Key Takeaways

• Delaying Medicare Part B enrollment past age 65 can trigger permanent late enrollment penalties, even if you’re currently covered under a Postal Service Health Benefits (PSHB) plan.

• In 2025, PSHB rules increasingly require Medicare-eligible annuitants and their covered family members to enroll in Medicare Part B to retain full health benefits.

Why Medicare Part B Matters If You Have PSHB

If you’re a Postal Service annuitant or family member covered under PSHB and are approaching age 65, you may assume your PSHB plan provides enough coverage on its own. However, that assumption can lead to expensive, permanent mistakes.

Starting in 2025, PSHB benefits are closely coordinated with Medicare. For many annuitants and eligible family members, Medicare Part B is no longer optional if you want to keep full PSHB coverage. Delaying enrollment can mean more than just gaps in care. It can also mean higher costs for the rest of your life.

What Happens When You Delay Medicare Part B

Medicare Part B covers outpatient care, doctor visits, durable medical equipment, preventive services, and some home health care. If you don’t sign up when first eligible, you may owe a late enrollment penalty of 10% for each 12-month period you delay, and that penalty lasts for as long as you have Medicare.

Even if you have a PSHB plan, that alone does not exempt you from the penalty unless you qualify for a valid Special Enrollment Period (SEP). If you retire before age 65 and do not have active employment-based coverage, your PSHB plan does not count toward delaying without penalty.

The Penalty in Numbers

• The Part B penalty is calculated as 10% of the standard Part B premium for each full 12-month period you delay.

• In 2025, the standard Part B premium is $185. A two-year delay could add 20%, or $37 per month, permanently.

• The penalty lasts for life, not just a one-time payment.

PSHB Integration with Medicare in 2025

The PSHB program is designed to work with Medicare once you turn 65. Beginning in 2025, new rules require most Medicare-eligible Postal Service annuitants and family members to enroll in both Part A and Part B to remain in a PSHB plan.

Key 2025 Requirements:

• You must enroll in Part B to keep your PSHB coverage once you’re Medicare-eligible, unless you’re exempt.

• Exemptions include:

  • Retired on or before January 1, 2025 and not enrolled in Part B.

  • Age 64 or older as of January 1, 2025 and not enrolled in Part B.

  • Living overseas.

  • Enrolled in VA health care or Indian Health Services.

If you do not meet one of these exceptions, you’ll need Part B to avoid losing your PSHB benefits.

Common Misunderstandings That Lead to Penalties

Many retirees believe their PSHB plan counts as employer coverage after retirement. Unfortunately, that’s not the case. Once you retire, your PSHB plan becomes annuitant coverage, not active employee coverage.

That distinction is critical. Only active employment-based health coverage allows you to delay Medicare Part B without a penalty. If you retired at 60 and waited until 67 to enroll in Part B, you’d be hit with a 70% penalty.

Myths to Watch For:

• “I’m covered by PSHB, so I don’t need Medicare yet.”

• “I can wait to enroll in Part B if I have good health coverage.”

• “I’ll enroll later during Open Enrollment.”

Each of these assumptions could lead to permanent penalties.

Timing Your Enrollment Matters

Medicare has very specific windows for when you can sign up. Missing these windows can cause delays and cost increases.

Initial Enrollment Period (IEP)

• Starts 3 months before your 65th birthday month.

• Ends 3 months after your birthday month (7 months total).

• Best time to enroll to avoid penalties and coverage gaps.

General Enrollment Period (GEP)

• Runs January 1 to March 31 each year.

• Used if you missed your IEP.

• Coverage begins July 1, and you may owe a late penalty.

Special Enrollment Period (SEP)

• Only available if you’re still working and covered by an active group health plan.

• You have 8 months after employment or coverage ends to sign up for Part B without penalty.

If you’re retired and only covered by PSHB, you won’t qualify for the SEP.

How PSHB and Part B Work Together

When enrolled in both PSHB and Medicare Part B, Medicare becomes the primary payer, and your PSHB plan becomes secondary. This usually results in:

• Lower out-of-pocket costs

• Waived deductibles and reduced copayments (varies by plan)

• Better coordination for doctor and outpatient services

If you skip Part B, your PSHB plan becomes primary, but you may pay:

• Higher deductibles

• Full outpatient costs Medicare would have covered

• Limited access to coordination benefits

Some PSHB plans may not cover certain services unless you have Medicare Part B.

Losing PSHB Drug Benefits by Skipping Part B

Starting in 2025, your PSHB plan will automatically include Medicare Part D prescription coverage through an Employer Group Waiver Plan (EGWP) if you enroll in Medicare. This is separate from your Part B enrollment but depends on it.

If you decline Medicare enrollment entirely, you may:

• Lose access to drug coverage under PSHB

• Be unable to re-enroll in drug benefits later unless under special rules

These drug plans come with important features like:

• A $35 insulin cap

• A $2,000 annual out-of-pocket maximum

• Wide national pharmacy networks

Skipping Part B could jeopardize access to these prescription savings.

What If You Already Delayed Part B?

If you’ve already delayed Medicare and believe you may face a penalty, you still have options:

• Enroll during the next General Enrollment Period: While you may face penalties, enrolling now limits future costs.

• Check your employment history: If you were actively employed and had employer coverage, you may qualify for a Special Enrollment Period.

• Talk to a licensed agent: Professional help can clarify timelines and minimize long-term penalties.

When You Might Be Exempt From Enrolling in Part B

There are limited circumstances where you can keep PSHB without enrolling in Part B:

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

• You’re 64 or older as of January 1, 2025, and not already enrolled in Part B.

• You live abroad and aren’t eligible for Medicare.

• You receive health care through the VA or Indian Health Services.

If none of these apply, delaying Part B risks penalties and the loss of PSHB benefits.

The Long-Term Cost of Waiting

While your PSHB plan might seem to offer sufficient coverage today, Medicare enrollment is a long-term strategy. Failing to align your enrollment with PSHB rules could mean:

• Permanent monthly penalties added to Part B

• Higher out-of-pocket costs for care

• Loss of drug coverage or limited pharmacy access

• Forfeiture of coordination benefits between PSHB and Medicare

The cost of delaying can compound over the years. The penalty is based on the number of years delayed, and those penalties last as long as you’re enrolled in Medicare.

How to Prepare Now If You’re Nearing 65

If you’re within a year of turning 65, start preparing now:

• Check your PSHB eligibility status and see if you fall under an exemption

• Review your Medicare Initial Enrollment Period and set reminders

• Compare benefits with and without Part B

• Talk to a licensed agent listed on this website to confirm you won’t face penalties

Early preparation will help you avoid missteps and ensure you retain the full value of your PSHB coverage.

Know the Requirements to Protect Your Benefits

As the PSHB program evolves in 2025, Medicare Part B enrollment is becoming essential for long-term access to care and cost savings. Don’t wait until you receive a notice of penalty or coverage disruption. Take action early.

If you’re unsure whether you’re exempt or need to enroll, speak to a licensed agent listed on this website. They can help walk you through the rules, timelines, and plan-specific details so you don’t risk permanent penalties or benefit loss.