Key Takeaways

• USPS retirees who are eligible for Medicare and are enrolled in the PSHB Program in 2025 must make a clear decision about Medicare Part B, as opting out may lead to limited drug coverage and higher out-of-pocket costs.

• Certain exemptions apply, but if you are not exempt, skipping Part B can jeopardize your access to integrated benefits under the new PSHB structure.

Understanding the New Landscape in 2025

If you are a USPS retiree or nearing retirement, 2025 has brought significant changes to your health benefits. With the launch of the Postal Service Health Benefits (PSHB) Program, your coverage now looks different than it did under the Federal Employees Health Benefits (FEHB) Program.

A major part of these changes involves Medicare Part B. You might be wondering whether you should enroll or skip it. The answer isn’t always straightforward, but this article will walk you through everything you need to consider before making that choice.

How PSHB Works With Medicare

Under the PSHB Program, Medicare integration is more than just an add-on — it is now a foundational part of the system. If you’re eligible for Medicare Part A and Part B, enrolling in both is expected unless you qualify for a specific exemption.

What happens when you enroll in Medicare Part B:

• Your PSHB plan becomes your secondary coverage.

• Your out-of-pocket costs often go down for medical services.

• You may receive enhanced benefits such as waived deductibles and reduced copayments.

• Prescription drug coverage becomes integrated through a Medicare Part D Employer Group Waiver Plan (EGWP).

If you don’t enroll in Medicare Part B:

• You may lose access to prescription drug coverage through PSHB.

• You will be responsible for a higher share of healthcare costs.

• You may not be able to re-enroll in the drug coverage component later, except during limited periods.

Mandatory Enrollment Rules

The PSHB Program includes a Medicare Part B enrollment requirement for certain individuals starting in 2025. You must be enrolled in Medicare Part B if:

• You are a USPS annuitant or a covered family member who is eligible for Medicare Part A.

• You are not exempt due to special conditions.

Who Is Exempt From the Requirement

Not everyone has to enroll in Medicare Part B. You are exempt if:

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

• You are age 64 or older as of January 1, 2025, and actively employed.

• You live outside the United States and do not receive services covered by Medicare.

• You are eligible for healthcare from the Department of Veterans Affairs (VA) or Indian Health Services (IHS).

If you fall into any of these groups, you can keep your PSHB coverage without enrolling in Part B.

The Costs of Skipping Part B

Some retirees consider skipping Part B to avoid the monthly premium. While the standard premium in 2025 is $185, skipping it could lead to much higher costs in the long run.

Potential consequences include:

• Loss of prescription drug coverage: If you skip Part B, your PSHB plan won’t provide drug benefits through the Medicare Part D EGWP.

• Higher out-of-pocket costs: Without Medicare as your primary payer, you’ll likely pay more for doctor visits, hospital stays, and other services.

• Late enrollment penalty: If you decide to enroll in Part B later, you’ll face a 10% penalty for each 12-month period you delayed — and that penalty is permanent.

Drug Coverage Is Tied to Part B

One of the most overlooked facts in the new PSHB system is that prescription drug coverage is now tied to Medicare enrollment. If you opt out of Part B, you’ll also be opting out of drug benefits in many plans.

Your PSHB plan automatically includes Part D prescription coverage through an EGWP if you’re enrolled in Part B. This integration provides:

• A $2,000 annual out-of-pocket cap on drug expenses

• $35 monthly insulin caps

• Access to an expanded pharmacy network

Without Part B, these drug-related savings and protections disappear.

No Second Chances Without a Special Enrollment Period

Once you decline Medicare Part B, you can only enroll later during a Special Enrollment Period (SEP) or the General Enrollment Period (GEP) each year. SEPs require specific life events, such as losing coverage elsewhere. If no SEP applies to you, you’ll need to wait until January 1 to March 31 to enroll, with coverage starting in July — and late penalties will apply.

In practical terms, skipping Part B now could mean going months — or even years — without full coverage.

Should Current Employees Care?

Yes, if you’re still employed by USPS but are approaching Medicare eligibility, you must prepare now. If you will be age 64 or younger on January 1, 2025, and plan to retire afterward, Medicare Part B enrollment will be mandatory for you to maintain full PSHB coverage once you retire and become eligible for Medicare.

Planning ahead is essential. Delaying or misunderstanding the requirements may leave you with incomplete coverage later.

Enrollment Coordination and Timelines

To make the transition smoother, a one-time Special Enrollment Period ran from April 1 through September 30, 2024, for those who previously declined Part B. This allowed late enrollees to join Part B without penalty.

Now that 2025 has started, any new enrollment must follow the regular Medicare timelines:

• Initial Enrollment Period (IEP): 7-month window around your 65th birthday

• General Enrollment Period (GEP): January 1 to March 31

• Coverage begins: July 1 if enrolled during GEP

What You Risk Giving Up

If you choose to skip Medicare Part B, you could miss out on several cost-saving and protective benefits:

• Lower deductibles and copayments

• Coordination between Medicare and your PSHB plan for seamless billing

• Comprehensive prescription drug coverage

• Protection from high out-of-pocket spending

You also risk being unable to rejoin those benefits later, especially the drug component, unless you qualify for a SEP.

How to Make the Right Decision

You should carefully assess the financial and healthcare implications of enrolling versus skipping Part B. This decision affects more than just your wallet — it affects your access to care, medications, and peace of mind.

Consider speaking with a licensed agent who understands the PSHB system. They can evaluate your eligibility, exemptions, and how your personal situation aligns with the new rules.

You should also:

• Review your PSHB plan brochure to see how it works with Medicare

• Confirm if you meet any exemption criteria

• Talk to your HR department or retirement advisor if you’re still employed

• Compare long-term costs, not just premiums

Don’t Risk Your Retirement Health Coverage

Medicare Part B isn’t just another option anymore — it’s a critical component of your USPS retiree health benefits under the PSHB Program. Skipping it may seem like a cost-saving move, but the long-term consequences can be far more expensive.

Whether you’re already retired or planning to retire soon, take the time to understand the rules in 2025 and beyond. Being proactive today can save you financial and medical headaches later.

Speak with a licensed agent listed on this website for help navigating your PSHB and Medicare options.