Key Takeaways

• Enrolling in both Medicare and a Postal Service Health Benefits (PSHB) plan in 2025 may reduce your overall healthcare costs, but only if you understand how the two systems work together.

• Gaps in coverage can occur when Medicare eligibility and PSHB integration rules are misunderstood, especially if you delay enrollment in Medicare Part B.

How PSHB and Medicare Are Designed to Work Together

In 2025, the Postal Service Health Benefits (PSHB) Program officially replaces Federal Employees Health Benefits (FEHB) for Postal Service employees and retirees. One of the biggest changes in this transition is how PSHB integrates with Medicare. If you’re age 65 or older and eligible for Medicare, the way these two systems interact could significantly affect both your coverage and your costs.

When used correctly, Medicare becomes your primary payer, and PSHB acts as your secondary coverage. This arrangement can reduce your out-of-pocket expenses for many services. But for that coordination to happen smoothly, you need to be enrolled in both Medicare Part A and Part B.

Why Medicare Enrollment Is Critical

• Part A (Hospital Insurance) is typically premium-free if you’ve worked at least 10 years in Medicare-covered employment.

• Part B (Medical Insurance) requires a monthly premium and covers outpatient care, preventive services, and physician visits.

If you’re a Medicare-eligible annuitant and do not enroll in Part B, your PSHB plan will not coordinate as a secondary payer. That means you may face higher costs or denied claims for services Medicare would have covered first.

What Happens If You Don’t Enroll in Part B

Under the PSHB rules in 2025, some retirees and family members are required to enroll in Medicare Part B. If you’re newly eligible for Medicare, you must enroll in Part B to retain full PSHB coverage unless you qualify for one of the exceptions:

• You retired on or before January 1, 2025.

• You are an active employee as of January 1, 2025, and will be 64 or older during that year.

• You live abroad and are not eligible for Medicare.

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

Without Part B, many PSHB plans won’t offer full benefits, which could leave you with costly gaps in outpatient or physician services. And if you delay enrolling in Part B, you may face late enrollment penalties that last as long as you have Medicare.

Coordinated Benefits: How Costs May Be Lower

When you’re enrolled in both PSHB and Medicare, your PSHB plan acts as secondary insurance. This layered coverage typically results in:

• Reduced or waived deductibles

• Lower copayments or coinsurance

• Fewer billing surprises

Medicare pays first, and your PSHB plan picks up what’s left—up to plan limits. Many PSHB plans in 2025 even include added incentives like partial reimbursement for your Medicare Part B premium, or extra benefits when Medicare is your primary payer.

However, not all PSHB plans are identical. Some offer more robust Medicare integration than others. That’s why comparing plans during the annual Open Season (November to December) is essential.

Missteps That Could Lead to Gaps or Penalties

Healthcare under PSHB and Medicare can become confusing if you make incorrect assumptions. Here are common issues that lead to gaps in coverage:

1. Delaying Medicare Part B Enrollment

If you assume PSHB alone is enough and don’t enroll in Part B when first eligible, you risk major out-of-pocket costs. After the Initial Enrollment Period ends, late enrollment penalties apply unless you qualify for a Special Enrollment Period.

2. Choosing to Opt Out of Medicare Part B

Even though some PSHB enrollees are allowed to skip Part B, that decision often results in:

• No secondary coverage for outpatient services

• Denied claims where Medicare would have paid first

• Higher overall costs for ongoing care

3. Failing to Coordinate Prescription Coverage

PSHB plans for Medicare-eligible retirees automatically include a Medicare Part D prescription drug plan through an Employer Group Waiver Plan (EGWP). If you opt out of this drug benefit or try to enroll in a separate Part D plan, you may lose prescription coverage under PSHB entirely.

4. Not Understanding the Primary/Secondary Relationship

If Medicare is your primary and you mistakenly submit claims directly to your PSHB plan, they may be denied or delayed. It’s important to follow correct billing processes so you don’t get stuck paying the bill.

Medicare and PSHB Costs in 2025

While you may be focused on premiums, don’t overlook other costs:

• Medicare Part B Premium: The standard monthly premium in 2025 is $185.

• Medicare Part B Deductible: $257 per year.

• PSHB Deductibles and Copays: These vary by plan. Many reduce these costs if you have Medicare.

• Part D Prescription Drug Cap: A new $2,000 annual out-of-pocket cap helps limit drug spending for Medicare enrollees in 2025.

Adding it all up, most people find that enrolling in both Medicare and PSHB leads to better coverage with lower total spending—if coordinated correctly.

Enrollment Periods You Need to Track

If you’re approaching Medicare eligibility or planning to retire soon, these timelines are key:

Initial Enrollment Period (IEP)

• Begins 3 months before your 65th birthday

• Ends 3 months after the month you turn 65

Enroll during this time to avoid penalties and ensure smooth PSHB coordination.

General Enrollment Period (GEP)

• January 1 to March 31 each year

• For those who missed their IEP and have no other qualifying coverage

• Coverage begins July 1

Special Enrollment Period (SEP)

• Applies if you had employer-sponsored coverage past age 65 and are now retiring

• Typically allows penalty-free enrollment within 8 months of losing coverage

PSHB Plan Features That Depend on Medicare

Several PSHB plan benefits only activate or expand when you’re enrolled in both Medicare Parts A and B:

• Lower deductibles and coinsurance for hospital stays and surgeries

• Access to Medicare Advantage-style extras like vision or dental (through plan integration)

• Waived prior authorizations or referrals for certain services

Your actual cost-sharing and coverage can differ substantially depending on whether you’ve enrolled in Medicare.

Special Circumstances for Postal Retirees

Retirees who are not eligible for Medicare, such as those who haven’t earned enough work credits or who live abroad, generally remain enrolled in PSHB-only plans. However, these enrollees may pay higher cost-sharing, since the plan assumes Medicare is not paying first.

It’s important to confirm your Medicare eligibility and review your PSHB plan’s coordination rules every year.

How to Make PSHB and Medicare Work Smoothly

If you want to avoid missteps and ensure you’re getting the most value:

• Enroll in both Medicare Parts A and B if eligible

• Review your PSHB plan’s summary to understand how it works with Medicare

• Compare PSHB plan options during Open Season—some are more Medicare-friendly than others

• Ensure your providers accept both Medicare and your PSHB plan

• Keep your coordination of benefits (COB) information updated with both Medicare and your PSHB carrier

Why Annual Plan Review Is Crucial

Each year, PSHB plans may update their benefits, drug formularies, provider networks, and how they coordinate with Medicare. The Annual Notice of Change (ANOC) explains these changes.

From November to December, you have the opportunity to:

• Switch to a different PSHB plan

• Ensure your plan continues to coordinate with Medicare in a way that benefits you

• Evaluate whether added benefits like dental, hearing, and vision are worth the plan’s cost

Coordinated Coverage Can Be Powerful—But Only When You Understand It

The 2025 PSHB landscape offers many opportunities for better coverage and lower costs—if you enroll in both Medicare and a compatible PSHB plan. But misunderstandings about eligibility, enrollment timelines, and plan integration can quickly lead to denied claims or unexpected bills.

Don’t try to guess your way through it. If you’re uncertain about what’s required or what plan is best for you, speak with a licensed agent listed on this website who can help you make the right decisions based on your eligibility and budget.