Key Takeaways

• If you skip Medicare Part B when you’re required to enroll, you risk losing critical access to Postal Service Health Benefits (PSHB) coverage or seeing major reductions in your benefits.

• The penalties for late Medicare Part B enrollment aren’t just financial—they can include permanent gaps in healthcare options and higher out-of-pocket costs for the rest of your life.

How Medicare Part B Works With PSHB

Medicare Part B is designed to cover outpatient medical services like doctor visits, preventive care, durable medical equipment, and some home health services. In 2025, the standard Part B monthly premium is $185, and the annual deductible is $257. While it may seem optional, especially if you’re already enrolled in a health plan like PSHB, it’s not always a matter of preference.

PSHB, the Postal Service Health Benefits Program, officially replaced FEHB coverage for USPS employees and retirees starting January 1, 2025. Under this new system, Medicare-eligible annuitants and family members must enroll in Medicare Part B to maintain full access to their PSHB plan’s benefits. There are only limited exemptions.

Why Part B Is Mandatory for Most PSHB Enrollees

For many annuitants and family members, skipping Medicare Part B doesn’t just result in higher healthcare bills later. It could disqualify you from essential PSHB coverage features or lead to outright loss of your drug and medical benefits.

If you are Medicare-eligible and:

• Retired after January 1, 2025,

• Or are a dependent of a retired USPS worker,

…you are required to enroll in Medicare Part B to keep your PSHB coverage intact. Failing to do so can result in your plan treating you as if you don’t have complete coverage, which leads to reduced benefits and higher out-of-pocket costs.

Limited Exceptions to the Rule

You may be exempt from this Part B requirement only if you:

• Retired on or before January 1, 2025

• Were age 64 or older on January 1, 2025 and actively employed by USPS

• Live outside the United States (and Medicare is not available)

• Receive care only through the VA or Indian Health Services

These exceptions are narrowly defined. Unless you meet them exactly, you should expect that Medicare Part B enrollment will be a condition for receiving full PSHB benefits.

What Happens if You Skip Part B?

The consequences of ignoring Part B go beyond just paying a penalty.

• PSHB benefits will be reduced or restricted. Plans coordinate with Medicare, assuming you’re enrolled. If you’re not, you could be stuck paying coinsurance or full costs that Medicare would normally cover.

• Prescription drug coverage could be lost. Many PSHB plans integrate Part D coverage through a Medicare Employer Group Waiver Plan (EGWP), which only applies if you’re enrolled in both PSHB and Medicare.

• You might face coverage denial for some services. Your PSHB plan may assume Medicare is primary and refuse to pay for services it believes Medicare should cover.

In short, your coverage doesn’t just get more expensive—it gets fractured and less reliable.

Late Enrollment Penalties Are Permanent

If you delay Medicare Part B enrollment beyond your Initial Enrollment Period (IEP) and you don’t qualify for a Special Enrollment Period (SEP), you will face a 10% penalty for each 12-month period you were eligible but didn’t enroll. And this isn’t a one-time charge—it applies for life as long as you have Part B.

Here’s how the timeline works:

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

• Special Enrollment Period (SEP): Only applies if you had creditable coverage through active employment. Retirees don’t qualify for this.

• General Enrollment Period (GEP): January 1 to March 31 every year. Coverage begins July 1, and penalties apply.

So, for a retiree who ignores their IEP and doesn’t qualify for SEP, they’re forced into the GEP with delayed coverage and a lifetime penalty added to every Part B premium.

How Part B Unlocks Lower Costs Within PSHB

Rather than thinking of Part B as just another bill, consider what it unlocks inside PSHB coverage. When you’re enrolled in both Part B and PSHB, the benefits work together to significantly reduce your share of healthcare expenses:

• Lower deductibles: Many PSHB plans waive or reduce deductibles when Medicare is your primary payer.

• Reduced copayments and coinsurance: With Medicare paying first, your PSHB plan often picks up what’s left—meaning lower out-of-pocket costs.

• Access to coordinated drug benefits: Enrolling in Part B gives you access to EGWP-integrated Part D drug coverage through your PSHB plan.

Skipping Part B may seem like a way to save money short-term, but doing so closes the door on these cost-saving features.

Timing Matters: 2025 Is a Transition Year

The PSHB program officially took effect in 2025, meaning this year is a crucial turning point. During 2024, special enrollment options were available for Medicare-eligible USPS annuitants to sign up for Part B without facing penalties. But that window closed on September 30, 2024.

If you didn’t act during that special period and are now trying to enroll in 2025, you’re likely going through the General Enrollment Period—with penalties and delayed coverage.

That’s why the timing of your retirement, your age as of January 1, 2025, and your enrollment history with Medicare are all now directly linked to how well your PSHB coverage works.

Don’t Rely on Your Plan to Warn You

A common misconception is that your PSHB plan or Medicare will notify you in time if you need to enroll. Unfortunately, this is not always the case.

While you may receive notices, the responsibility falls on you to:

• Understand your eligibility

• Track your enrollment deadlines

• Coordinate between PSHB and Medicare

Missing a deadline due to assumptions can result in serious financial and coverage consequences.

Medicare Part B and Your Dependents

Your family members’ coverage can also be affected by your decision. If you are the primary annuitant and you skip Medicare Part B, any Medicare-eligible dependents on your PSHB plan may also face reduced or denied coverage. They too may lose access to integrated prescription drug benefits.

It’s not just your own coverage at risk—it’s your family’s as well.

Planning for Medicare and PSHB Together

To make sure you stay fully protected, here’s what you should do:

• Start reviewing eligibility by age 64. Don’t wait until your birthday month to begin.

• Enroll in Medicare Part B during your IEP. If you’re retiring soon or already retired, don’t assume you qualify for SEP.

• Check PSHB plan documents. Make sure you understand how your specific plan coordinates with Medicare.

• Review any notices from OPM or your plan. These often contain details about how your coverage could change.

The more proactive you are, the smoother your transition into Medicare-integrated PSHB coverage will be.

What If You Already Missed Enrollment?

If you’ve already missed your Initial Enrollment Period and did not act during the 2024 Special Enrollment Period, you still have a path forward:

• Use the General Enrollment Period from January 1 to March 31.

• Your coverage will start July 1, but late penalties will apply.

• Once your Part B coverage starts, your PSHB plan should begin coordinating benefits correctly again.

While this may not be ideal, it’s still better than remaining without Part B and jeopardizing your PSHB access long-term.

Your Next Steps Matter More Than Ever

Enrolling in Medicare Part B isn’t just a box to check—it’s a fundamental part of maintaining complete PSHB health coverage. Skipping it can have far-reaching effects, not just in cost, but in access to care, prescription benefits, and long-term stability for you and your family.

If you’re unsure where you stand, now is the time to review your eligibility, understand your enrollment window, and take action. A delay today can translate to a lifetime of higher costs and restricted access.

Secure Your Coverage Before It’s Too Late

Your health benefits under PSHB depend on more than just staying enrolled—they depend on understanding how Medicare works alongside them. Especially in 2025, this coordination is critical to avoid penalties, ensure full benefits, and protect your future access to care.

If you’re unsure about your eligibility or your next steps, don’t take chances. Speak with a licensed agent listed on this website to get personalized help tailored to your situation.