Key Takeaways

• Many PSHB retirees are surprised by the actual costs and rules surrounding Medicare Part B in 2025, especially the premium structure and late enrollment penalties.

• Understanding how Medicare Part B integrates with your PSHB coverage is essential to avoid gaps in care, unnecessary expenses, and enrollment mistakes.

The Medicare Part B Reality Check in 2025

For many Postal Service Health Benefits (PSHB) annuitants, enrolling in Medicare Part B in 2025 feels like stepping into unfamiliar territory. While you may have assumed your retirement coverage would be seamless and straightforward, the truth is that Medicare Part B comes with its own set of rules, costs, and implications. Learning these details too late can mean paying more than necessary or making choices you can’t easily reverse.

Whether you’re newly retired or planning ahead, this guide lays out what you need to know about Medicare Part B in 2025—and what many retirees only discover after the bills start arriving.

What Medicare Part B Covers (And What It Doesn’t)

Medicare Part B provides coverage for outpatient services, including:

• Physician visits

• Preventive care (like screenings and vaccines)

• Lab tests and diagnostic imaging

• Durable medical equipment

• Mental health services

• Outpatient surgeries

What it does not cover includes:

• Prescription drugs (covered under Part D or PSHB drug plans)

• Long-term care

• Dental, hearing aids, and vision (unless supplemental PSHB coverage is used)

• Custodial or non-skilled nursing home care

Even when Part B covers a service, it typically only pays 80% of the Medicare-approved amount. You’re responsible for the remaining 20%, unless your PSHB plan fills those gaps—which many do, but only if you’re also enrolled in Part B.

Monthly Premiums in 2025: More Than You Expected?

The standard monthly premium for Medicare Part B in 2025 is $185. However, this isn’t a flat fee for everyone. If your income from 2023 exceeds certain thresholds, you’ll pay an Income-Related Monthly Adjustment Amount (IRMAA), which can increase your monthly Part B cost significantly.

This adjustment is based on your Modified Adjusted Gross Income (MAGI), typically reported on your IRS tax return. If you earned more due to a one-time event (e.g., selling property or cashing in investments), you could face higher premiums—even in retirement.

Income brackets for IRMAA in 2025 start at $106,000 for individuals and $212,000 for married couples filing jointly.

Enrollment Isn’t Automatic for Everyone

One common misconception is that Medicare enrollment just happens automatically when you turn 65. This only applies if you’re already receiving Social Security. If you’re not, you must actively sign up for Medicare during your Initial Enrollment Period (IEP), which lasts:

• 3 months before your 65th birthday

• The month of your birthday

• 3 months after your birthday

If you miss this window and don’t qualify for a Special Enrollment Period, you’ll need to wait for the General Enrollment Period (January 1 to March 31), and your coverage won’t start until July. On top of that, you’ll face a late enrollment penalty that grows the longer you delay.

The Part B Late Enrollment Penalty in 2025

In 2025, the Part B penalty remains as steep as ever: 10% added to your monthly premium for every 12-month period you were eligible but did not enroll. And here’s the catch—it’s not a one-time fee. This penalty applies for the rest of your life.

For example, delaying Part B for two full years means paying 20% more each month, permanently. And yes, the IRMAA surcharge applies on top of that penalty, if your income qualifies.

How PSHB and Medicare Part B Work Together

Here’s where it gets even more complex: the relationship between your PSHB plan and Medicare Part B.

In 2025, Medicare-eligible Postal Service annuitants and their Medicare-eligible family members must enroll in Medicare Part B to keep PSHB coverage, unless they fall under specific exceptions:

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

• Are age 64 or older as of January 1, 2025

• Live outside the U.S.

• Are covered under VA or Indian Health Service benefits

If you meet one of these exceptions, you may delay or decline Part B. Otherwise, failure to enroll means losing access to PSHB medical coverage. You’ll only retain prescription drug coverage.

Cost Sharing After Enrolling in Both

Once enrolled in both Medicare Part B and a PSHB plan, most annuitants notice improved cost-sharing. That’s because Medicare becomes the primary payer and your PSHB plan becomes secondary. This coordination can result in:

• Waived deductibles

• Reduced or eliminated copayments

• Lower out-of-pocket maximums

• Broader provider access (via Medicare)

Many PSHB plans offer additional incentives in 2025, such as Part B premium reimbursements or lower coinsurance when paired with Medicare. But you won’t access these savings unless you actively enroll in Part B.

Prescription Drug Coverage: Automatically Integrated

If you’re enrolled in Medicare and a PSHB plan, your prescription drug benefits are automatically covered under an Employer Group Waiver Plan (EGWP) tied to Medicare Part D. This means:

• A $2,000 annual out-of-pocket cap applies

• A $35 monthly cap on insulin

• Enhanced access to a national pharmacy network

Opting out of the Medicare Part D portion will result in losing drug coverage under PSHB. Re-enrollment opportunities are limited and not guaranteed.

Budgeting for the Full Picture

When estimating your retirement health expenses, it’s important to account for all Medicare Part B-related costs, including:

• Standard premium ($185/month)

• IRMAA (if applicable)

• Late enrollment penalty (if applicable)

• Deductible ($257 in 2025)

• Part B services not fully covered by Medicare

Compare these expenses to your annuity income and any other retirement savings. Failing to plan for these costs can impact your overall retirement security.

Understanding the Timeline of Enrollment and Coverage

Let’s map out the most important timelines you should be aware of:

• Turning 65: Your Initial Enrollment Period lasts 7 months surrounding your birthday month.

• Still Working at 65: If you remain employed by USPS with health coverage, you can delay Part B without penalty until you retire. You then have an 8-month Special Enrollment Period.

• Retiring Before 65: You’ll need to plan to enroll at 65 to avoid penalties and maintain your PSHB benefits.

• Missed Initial Enrollment: General Enrollment runs January 1 to March 31. Coverage starts July 1, with penalties applied.

Coordination is crucial. The PSHB system uses Medicare status to determine eligibility for enhanced benefits or drug coverage.

Common Mistakes Retirees Are Still Making in 2025

Despite growing awareness, many PSHB retirees continue to make avoidable mistakes:

• Waiting too long to enroll in Medicare Part B after becoming eligible

• Assuming PSHB plans cover everything without needing Medicare

• Underestimating IRMAA costs due to previous high earnings

• Missing the Medicare drug opt-out consequences, resulting in lost prescription coverage

• Ignoring how Medicare affects out-of-pocket costs, especially deductibles and coinsurance

Avoiding these pitfalls requires early planning, clear understanding of rules, and timely decision-making.

Getting Help and Clarifying Your Enrollment

As a PSHB enrollee, you’re not expected to handle all this alone. In fact, the Office of Personnel Management (OPM) encourages you to review plan details every year and contact support if you’re unsure.

You can also:

• Use your plan’s Annual Notice of Change (ANOC) to see upcoming changes

• Visit KeepingPosted.org for annuitant-specific PSHB guidance

• Access the PSHB Navigator Help Line (1-833-712-7742) for questions about Medicare coordination

But sometimes, a one-on-one conversation is the most effective. A licensed agent listed on this website can help evaluate your situation and guide you through every Medicare decision.

Prepare Now to Avoid Surprises Later

Understanding the role of Medicare Part B within your PSHB coverage in 2025 is not just helpful—it’s essential. What you choose today will affect what you pay, the providers you can see, and the kind of care you receive.

Many retirees realize too late that they missed key enrollment windows or underestimated their costs. By educating yourself now, you can avoid penalties, preserve your PSHB benefits, and protect your retirement income.

If you’re still unsure about your next step, now is the time to speak with a licensed agent listed on this website. They can walk you through your PSHB options, Medicare enrollment timing, and what makes sense for your needs.