Key Takeaways

• Medicare and PSHB are both critical parts of your healthcare coverage in retirement, but without careful coordination, you could face denied claims, surprise bills, or reduced benefits.

• Understanding which plan pays first and how cost-sharing works in 2025 can protect you from gaps in coverage and unnecessary out-of-pocket expenses.

Medicare and PSHB: What’s the Relationship in 2025?

As of 2025, if you are a Postal Service retiree or an eligible family member and you are entitled to Medicare, you are expected to coordinate that coverage with your Postal Service Health Benefits (PSHB) plan. This new requirement changes how your medical bills are processed, and more importantly, who pays them first.

Medicare is the primary payer for most enrollees aged 65 and older who meet eligibility, while your PSHB plan becomes the secondary payer. This means that Medicare Part A and Part B pay their share of your healthcare costs first, and then PSHB picks up the remaining balance according to its benefits and cost-sharing rules.

This structure can work well—when it works. But if there’s a breakdown in enrollment timing, billing coordination, or plan understanding, it’s usually you, the patient, who ends up paying more than expected.

The Risk of Missed Medicare Enrollment

One of the most common and costly mistakes PSHB members make is delaying Medicare Part B enrollment. In 2025, Medicare-eligible annuitants and their Medicare-eligible family members are generally required to enroll in Part B to keep full PSHB benefits. Those who retired on or before January 1, 2025, may be exempt from this rule, but they still need to evaluate whether enrolling makes sense financially.

What happens if you skip it?

• Your PSHB plan may not cover certain services unless Medicare is also paying its portion first.

• You may face a late enrollment penalty that increases your monthly Part B premium for life.

• Providers may bill you directly for services that should have been covered if Medicare had been properly in place.

Timing is key. Your initial enrollment period for Medicare begins three months before your 65th birthday and lasts for seven months. Missing this window triggers delays and penalties.

Who Pays First? Know the Order of Coverage

Understanding who pays first—Medicare or PSHB—is critical in 2025. In most cases:

• Medicare pays first if you are retired and over 65.

• PSHB pays first if you are still an active postal employee and over 65.

But it gets complicated if you’re covering a spouse or dependent, especially one who is under 65 or has a different Medicare eligibility status. This coordination becomes even more tangled if you’re seeing out-of-network providers or receiving care outside the United States.

If the proper primary coverage isn’t applied, your claim may be denied or only partially reimbursed—forcing you to navigate appeals or pay out-of-pocket.

How Medicare Part D and PSHB Prescription Benefits Interact

In 2025, your PSHB plan provides prescription drug coverage through a Medicare Part D Employer Group Waiver Plan (EGWP) if you are Medicare-eligible. This is automatic unless you opt out, which is strongly discouraged.

Key considerations:

• This Part D integration provides a $2,000 annual out-of-pocket cap on prescription drugs.

• If you opt out of the integrated Part D plan, you lose drug coverage under your PSHB plan entirely.

• Late enrollment in Part D can result in permanent penalties unless you have creditable coverage elsewhere.

Pharmacies and providers must be properly coded in the system to avoid billing issues. If you go to a pharmacy that doesn’t coordinate with your Medicare drug plan, you could be charged full price.

Cost Sharing Doesn’t Always Align

Medicare and PSHB plans don’t always line up when it comes to cost-sharing. For instance:

• Medicare has a Part B deductible of $257 in 2025.

• PSHB plans may also have their own in-network deductibles ranging from $350 to $500 for Self Only coverage.

• Coinsurance and copayments for services like emergency care, durable medical equipment, and outpatient surgery may differ significantly between Medicare and PSHB.

This can result in double-dipping—where you pay two deductibles—or unexpected out-of-pocket expenses if you assumed one plan would fully cover a service. Always check whether your provider accepts Medicare and PSHB and confirm how each plan treats the specific service.

Coordination Errors That Lead to Costly Surprises

In 2025, billing errors due to poor coordination are still a common problem. You might face:

• Duplicate billing when both Medicare and PSHB are charged the full amount.

• Claim rejections due to incorrect primary payer designation.

• Out-of-pocket charges for services that could have been fully or mostly covered.

How can this happen?

• Your provider may not have your updated Medicare and PSHB information.

• You might have opted out of Medicare Part B or D unknowingly.

• You didn’t inform both carriers of your coordination status.

These mistakes can take months to resolve and may result in balance bills that Medicare and PSHB won’t touch—leaving you stuck.

Special Enrollment Periods Don’t Fix Everything

If you miss your initial Medicare enrollment, you may qualify for a Special Enrollment Period (SEP), especially if you had other creditable coverage. But these periods are time-sensitive and don’t always eliminate penalties or delays.

For example:

• If you wait until the General Enrollment Period (January 1 to March 31), your Medicare coverage begins in July.

• During this gap, your PSHB plan may deny services it expects Medicare to cover first.

• Penalties for late enrollment in Part B can add up quickly, especially over time.

What You Should Do Each Year

To protect yourself from paying the price of coordination problems, there are several steps to take annually:

• Review your Annual Notice of Change (ANOC): This letter outlines PSHB and Medicare changes that affect your coverage.

• Check your coordination status: Ensure Medicare is listed as your primary payer (if retired) and that both carriers have your correct information.

• Evaluate your prescription coverage: Confirm you’re enrolled in the integrated Part D plan through PSHB.

• Update your providers: Make sure all your doctors, specialists, and pharmacies are aware of your Medicare and PSHB status.

If you’re uncertain, get professional help before Open Season (typically November through December) to avoid costly surprises the following year.

Why the Burden Falls on You

Despite both programs being government-administered, the responsibility to coordinate your benefits correctly falls mostly on your shoulders. PSHB and Medicare don’t automatically work in perfect harmony. If there’s a mistake in claims submission, benefit integration, or provider billing, it’s not the agency or provider that suffers—it’s you.

And in 2025, more PSHB plans require Medicare Part B enrollment to offer full cost-sharing benefits. This means you’re not just penalized for not enrolling—you might also lose valuable protections like waived deductibles and lower copays.

Even when coordination works, staying informed and active in managing your healthcare paperwork is the only way to ensure your plans are doing what they’re supposed to do.

Don’t Let a Simple Mistake Turn Into a Financial Burden

This isn’t just about coverage—it’s about protecting your financial health. A small misstep like skipping a Part B enrollment, overlooking a Special Enrollment Period, or assuming your PSHB plan will pay first can cost you thousands.

By understanding the mechanics of Medicare and PSHB coordination in 2025, you’re taking charge of your retirement security. Review your options thoroughly, communicate with both Medicare and your PSHB provider, and double-check your coverage alignment.

Need help figuring out what applies to you? Get in touch with a licensed agent listed on this website. They can review your unique situation and help ensure you aren’t left paying the price for someone else’s mistake.