Key Takeaways

• Relying solely on Medicare in 2025 can leave you responsible for unexpected out-of-pocket costs, gaps in coverage, and limited access to certain services.

• Coordinating your Medicare enrollment with your Postal Service Health Benefits (PSHB) plan can protect you from those risks and help you manage costs more effectively.

Medicare Isn’t Designed to Cover Everything

As a Medicare-eligible annuitant or employee under the Postal Service Health Benefits (PSHB) Program, you might assume that enrolling in Medicare automatically shields you from most health-related expenses. But in 2025, Medicare still leaves significant gaps that could result in costly surprises—especially if you aren’t actively coordinating it with your PSHB plan.

Original Medicare, which includes Part A (hospital insurance) and Part B (medical insurance), is a powerful foundation. However, it was never intended to be a comprehensive solution. It leaves many services either partially covered or not covered at all. That means if you’re depending on Medicare alone, you may find yourself exposed to:

• Deductibles and coinsurance

• Prescription drug costs

• Limited dental, vision, and hearing coverage

• Out-of-pocket spending with no maximum cap under Original Medicare

In contrast, PSHB plans are built with coordination in mind. But that coordination only works if you enroll in Medicare properly and understand how your PSHB plan interacts with it.

What Medicare Covers—And What It Doesn’t

Covered by Medicare

• Part A: Inpatient hospital care, skilled nursing facility care, hospice, and limited home health services.

• Part B: Doctor visits, preventive care, outpatient services, durable medical equipment, and diagnostic tests.

Not Covered by Medicare

• Prescription drugs (unless you have a Part D plan or PSHB plan with EGWP)

• Long-term custodial care (like assisted living or nursing homes for non-rehabilitative reasons)

• Routine dental care (cleanings, fillings, dentures)

• Vision exams and glasses

• Hearing aids and exams

That list alone illustrates why Medicare alone isn’t enough—especially in retirement, when routine vision or dental care and medications become more critical.

Out-of-Pocket Costs Without a Cap

Medicare Part A has a deductible of $1,676 per benefit period in 2025, and Part B has a $185 monthly premium with an annual deductible of $257. Beyond that, Part B covers 80% of approved services, leaving you responsible for the remaining 20%, with no maximum limit on what you might pay annually.

If you experience a major illness or require extended care, this structure can leave you exposed to thousands of dollars in unplanned costs. That’s why having a PSHB plan that coordinates with Medicare is so critical—many plans reduce or eliminate those out-of-pocket costs once Medicare pays its share.

Prescription Drugs Are a Major Blind Spot

While Medicare Part D helps cover medications, it comes with its own deductible, formulary restrictions, and coverage phases. In 2025, a $2,000 out-of-pocket cap has been introduced, but that doesn’t mean your costs vanish. You still need to meet a deductible of up to $590, and costs can vary until you hit the cap.

Postal Service annuitants enrolled in Medicare and PSHB may be automatically enrolled in a Medicare Part D EGWP (Employer Group Waiver Plan). These plans often:

• Lower copays for prescriptions

• Waive deductibles

• Offer broad formularies and national pharmacy networks

However, opting out of this prescription benefit can mean losing drug coverage entirely under your PSHB plan. And re-enrollment may not be guaranteed.

Long-Term Care? Not Covered by Medicare

A common and costly assumption is that Medicare will cover long-term care. It doesn’t—at least not the kind most retirees eventually need. Medicare covers skilled nursing facility care only after a qualifying hospital stay and only up to 100 days. Once rehabilitative care ends, so does coverage.

Custodial care, such as help with bathing, dressing, or eating, is not covered. The average annual cost of assisted living or nursing home care can run into the tens of thousands. This is one of the most financially devastating gaps if you’re relying on Medicare alone.

Why Medicare-PSHB Coordination Matters

Since January 1, 2025, the PSHB program has replaced fehb for postal employees and annuitants. One major difference is how your PSHB plan interacts with Medicare.

If you are:

• Medicare-eligible, and

• Not enrolled in Part B (without an approved exemption),

…your PSHB plan may impose penalties, higher cost-sharing, or deny claims that would have been covered had you enrolled in Medicare.

In contrast, if you are properly enrolled in both Medicare Parts A and B, your PSHB plan may:

• Waive deductibles

• Lower coinsurance

• Reduce copayments

• Offer enhanced prescription drug benefits

Simply put, when both plans work together, you could significantly reduce your healthcare costs. When they don’t, you may be left responsible for expenses your PSHB plan won’t fully cover.

Who Must Enroll in Medicare Part B?

As of 2025, enrollment in Medicare Part B is mandatory for most Medicare-eligible postal annuitants and covered family members in order to stay on a PSHB plan. However, there are exemptions, including:

• Retirees who were already retired as of January 1, 2025 and not enrolled in Part B

• Annuitants aged 64 or older on January 1, 2025

• Individuals living abroad

• Those covered by Indian Health Services or the VA

If you fall outside these exemptions and fail to enroll in Medicare Part B, you could lose access to critical coordination benefits—and face higher out-of-pocket costs.

What About Out-of-Network Costs?

Original Medicare doesn’t restrict you to a provider network, but some PSHB plans do. Without Medicare as primary coverage, your PSHB plan may limit access or charge higher coinsurance for out-of-network care.

With Medicare in place, you often retain access to:

• A broader choice of providers

• Nationwide or even travel-friendly coverage

• Fewer billing surprises due to Medicare’s established payment rates

This matters especially if you relocate seasonally or need specialized care outside your state of residence.

Don’t Forget About Supplemental Benefits

Medicare does not cover routine dental, vision, or hearing services. These are services you’re more likely to need as you age. Fortunately, many PSHB plans include these supplemental benefits—but only when Medicare enrollment requirements are met.

If you fail to enroll in Medicare Part B and your PSHB plan reduces or cancels coordination benefits as a result, you may lose access to:

• Dental cleanings and procedures

• Eye exams and glasses

• Hearing exams and aids

In 2025, these services remain among the most sought-after benefits in PSHB plans. Make sure you preserve access to them.

Enrollment Timing Can Make or Break Your Coverage

Your Initial Enrollment Period (IEP) for Medicare is a 7-month window around your 65th birthday (3 months before, the month of, and 3 months after). Missing it can lead to:

• A 10% late enrollment penalty for every 12-month period you delay Part B

• Gaps in coverage until the next General Enrollment Period (January 1 to March 31)

If you’re already enrolled in a PSHB plan and turning 65 this year, it’s critical that you:

• Enroll in Medicare Parts A and B during your IEP

• Notify your PSHB plan to ensure coordination kicks in

Failing to do this on time may disqualify you from the cost-sharing benefits your PSHB plan would otherwise provide.

Planning Ahead Protects Your Retirement Budget

Retirement healthcare isn’t just about access. It’s about budgeting predictability. Relying on Medicare alone leaves you vulnerable to sudden spikes in costs.

By coordinating with your PSHB plan, you may benefit from:

• Predictable monthly premiums

• Capped annual out-of-pocket spending

• Reduced or waived deductibles

• Lower drug and specialist copays

• Extended coverage for non-Medicare services

In 2025, a smart strategy means understanding how all parts work together—and where your responsibilities lie. Assuming Medicare is automatic or “good enough” without review could end up costing you more than you anticipated.

Your Next Steps to Protect Against Coverage Gaps

Health coverage in retirement demands proactive decisions. If you’re already enrolled in PSHB or will be soon, here’s what you should do now:

• Review your Medicare eligibility status and confirm if enrollment in Part B is required.

• Compare PSHB plan brochures to understand how benefits coordinate with Medicare.

• Enroll in Medicare during your proper enrollment period to avoid penalties.

• Keep records of all enrollments and confirm your coordination benefits are active.

This is a one-time opportunity to set yourself up with health security that works long term. You only get one chance to make timely enrollment decisions. Make sure you’re using it wisely.

Coordination Is the Safety Net You Need

Counting on Medicare alone in 2025 means gambling with incomplete coverage, unpredictable expenses, and gaps in care. PSHB plans offer a powerful complement to Medicare—but only when you meet their coordination requirements.

Take control of your health coverage. Don’t wait until something goes wrong to find out your plan isn’t working the way you assumed. Get in touch with a licensed agent listed on this website for professional advice on how to secure the protection and peace of mind you deserve.