Key Takeaways

• Coordinating Medicare with your Postal Service Health Benefits (PSHB) plan in 2025 can reduce your overall healthcare costs, but only if you understand how they interact.

• Certain Medicare enrollment requirements apply specifically to PSHB annuitants, and failing to meet them could result in losing drug coverage or paying higher out-of-pocket costs.

Why Adding Medicare to Your PSHB Coverage Isn’t Just a Technicality

The shift from the Federal Employees Health Benefits (FEHB) Program to the new Postal Service Health Benefits (PSHB) Program is now fully implemented in 2025. With it comes a crucial question: Should you combine Medicare with your PSHB plan? For many annuitants and eligible family members, the answer is yes—but only if you clearly understand what combining these two systems really means.

Too often, people assume Medicare will simply pick up where their PSHB plan leaves off. That’s not always the case. In fact, what seems like a straightforward pairing can introduce costly gaps if you miss key steps or misunderstand how the two programs coordinate.

Understanding the PSHB Program in 2025

PSHB replaces FEHB for Postal Service employees and retirees starting this year. The coverage, premiums, cost-sharing structures, and plan offerings are now tailored specifically for Postal workers.

Here’s what you need to know about PSHB in 2025:

• You must enroll in a PSHB plan to maintain health coverage if you’re an annuitant.

• PSHB plans offer integrated prescription drug coverage through a Medicare Part D Employer Group Waiver Plan (EGWP).

• Medicare-eligible annuitants must enroll in Medicare Part B to maintain PSHB medical and drug coverage, unless they qualify for specific exemptions.

How Medicare Parts A and B Fit Into the Equation

Medicare consists of several parts, but the two most relevant for PSHB enrollees are:

• Part A (Hospital Insurance): Usually premium-free, covers inpatient hospital stays, skilled nursing facility care, and hospice.

• Part B (Medical Insurance): Requires a monthly premium and covers outpatient care, doctor visits, and preventive services.

When you enroll in both Medicare Part A and B, your PSHB plan generally becomes your secondary payer. This means Medicare pays first, and PSHB covers what Medicare doesn’t, often reducing your out-of-pocket costs.

However, you must be enrolled in both Parts A and B to receive the full cost-sharing benefits under PSHB. Skipping Part B—unless exempt—means you might lose prescription drug coverage and pay higher medical costs.

What Happens If You Don’t Enroll in Medicare Part B?

In 2025, the rules are firm: If you are a Medicare-eligible Postal Service annuitant or family member, you must enroll in Medicare Part B to maintain your PSHB plan’s full benefits.

If you don’t enroll:

• You lose access to the integrated Medicare Part D drug coverage through PSHB.

• Your PSHB plan may act as your primary payer, but with higher deductibles, copays, and coinsurance.

• You might face late enrollment penalties if you decide to join Medicare Part B later.

Exceptions to the Rule

You may be exempt from the Part B requirement if:

• You retired on or before January 1, 2025.

• You were at least age 64 as of January 1, 2025.

• You live outside the United States.

• You receive care through the Indian Health Service or the Department of Veterans Affairs (VA).

Prescription Drug Coverage Is Tied to Your Medicare Enrollment

All Medicare-eligible PSHB members are automatically enrolled in a Medicare Part D EGWP plan for prescription drug coverage. This integration brings some major advantages:

• Lower out-of-pocket drug costs due to Medicare’s $2,000 annual cap starting in 2025.

• Expanded pharmacy networks that improve access to medications.

• Insulin costs capped at $35 per month under Medicare rules.

But you only get these advantages if you are enrolled in Medicare Part B. Opting out means you lose access to the EGWP coverage, and re-enrollment is restricted.

Coordinating Benefits: Who Pays First?

When you’re enrolled in both Medicare and PSHB:

• Medicare pays first for services covered under Parts A and B.

• Your PSHB plan pays second, picking up costs like coinsurance, copayments, and deductibles that Medicare doesn’t fully cover.

This coordination reduces your total expenses and extends the value of your coverage.

If you only have PSHB and decline Medicare (Part B especially), your PSHB plan becomes the sole payer. That can lead to much higher out-of-pocket costs.

Timing Matters: When to Enroll

Medicare enrollment isn’t automatic unless you’re already receiving Social Security benefits. Here’s when to act:

• Initial Enrollment Period (IEP): Begins three months before your 65th birthday and continues for seven months.

• Special Enrollment Period (SEP): If you delayed Medicare due to working past 65, you have eight months after leaving employment to enroll in Part B without a penalty.

• Open Enrollment Period: October 15 to December 7 annually, but this applies mainly to Part C and D plan changes—not initial Part B enrollment.

Coordination with PSHB Timelines

The PSHB Open Season runs from November to December each year. This is your only opportunity to make changes unless you qualify for a Qualifying Life Event (QLE).

How PSHB and Medicare Lower Your Total Costs

Combining PSHB and Medicare typically lowers your overall healthcare spending by:

• Reducing or eliminating PSHB deductibles if your plan offers integration benefits.

• Offering more predictable costs, especially with the Medicare Part D $2,000 drug cap.

• Providing broader access to providers, especially if your PSHB plan has a restrictive network but Medicare doesn’t.

Some PSHB plans may even offer Part B premium reimbursement or lower cost-sharing as an incentive to coordinate with Medicare.

Hidden Pitfalls If You Don’t Pay Attention

There are real consequences if you assume that everything just works out automatically:

• Failing to enroll in Medicare Part B could mean losing drug coverage and facing high out-of-pocket costs.

• Not reviewing your PSHB plan annually may result in sticking with a plan that no longer meets your needs.

• Overlooking the PSHB Open Season can lock you into a plan for another year unless you qualify for a QLE.

Reviewing and Adjusting Your Coverage

Each year, PSHB sends out an Annual Notice of Change (ANOC). It’s critical to read this document to understand any shifts in:

• Premiums

• Deductibles and copayments

• Covered services and provider networks

• Prescription drug formularies

Don’t treat this as junk mail. These changes can materially affect your costs and coverage.

Understanding the Role of the Medicare Prescription Payment Plan

Starting in 2025, Medicare offers a new feature: the Medicare Prescription Payment Plan. This allows you to spread out your out-of-pocket drug costs over the calendar year instead of paying large sums all at once.

If you’re enrolled in both Medicare and PSHB, you’ll likely benefit from this feature, especially if you take expensive medications.

To use it, you must opt in. If you don’t, your full cost-sharing will be due at the pharmacy counter as usual.

Is It Worth It to Combine Medicare and PSHB?

For most Postal Service annuitants, the answer in 2025 is yes—but only if:

• You are enrolled in both Medicare Parts A and B.

• You understand which plan pays first.

• You monitor your coverage each year.

• You take advantage of cost-reducing benefits like the $2,000 drug cap and prescription payment plan.

The risks of skipping Medicare Part B are now too high under PSHB to ignore.

Making the Most of Your Coverage Options

Understanding how PSHB and Medicare work together helps you avoid costly mistakes. A coordinated approach can give you peace of mind and more control over your health costs in retirement.

If you feel unsure about what to choose, how to enroll, or what changes affect your situation, it’s time to speak with a professional.

Speak with a licensed agent listed on this website to help clarify your PSHB and Medicare options and guide you through smart, timely enrollment decisions.