Key Takeaways

• While Medicare and PSHB plans can work well together, failing to understand enrollment rules, timelines, and coordination of benefits can leave you paying more out of pocket or even losing drug coverage.

• Many retirees assume they can delay Medicare or rely on PSHB alone, but in 2025, certain PSHB enrollees are required to enroll in Medicare Part B to keep their full benefits.

Medicare Feels Familiar, But PSHB Changes the Rules

You’ve probably heard of Medicare for decades, and by the time you retire from the Postal Service, you may feel like you’ve got it figured out. But now that you’re under the new Postal Service Health Benefits (PSHB) Program, your decisions about Medicare aren’t just important. They’re mandatory in many cases.

In 2025, the PSHB landscape isn’t the same as FEHB. A missed enrollment window, a misunderstood requirement, or a delayed action could lead to penalties, higher costs, or even a gap in prescription drug coverage. Here’s what you need to know before those gaps become financial surprises.

1. Medicare Is Not Optional for Many PSHB Annuitants

Under the PSHB Program, Medicare Part B enrollment is no longer just a smart choice for some enrollees. It’s now a condition to maintain full benefits in certain situations.

You must enroll in Medicare Part B if:

• You are a Medicare-eligible Postal Service retiree or family member, and

• You retired after January 1, 2025, or

• You were an active USPS employee on January 1, 2025, and turned 64 or younger that year.

If you fall into any of those categories and do not enroll in Part B when eligible, you risk losing access to full PSHB coverage. Not just medical services, but also integrated drug benefits may be affected.

2. Missing the Medicare Part B Deadline Can Cost You for Life

The Initial Enrollment Period (IEP) for Medicare is the seven-month window surrounding your 65th birthday: three months before, the month of, and three months after. If you miss this period and don’t have other qualifying coverage, you could face lifelong late enrollment penalties.

In 2025, the penalty for missing Medicare Part B enrollment remains 10% for each full 12-month period you were eligible but didn’t sign up. That penalty applies to your monthly premium for as long as you’re enrolled in Part B.

And under PSHB rules, failing to enroll in Part B when required may disqualify you from cost-saving features like:

• Lower deductibles

• Waived copayments

• Drug coverage integration through Medicare Part D EGWP

3. PSHB Drug Coverage Now Relies on Medicare

One of the biggest surprises for retirees is that the PSHB Program ties its prescription drug benefits to Medicare. In 2025, if you’re eligible for Medicare and enrolled in a PSHB plan, your drug coverage will be delivered through a Medicare Part D Employer Group Waiver Plan (EGWP).

If you fail to enroll in Medicare Part B as required, you may lose access to that prescription coverage entirely.

Key details:

• Medicare-eligible annuitants and their dependents are automatically enrolled in the EGWP if they have Part B.

• There is a $2,000 annual out-of-pocket cap under this Part D coverage.

• If you opt out of Part B, you may not be allowed to rejoin the EGWP unless you qualify for a future Special Enrollment Period.

4. Medicare and PSHB Plans Coordinate, But Not Automatically

Even if you’ve enrolled in Medicare, that doesn’t mean your PSHB plan will automatically coordinate benefits. You need to:

• Provide your Medicare Beneficiary Identifier (MBI) to your PSHB carrier.

• Confirm that Medicare is listed as your primary insurance with your providers.

• Use in-network providers for your PSHB plan to avoid higher out-of-pocket costs.

When coordinated properly:

• Medicare pays first

• PSHB plan pays secondary

• You may have little or no remaining balance on many services

But if you forget to share your Medicare details or rely on an out-of-network provider, you could end up paying full price for a service Medicare would have covered.

5. Your Costs Can Rise Quickly If You Don’t Align Your Coverage

Here’s where many retirees get caught off guard. Without Medicare Part B:

• You may owe full PSHB plan deductibles (up to $500 in-network)

• Coinsurance for services may be higher (up to 30% in-network)

• You could lose eligibility for cost-sharing reductions or drug coverage

With Medicare Part B:

• PSHB plans often reduce or waive deductibles

• Copays are lower or eliminated

• Prescription drug costs are capped

The difference in annual cost could be thousands of dollars depending on your medical needs.

6. The Out-of-Pocket Maximum Only Applies to In-Network Services

In 2025, PSHB plans have out-of-pocket maximums of $7,500 for Self Only and $15,000 for Self Plus One or Self and Family coverage. However, this protection only applies to in-network services.

If you skip Medicare and need to go out-of-network, or if your provider doesn’t accept your PSHB plan, those expenses may not count toward your out-of-pocket cap.

Medicare gives you nationwide provider access. Enrolling ensures:

• Better coordination with PSHB benefits

• Broader provider choices

• Reduced exposure to surprise bills

7. Special Enrollment Periods Exist, But Don’t Count on Them

If you missed enrolling in Medicare Part B, there are some Special Enrollment Periods (SEPs) available. But they’re narrow and often require proof of creditable coverage.

For PSHB retirees, SEPs include:

• Moving back to the U.S. from overseas

• Losing employer-sponsored coverage (not through your own decision)

• Qualifying for Medicaid or other special programs

In 2024, a one-time SEP was granted for Postal retirees, but that window closed on September 30, 2024. If you missed that, your next opportunity may come with a late penalty attached.

8. Medicare Premiums Are Income-Based

In 2025, the standard Medicare Part B premium is $185 per month. However, if your modified adjusted gross income (MAGI) from two years ago exceeds $106,000 (individual) or $212,000 (joint), you’ll pay an income-related monthly adjustment amount (IRMAA).

This higher premium is deducted directly from your Social Security payment (if receiving benefits), or billed quarterly.

Understanding IRMAA is essential because:

• It affects your monthly budget

• It’s based on old income, not current finances

• It can be appealed but requires paperwork and proof

9. Coordination Impacts Your Future Medical Planning

If you plan to travel, live abroad, or spend time in multiple states during retirement, your Medicare and PSHB choices impact how easily you can get care.

With Medicare Part B:

• You can see providers across the U.S. who accept Medicare

• PSHB coverage supplements what Medicare doesn’t pay

Without Part B:

• You are limited to PSHB in-network providers only

• You may not be covered for services outside your plan’s region

Even more important, PSHB plans are not designed to replace Medicare—they are meant to work with it.

10. The Rules May Continue to Evolve

As PSHB is still new in 2025, additional policy updates or enforcement mechanisms may emerge. You need to stay proactive by:

• Reviewing your Annual Notice of Change (ANOC)

• Checking mail for Medicare or PSHB-related updates

• Attending OPM webinars or reviewing published resources

The transition from FEHB to PSHB was more than a cosmetic change. It brought a structural shift in how health benefits work in retirement.

Protecting Yourself Starts With Awareness

Understanding your responsibilities under Medicare and PSHB is essential to avoiding coverage gaps, penalties, or surprise bills. While you may feel confident in your Medicare knowledge, 2025’s PSHB rules make it more important than ever to reevaluate what you think you know.

If you’re unsure how your Medicare eligibility interacts with PSHB requirements, don’t guess. Get in touch with a licensed agent listed on this website to help you review your enrollment timeline, benefits coordination, and coverage options.