Key Takeaways

• Skipping Medicare Part D in 2025, even with PSHB drug coverage, can lead to gaps in prescription benefits and unexpected penalties.

• Part D’s integration with PSHB through Medicare Part D EGWP affects how your prescriptions are priced, managed, and reimbursed.

Why Medicare Part D Still Matters for PSHB Enrollees

If you’re enrolled in the Postal Service Health Benefits (PSHB) program and eligible for Medicare, you might think your prescription coverage is already handled. After all, PSHB plans offer integrated drug benefits. But skipping Medicare Part D in 2025, even with PSHB coverage, can have lasting effects that go far beyond your pharmacy copays. Understanding how these two systems work together is essential to protect your wallet and ensure continuous prescription coverage.

The PSHB and Part D Connection: What You Should Know

The PSHB prescription drug benefit is not a standalone program. For Medicare-eligible annuitants and family members, PSHB coverage now includes enrollment in a Medicare Part D Employer Group Waiver Plan (EGWP). This integration aims to provide better drug coverage and reduce out-of-pocket expenses—but it only works if you’re enrolled in Medicare Part B, and, importantly, you don’t opt out of the Part D component embedded in PSHB.

Here’s what’s involved:

• PSHB plans for Medicare-eligible participants automatically include a Part D EGWP.

• This coverage works only if you meet Medicare’s enrollment requirements.

• If you opt out of the Part D portion, you lose PSHB’s integrated prescription drug coverage.

What Happens If You Skip Part D?

Choosing not to participate in the Part D portion of your PSHB plan can lead to multiple consequences:

• Loss of prescription drug coverage under PSHB. Your health plan may still be active for medical services, but the pharmacy benefit disappears.

• No access to the $2,000 out-of-pocket prescription cap. Starting in 2025, Medicare Part D limits annual out-of-pocket spending for covered drugs to $2,000. Without Part D, this protection does not apply.

• You cannot rejoin easily. If you decline the EGWP drug benefit, re-enrollment is limited and only permitted under certain circumstances.

• Late enrollment penalties. If you later decide to enroll in a standalone Part D plan, you may face permanent late penalties, unless you qualify for an exception.

How Part D Affects Your PSHB Plan’s Costs

Many Medicare-eligible annuitants are surprised to learn that staying enrolled in the Part D EGWP could reduce their total health expenses under PSHB. That’s because when Part D pays first, your PSHB plan can lower or waive certain cost-sharing:

• Deductibles may be reduced or eliminated.

• Coinsurance for name-brand drugs may be lower.

• The plan may reimburse you for some of your Medicare Part B premiums, depending on the policy.

Without Part D in place, you lose these embedded savings.

The Role of Medicare Part B

It’s important to recognize that Medicare Part B enrollment is a requirement for receiving the full PSHB prescription benefit through the EGWP. The PSHB-Medicare coordination only works if both Part B and the integrated Part D are active. If you skip either one, the savings and protections built into your PSHB drug coverage vanish.

If you’re unsure whether you’ve enrolled in Part B, confirm your status now. In general, Medicare enrollment begins around your 65th birthday. You have:

• A 7-month Initial Enrollment Period (IEP): 3 months before, the month of, and 3 months after turning 65.

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

If you miss these, you could face late enrollment penalties and delayed coverage.

Limited Options After Opting Out

If you actively opt out of the Part D EGWP tied to your PSHB plan, you cannot simply switch back when you change your mind. Re-enrollment is allowed only under specific conditions:

• A qualifying life event (QLE), such as losing other coverage.

• A Special Enrollment Period granted by Medicare.

• Rejoining during Open Season, only if the plan permits it for your situation.

Otherwise, the decision to opt out may be locked in for the year, leaving you without essential prescription benefits.

The $2,000 Cap Doesn’t Apply Without Part D

One of the biggest updates in 2025 is the new $2,000 annual out-of-pocket cap on covered drug costs under Medicare Part D. This change eliminates the coverage gap that previously burdened beneficiaries with high drug costs.

However, this cap is only available if:

• You are enrolled in a Part D plan.

• You have not opted out of the EGWP through PSHB.

If you skip Part D, you lose the out-of-pocket protection entirely. That could mean thousands more per year in drug expenses.

What If You Have Other Prescription Coverage?

Some retirees mistakenly believe they don’t need the PSHB/Part D drug benefit because they already have prescription drug coverage through another source, such as:

• A retiree health plan from a different employer

• TRICARE or VA benefits

• A standalone drug plan

But if that coverage is not creditable under Medicare standards, you may face penalties later. And if you drop the PSHB EGWP, you cannot rely on the PSHB plan to fill drug coverage gaps.

Make sure any outside plan you’re considering is designated as creditable—meaning it’s at least as good as Medicare Part D. Otherwise, your decision could backfire.

Coordination of Benefits Gets Complicated

Another issue arises when you try to pair PSHB with other health insurance or standalone drug coverage. The coordination of benefits can become disjointed if you’ve opted out of Medicare Part D:

• Your PSHB plan will not coordinate with Medicare drug coverage you don’t have.

• Pharmacies may deny claims or charge higher rates if your PSHB plan doesn’t show active drug coverage.

• Billing errors or processing delays may arise when coverage rules don’t align.

To avoid unnecessary paperwork, delays, or denied claims, it’s generally safer to stay enrolled in the integrated Part D benefit through PSHB.

What About the Insulin and Vaccine Savings?

Medicare Part D includes federally mandated price caps on certain preventive services and lifesaving drugs:

• Insulin: Capped at $35 per month.

• Vaccines: Certain vaccines are covered at no cost under Part D.

These savings are only available if you’re enrolled in Part D. By opting out, you lose access to these important benefits, even if your PSHB plan covers them differently. In many cases, the Medicare Part D rates are better negotiated, and skipping Part D means forfeiting that advantage.

You Can’t Just Rely on PSHB Alone

While PSHB offers strong drug benefits for Medicare-eligible members, those benefits are not complete without Part D. Opting out of the EGWP component of your plan disrupts how the drug benefits are structured and reimbursed.

You may be:

• Paying more at the pharmacy

• Missing out on federal subsidies

• Ineligible for Medicare’s annual protection limits

• Denied re-entry into Part D during the same year

Your PSHB plan is designed to wrap around Medicare—not to replace it.

Planning Ahead for Open Season and Beyond

The PSHB Open Season typically runs from early November to mid-December. This is your annual window to make changes, including whether to remain enrolled in the EGWP.

Before making any decision, review:

• Your Medicare Part B status

• Whether you’re currently enrolled in the PSHB EGWP

• Whether your prescriptions are covered better under Part D

• The potential cost differences with and without Part D

You should also talk to a licensed agent listed on this website to evaluate your options.

Keep Your Prescription Coverage On Track

The convenience of integrated PSHB and Medicare benefits only works if all parts are in place. Skipping Part D can unravel the protections you rely on, including lower costs, broader access to medications, and annual spending limits.

If you’re unsure about your status or want help reviewing your PSHB plan’s drug coverage, don’t wait. Get in touch with a licensed agent listed on this website who can walk you through your plan and ensure you’re set up for 2025 and beyond.