missed deadline carries financial repercussions—so mark these dates clearly and consult your PSHB documents each year.

Staying Alert Means Staying Ahead

Navigating Medicare Part B alongside PSHB might seem daunting, but awareness can save you hundreds, even thousands, annually. Regularly updating your knowledge on these rules, costs, and timelines can significantly reduce surprises.

Ready to Take Control of Your Medicare and PSHB Costs?

Medicare Part B can be tricky, but armed with knowledge, you can stay ahead. If you’re feeling overwhelmed, don’t hesitate to speak with a licensed agent listed on this website. They’ll guide you through every step, ensuring your retirement healthcare is manageable, predictable, and affordable.