Key Takeaways

• Enrolling in Medicare Part B is not optional for many Postal retirees under PSHB. Skipping it can lead to higher out-of-pocket costs, penalties, and even loss of drug coverage.

• In 2025, PSHB plans are designed to coordinate with Medicare. Refusing Part B can significantly reduce your benefits, even if you keep your PSHB coverage.

Medicare and PSHB Are Meant to Work Together

With the 2025 transition to the Postal Service Health Benefits (PSHB) program, a coordinated approach with Medicare is now the norm—not the exception. If you’re 65 or older and entitled to Medicare, your PSHB plan expects you to enroll in both Medicare Part A and Part B. This expectation isn’t just procedural—it’s built into how your plan pays benefits.

Medicare becomes your primary payer, with PSHB acting as secondary. This two-layered structure is designed to reduce your costs. But if you decline Medicare Part B, the financial burden can shift sharply to you.

What Happens When You Say No to Part B

You might think keeping your PSHB plan is enough. After all, it provides strong coverage. But without Medicare Part B, your PSHB plan becomes the primary payer for outpatient services, and that changes the cost structure entirely:

• Higher cost-sharing: Without Medicare paying first, PSHB plans no longer cover services at the lower, secondary-payer rate.

• No reimbursement of Part B premiums: Many PSHB plans in 2025 offer partial reimbursement for Medicare Part B premiums—but only if you are actually enrolled.

• Potential loss of drug coverage: PSHB prescription drug coverage is coordinated through Medicare Part D via an EGWP (Employer Group Waiver Plan). Opting out of Medicare Part B can jeopardize your eligibility for this drug plan.

The 2025 Requirement: When Skipping Part B Can Cost You More

Under the new PSHB structure in 2025, you must enroll in Medicare Part B unless you meet a specific exemption. These include:

• Retired on or before January 1, 2025, and not enrolled in Part B

• Actively employed and age 64 or older as of January 1, 2025

• Living abroad

• Receiving benefits through the VA or Indian Health Service

If you don’t meet one of these criteria, declining Part B can result in reduced PSHB benefits—or complete loss of your plan’s prescription drug coverage.

Financial Penalties for Late Enrollment

If you delay Part B enrollment without valid coverage (such as being actively employed), you’ll face a lifetime late enrollment penalty. This penalty increases your monthly Part B premium by 10% for each full 12-month period you were eligible but not enrolled. In 2025, the standard Part B premium is $185 per month. A delay of three years could add more than $55/month to your cost—every month, for life.

And remember: delaying also means you lose out on potential savings your PSHB plan would have offered by coordinating with Medicare.

You Still Pay PSHB Premiums Even Without Part B

It’s a common misconception that skipping Medicare Part B makes your healthcare cheaper. But even if you opt out of Part B, you still pay your full PSHB premium. Without the support of Medicare’s primary coverage, those PSHB premiums give you less value, not more.

You may also lose out on:

• Lower copayments for doctor visits

• Waived or reduced deductibles

• Full access to the integrated prescription drug benefits

Cost Sharing Without Part B Is Substantial

When PSHB acts as the secondary payer (after Medicare), your share of costs is often minimal. But if you skip Part B, your PSHB plan assumes full responsibility for outpatient care—and you assume full financial exposure under the plan’s deductibles and coinsurance.

Here’s how that might play out under current 2025 PSHB plan structures:

• Deductibles can range from $350 to $2,000 depending on the plan

• Coinsurance for outpatient services can range from 10% to 50%

• Out-of-pocket maximums can be as high as $15,000 for a family

These costs are far higher than what you’d pay with Medicare Part B as your primary insurance.

Drug Coverage Could Be Disrupted

If you skip Medicare Part B, you may also forfeit access to your PSHB prescription drug plan, which is offered through Medicare Part D as part of an Employer Group Waiver Plan (EGWP). Here’s what that could mean:

• No drug coverage at all under PSHB

• No ability to re-enroll in the EGWP later unless you qualify for a future Special Enrollment Period

• Higher out-of-pocket drug costs, especially for brand-name or specialty medications

In 2025, the EGWP model includes critical enhancements like a $2,000 cap on annual out-of-pocket drug costs. You lose access to that protection if you skip Part B and thus can’t enroll in the EGWP.

You Miss Out on Premium Reimbursements

Many PSHB plans now offer partial or full reimbursement for your Part B premium—but only if you are enrolled in both Medicare Part A and B. That means if you skip Part B, you not only pay more for your health services but also miss out on a benefit that helps reduce your monthly Medicare costs.

For some retirees, this reimbursement adds up to hundreds of dollars annually. That’s real money you’re leaving on the table.

You May Be Denied Certain Benefits

Even if your PSHB plan doesn’t drop you entirely, skipping Medicare Part B can result in limitations like:

• No coverage for durable medical equipment

• Reduced reimbursement for lab work and diagnostic services

• Higher copays for outpatient care

Plans are increasingly coordinated-care dependent. Their value is built on Medicare being the first payer. Without that, you’re working with a plan that isn’t being used the way it was designed in 2025.

You Risk Involuntary Coverage Loss

While you may retain your PSHB plan without enrolling in Part B, your prescription drug coverage through EGWP is not guaranteed.

OPM has made clear: If you are required to enroll in Medicare Part B and don’t, you may lose your drug coverage permanently. That’s not something you can fix later during Open Season. It’s a one-way decision with permanent effects.

What If You’re Still Working?

If you’re actively employed and covered by a PSHB plan due to your current employment, you don’t need to enroll in Part B right away. Medicare recognizes active employment as valid coverage.

But the clock starts ticking as soon as you retire. You get an 8-month Special Enrollment Period to sign up for Part B without penalty. Miss it, and you face:

• Late enrollment penalties

• Waiting periods for coverage

• Loss of PSHB drug benefits if you’re Medicare-eligible

Planning ahead is critical.

Why Some Still Hesitate—and Why That’s Risky

The main reasons retirees skip Part B often include:

• Not wanting to pay the premium

• Believing PSHB alone is enough

• Misunderstanding how coordination works

But in 2025, with PSHB specifically designed to work with Medicare, these assumptions can be costly. Your financial exposure grows, your benefits shrink, and any potential premium savings vanish quickly in the face of even modest medical expenses.

Where This Leaves You Financially

Skipping Medicare Part B in 2025 can mean:

• Higher cost-sharing

• Loss of coordinated benefits

• No drug coverage under PSHB

• Permanent late enrollment penalties

• Missed premium reimbursements

The total financial hit can easily exceed thousands per year—far more than the standard Part B premium.

Let an Expert Help You Avoid the Pitfalls

If you’re unsure whether you’re required to enroll in Medicare Part B or whether your PSHB plan will continue to work for you without it, speak with a licensed agent listed on this website. The rules are nuanced, and the penalties are not always reversible. Making the right decision now can save you thousands later.