Key Takeaways

• Once you turn 65 and enroll in Medicare Part B, Medicare typically becomes your primary payer, and your PSHB plan becomes secondary—but not understanding this switch can lead to unexpected costs.

• PSHB plans often coordinate with Medicare to reduce your cost-sharing, but only if you’re enrolled in both. Skipping Medicare enrollment when required can cause coverage denials and billing issues.

When Medicare Takes the Lead in 2025

As a Postal Service worker or retiree, your health coverage under the Postal Service Health Benefits (PSHB) Program is solid. But what many don’t fully grasp is how dramatically the coordination of benefits changes once you become eligible for Medicare—especially starting at age 65. If you don’t understand the shift in payer priority, you could be stuck with medical bills your plan won’t cover.

In 2025, Medicare becomes the primary payer for most Medicare-eligible PSHB annuitants and family members. This means Medicare pays first, and your PSHB plan pays second. However, this only applies if you are actually enrolled in Medicare Part B. If you aren’t, the PSHB plan may act as primary, but with major coverage limitations.

Let’s look at what this means for you—and why waiting to figure it out later could leave you with avoidable expenses.

The Critical Role of Age 65

Turning 65 is more than a birthday milestone—it’s when Medicare eligibility begins for most Americans. Under the PSHB program rules, you’re expected to enroll in Medicare Part B once you become eligible, unless you fall into a narrow exception category.

If you continue working past 65 and maintain active employee status, your PSHB plan may remain primary. But once you retire, the shift is automatic: Medicare becomes primary if you are enrolled.

Here’s how the change usually plays out:

• Before age 65: PSHB is your only health plan (primary coverage).

• At age 65 and still working: PSHB remains primary.

• At age 65 and retired: Medicare becomes primary; PSHB becomes secondary if you are enrolled in Medicare Part B.

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

If you’re Medicare-eligible but choose not to enroll in Part B, PSHB plans do not pay as primary for services that Medicare would have covered. That leaves you exposed to paying most or all of those costs out-of-pocket.

That includes:

• Outpatient visits

• Diagnostic tests

• Emergency room services

• Durable medical equipment

• Outpatient surgeries

This is where many retirees get caught off guard. They assume their PSHB plan will simply cover what Medicare doesn’t. But PSHB plans are designed to coordinate with Medicare—not replace it. That coordination relies on you being enrolled in Medicare.

Why PSHB Plans Require Medicare Enrollment

Since 2025, PSHB plans integrate closely with Medicare Part B. The U.S. Office of Personnel Management (OPM) requires Medicare-eligible annuitants to enroll in Part B unless exempt to retain full PSHB benefits.

Exemptions apply if:

• You retired on or before January 1, 2025, and weren’t already enrolled in Part B.

• You or a covered family member are living abroad.

• You are eligible for care through the VA or Indian Health Services.

For everyone else, declining Medicare Part B means:

• Your PSHB plan may deny claims Medicare would have covered.

• You may face gaps in outpatient and preventive coverage.

• You risk being dropped from integrated pharmacy benefits.

Coordination of Benefits in Action

When Medicare is primary and PSHB is secondary, here’s what typically happens:

• Medicare pays first—usually 80% of approved charges for Part B services.

• Your PSHB plan pays second—often covering the remaining 20%, reducing or eliminating your out-of-pocket costs.

This coordination protects you financially, especially if your PSHB plan also offers:

• Waived deductibles for Medicare enrollees

• Lower coinsurance

• Premium rebates for those with Medicare Part B

But again—none of this applies if you skip enrolling in Part B. In that case, you’re responsible for the portion Medicare would have paid.

Part D Drug Coverage Under PSHB

In 2025, PSHB plans automatically include prescription coverage for Medicare-eligible annuitants through a Medicare Part D Employer Group Waiver Plan (EGWP). This coverage offers:

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

• Access to a broad network of retail and mail-order pharmacies

• Monthly payment options for spreading drug costs over the year

However, if you decline Medicare Part B and opt out of the Part D EGWP, your PSHB plan may drop your drug coverage. This can result in:

• High medication costs

• No access to the $2,000 cap

• Limited pharmacy choices

How Timing Affects Costs and Penalties

If you delay enrolling in Medicare Part B beyond your Initial Enrollment Period (IEP)—which spans seven months around your 65th birthday—you may face late enrollment penalties.

In 2025, the Part B penalty is 10% of your monthly premium for each full 12-month period you were eligible but didn’t enroll. This penalty is permanent and adds to your Part B premium every month for the rest of your life.

For PSHB retirees, this could mean:

• Paying more over time for something you’ll eventually need

• Losing access to full PSHB coordination benefits

• Being locked out of Part B until the next General Enrollment Period (January–March each year), with coverage delayed until July 1

Impact on Hospital and Skilled Nursing Costs

Medicare Part A (hospital coverage) typically remains premium-free if you have 40 quarters of work history. It pays first for inpatient care, with the PSHB plan helping cover remaining costs like:

• Hospital coinsurance

• Skilled nursing facility stays

• Post-discharge care

With both Medicare and PSHB working together, you’re better protected. But if you have only PSHB coverage and no Medicare Part A (uncommon), you’re likely to pay significantly more.

Key Deadlines for PSHB Enrollees

Here are important Medicare timelines to remember in 2025:

• Initial Enrollment Period (IEP): Starts 3 months before, includes the month of, and extends 3 months after your 65th birthday.

• General Enrollment Period (GEP): January 1 to March 31 each year, with coverage starting July 1.

• Special Enrollment Period (SEP): Available in limited situations, such as losing employer coverage or moving.

Missing these windows may limit your options and raise your long-term costs.

What to Review Before You Turn 65

To prepare for the Medicare and PSHB transition, review the following:

• Are you eligible for premium-free Part A?

• Do you fall into a Medicare Part B exemption category?

• Have you received your Medicare card?

• Does your PSHB plan offer Part B premium reimbursement?

• Are you enrolled in the EGWP drug benefit?

Take time to check your current plan brochure and confirm coordination rules now, not after a denied claim.

Getting PSHB and Medicare to Work for You

When you enroll in Medicare Part A and B at 65 and keep your PSHB plan, you create a dual-layered system where:

• Medicare handles primary medical costs

• PSHB helps pay the remainder

• You access enhanced drug coverage and possible premium reimbursements

Failing to enroll can mean reduced benefits, higher costs, and limited access to vital care. Understanding this now can spare you major problems later.

Don’t Wait Until It’s Too Late to Get Clarity

The transition to Medicare as your primary payer is one of the most important financial moments in your PSHB journey. Many retirees don’t realize how vital Medicare enrollment is until claims start getting denied—and by then, it’s often too late to avoid penalties or fill the coverage gaps.

Take action now. If you’re approaching age 65, review your Medicare options carefully, and check how your PSHB plan coordinates with Parts A and B. If you’re unsure whether you’re required to enroll or how to time it, get in touch with a licensed agent listed on this website who can guide you through your specific situation.