Key Takeaways

• Enrolling in Medicare Part B is not optional for many PSHB annuitants in 2025—it’s a core requirement that directly affects your plan’s benefits.

• Making incorrect assumptions about Medicare coordination could leave you with higher out-of-pocket costs, denied claims, or gaps in prescription drug coverage.

Medicare and PSHB Work Together—But Only If You Do Your Part

If you’re a Postal Service retiree or annuitant enrolled in the new Postal Service Health Benefits (PSHB) Program in 2025, you might be surprised at how tightly your PSHB plan is linked to Medicare. While it’s easy to assume you can delay or decline Medicare enrollment and still get full PSHB benefits, that assumption could lead to costly mistakes.

Here’s what you need to know about the required coordination—and what could happen if you overlook the details.

You May Be Required to Enroll in Medicare Part B

In 2025, Medicare-eligible annuitants and their covered family members must generally be enrolled in Medicare Part B to maintain full PSHB coverage. If you fall into one of the following categories, this rule applies to you:

• You are a retired Postal Service annuitant and turned 65 before or during 2025.

• You have a Medicare-eligible family member (such as a spouse) covered under your PSHB plan.

There are limited exceptions, such as:

• If you retired on or before January 1, 2025, and are not currently enrolled in Medicare Part B.

• If you live outside the United States.

• If you’re covered under Indian Health Services or certain VA benefits.

Missing Medicare Part B enrollment—without qualifying for an exemption—means your PSHB plan may not pay for many services that Medicare would typically cover first.

Timing Matters More Than You Think

Medicare enrollment timelines are strict. Your Initial Enrollment Period (IEP) spans 7 months: 3 months before, the month of, and 3 months after your 65th birthday. If you miss that, you must wait for the General Enrollment Period (January 1 – March 31), with coverage beginning in July—and penalties may apply.

This delay can directly reduce your PSHB benefits during the waiting period. Claims that would normally be paid by Medicare first might be denied or only partially paid by your PSHB plan if you’re not enrolled in Part B.

Your PSHB Plan Could Deny Claims Without Part B

PSHB plans are built to coordinate with Medicare. When you’re enrolled in both, Medicare pays first, and PSHB picks up much of the remainder. But without Medicare Part B:

• PSHB plans may pay less for outpatient services.

• You may face higher coinsurance or deductibles.

• Certain benefits may be completely excluded.

In other words, skipping Medicare doesn’t just reduce your coverage—it changes the rules your plan follows when processing claims.

Prescription Drug Coverage Changes With Medicare

Another mistake is assuming your PSHB plan’s drug coverage will remain the same regardless of Medicare status. In 2025, if you’re enrolled in Medicare, your PSHB plan automatically includes a Medicare Part D Employer Group Waiver Plan (EGWP).

Benefits include:

• Lower out-of-pocket prescription drug costs.

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

• Access to expanded pharmacy networks.

But if you opt out of the Medicare drug plan or delay enrollment, you lose these enhanced benefits and may face:

• Higher drug costs.

• Limited pharmacy access.

• Gaps in coverage.

Delaying Medicare Could Cost You for Life

Enrolling late in Medicare Part B without a valid reason results in a permanent monthly penalty. In 2025, that penalty is 10% for each full 12-month period you delayed enrollment.

Even worse, some PSHB plans may still require Part B enrollment for full coordination—even if you’re willing to accept the penalty. You could be stuck paying more for less coverage.

You Can’t “Test Out” Medicare First

Some Postal retirees assume they can try PSHB alone, then add Medicare later if needed. But PSHB coordination doesn’t work like that. If you delay Medicare, your PSHB plan may not function as intended. Some services will simply not be covered, regardless of your willingness to pay out of pocket.

Additionally, switching to Medicare later may not restore missed benefits—and you may not be able to rejoin the Part D drug plan portion once you’ve opted out.

Thinking You’re Automatically Covered Is a Common Pitfall

Another major mistake is assuming that once you hit 65, Medicare enrollment happens automatically. That’s not always the case. You must manually enroll in Medicare Part B if:

• You are not already receiving Social Security.

• You delayed retirement past age 65.

Missing this step—even unintentionally—could jeopardize your PSHB benefits.

Family Members Are Affected Too

If your spouse or other covered family member is Medicare-eligible, their enrollment status affects your plan. If they’re required to have Medicare Part B and don’t enroll:

• Their benefits under your PSHB plan could be reduced or denied.

• Your plan’s prescription coverage structure could shift.

• Coordination of benefits could fail, leading to uncovered costs.

In 2025, plan coordination applies to the household, not just the enrollee. You need to track everyone’s eligibility and enrollment carefully.

You Can’t Rely on PSHB Plans to Notify You

While your plan may send notifications, it’s ultimately your responsibility to understand and meet the Medicare coordination requirements. Notifications might not arrive in time—or could be misunderstood.

That’s why reviewing your Annual Notice of Change (ANOC) and contacting a licensed agent listed on this website is critical. A single misstep could result in months of denied claims or benefit gaps.

Mistaking VA Coverage as a Medicare Substitute

If you’re a veteran receiving care through the VA, you might assume you don’t need Medicare. But PSHB plans still expect Medicare to pay first if you’re eligible. VA coverage is not considered primary under PSHB rules.

Skipping Medicare could mean your PSHB plan denies non-VA claims or pays far less than expected. VA care remains valuable, but it’s not a replacement for Medicare coordination.

Your Plan Selection May Not Fix Coordination Gaps

Some retirees believe that picking a more comprehensive PSHB plan will protect them from Medicare-related issues. But in 2025, all PSHB plans follow the same coordination rule: Medicare pays first, then PSHB fills in the gaps.

No plan offers full primary coverage for Medicare-eligible enrollees who skip Part B. Even the most robust plans assume you’re enrolled in Medicare. Choosing a “better” plan won’t override that requirement.

Why Proactive Enrollment Planning Saves You Money

The earlier you plan your Medicare enrollment, the better your outcome. Here’s what you should do:

• Review your Medicare eligibility before age 65.

• Enroll in Medicare Part B during your IEP.

• Make sure all Medicare-eligible family members are enrolled.

• Review plan communications and the Annual Notice of Change each fall.

• Consult with a licensed agent listed on this website to confirm requirements.

The financial difference between correct and incorrect coordination can amount to thousands of dollars each year.

Missteps in Medicare Coordination Can Be Corrected—But Only With Delays

If you’ve already made a mistake in 2025, you may still be able to fix it. But it’s rarely immediate. You’ll likely wait until the next General Enrollment Period, with coverage taking effect in July.

That could mean six months or more of:

• Denied medical claims.

• No drug coverage.

• Full out-of-pocket costs for outpatient services.

Timely correction is possible—but costly. It’s far better to get it right the first time.

Understanding Coordination Is Your Responsibility

Whether you’re about to retire, already receiving annuity payments, or assisting a Medicare-eligible family member, the rules of PSHB coordination in 2025 demand your attention. You can’t afford to ignore the timelines, rules, or financial impact.

This isn’t just about keeping your benefits—it’s about protecting your household from surprise bills, denied services, and long-term penalties. That starts with understanding how Medicare and PSHB fit together.

If you have questions or want help reviewing your options, speak to a licensed agent listed on this website for personalized guidance.