Key Takeaways

• If you’re a Postal Service Health Benefits (PSHB) enrollee aged 65 or older, understanding and enrolling in Medicare—especially Part B—isn’t just helpful anymore, it’s critical.

• Missing Medicare enrollment when required can cost you more than penalties: it could affect your continued PSHB eligibility and increase your out-of-pocket expenses.

Why Medicare Matters More Than Ever in 2025

The Postal Service Health Benefits (PSHB) program officially took effect on January 1, 2025. If you’re a Postal Service retiree or employee nearing retirement, the landscape of your health benefits has changed. The old rules under the Federal Employees Health Benefits (FEHB) system no longer apply in the same way.

One of the most pivotal shifts in 2025 is the required coordination between PSHB and Medicare. If you are eligible for Medicare Part A and Part B and meet certain criteria, enrolling in Medicare Part B isn’t optional—it’s required to maintain full PSHB coverage.

Understanding why this matters and how it affects your future health costs is now essential.

The Medicare Requirement in PSHB: Who Must Enroll?

For 2025 and beyond, specific PSHB enrollees must enroll in Medicare Part B if they want to keep their PSHB coverage. You fall under this requirement if:

• You’re a Postal Service annuitant (retiree) or a covered family member,

• You’re entitled to Medicare Part A,

• And you turned 65 before January 1, 2025, but are not already enrolled in Part B.

Exceptions exist for:

• Annuitants who retired on or before January 1, 2025,

• Covered family members who are Medicare-eligible but were already 64 or older on that date,

• People living overseas,

• Veterans receiving care through VA facilities,

• Certain tribal health service users.

If you’re not in one of these exception categories and you skip Part B enrollment, you risk losing PSHB coverage for your Medicare-eligible services.

What Happens If You Don’t Enroll in Part B?

If you’re required to enroll in Medicare Part B and don’t, you will not be eligible for full PSHB benefits. This means:

• Your plan may not cover services Medicare Part B would normally pay for.

• You may lose access to your prescription drug benefits under PSHB if you don’t enroll in the associated Medicare Part D Employer Group Waiver Plan (EGWP).

• You could face major out-of-pocket costs for outpatient care, including doctor visits, preventive services, lab work, and more.

In short, without Medicare Part B, PSHB won’t function the way you might expect.

Why PSHB Requires Part B: Cost and Coordination

The mandatory coordination with Medicare Part B is rooted in cost-sharing. Medicare becomes the primary payer, and PSHB serves as secondary coverage. This:

• Reduces costs for the PSHB plan,

• Helps control premium increases for all enrollees,

• Potentially reduces your own out-of-pocket costs when both payers contribute.

Many PSHB plans waive deductibles and lower copayments for those enrolled in Medicare Part B. Not having Part B disrupts this cost-sharing model.

What About Medicare Part A and Part D?

Most people don’t pay a premium for Medicare Part A (hospital insurance), so if you’re eligible, you likely already have it.

As for Part D (prescription drug coverage), PSHB plans integrate it through a Medicare Part D Employer Group Waiver Plan (EGWP). If you are enrolled in Medicare, you are automatically placed into the EGWP by your PSHB plan. However, opting out of this EGWP will also cancel your PSHB drug coverage. And unlike marketplace drug plans, re-enrollment opportunities are limited.

Understanding Enrollment Timelines

There are specific enrollment periods you need to know:

Initial Enrollment Period (IEP)

• Starts 3 months before your 65th birthday,

• Includes your birth month,

• Ends 3 months after your 65th birthday month.

This 7-month window is the best time to enroll in Medicare without facing late enrollment penalties.

Special Enrollment Period (SEP) for PSHB Transition

A one-time SEP was offered from April 1 to September 30, 2024, for annuitants and family members who met the criteria but hadn’t enrolled in Part B.

If you missed this SEP and are required to enroll, you may need to wait for the General Enrollment Period.

General Enrollment Period (GEP)

• Runs from January 1 to March 31 annually.

• Coverage starts July 1 of that year.

• Late penalties may apply.

These penalties increase the longer you delay enrollment, and they never go away.

The Part B Late Enrollment Penalty Isn’t Small

If you delay signing up for Medicare Part B past your initial eligibility, and you’re not covered by a Special Enrollment Period, you may owe a permanent penalty:

• An extra 10% on your Part B premium for each 12-month period you could’ve enrolled but didn’t.

• This penalty applies for life and increases your annual health expenses indefinitely.

For PSHB enrollees who are required to sign up for Part B, this penalty doesn’t just cost money—it can jeopardize your coverage altogether.

How Medicare and PSHB Work Together Once You’re Enrolled

Once you’re enrolled in both Medicare and PSHB, your coverage becomes more coordinated and often more affordable. Here’s how the pieces fit together:

• Medicare Part A covers hospital stays.

• Medicare Part B covers outpatient care, labs, and doctor visits.

• PSHB acts as secondary payer, often reducing copays and eliminating deductibles.

• EGWP Part D covers your prescription drugs with a $2,000 annual cap starting in 2025.

This dual enrollment strategy gives you broader coverage and financial protection—especially as you age.

Don’t Confuse Medicare Enrollment with Automatic Activation

Some retirees assume that turning 65 automatically triggers Medicare enrollment. That’s only partly true:

• If you’re already receiving Social Security benefits when you turn 65, you’re automatically enrolled in Parts A and B.

• If you’re not receiving Social Security, you must actively sign up for Medicare.

If you’re still working at USPS when you turn 65, you may choose to delay Part B—but once you retire, you’ll need to enroll unless exempt.

Your Family Members Are Affected Too

It’s not just you. If your spouse or other covered family members are also Medicare-eligible, they’ll need to follow the same PSHB-Medicare integration rules. That includes enrolling in Medicare Part B if they want to maintain their PSHB benefits.

Failing to coordinate Medicare enrollment for a family member can result in:

• Reduced coverage,

• Higher costs,

• Disruption in prescription drug access.

Review each family member’s eligibility and enrollment status to avoid coverage gaps.

Reviewing Your PSHB Plan During Open Season

Each year from November to December, you’ll have the opportunity to review and change your PSHB plan. This is especially important if:

• You’ve recently become Medicare-eligible,

• You’re considering changing your Medicare enrollment,

• You want to evaluate your cost-sharing benefits under a different PSHB plan.

Use this time to:

• Compare out-of-pocket costs,

• Confirm your provider networks,

• Review Medicare coordination benefits,

• Assess your prescription drug coverage under EGWP.

The High Cost of Ignoring Medicare in PSHB

Avoiding or postponing Medicare enrollment in hopes of saving money can backfire—especially under the 2025 PSHB rules. You may:

• Lose key components of your PSHB coverage,

• Be subject to irreversible late enrollment penalties,

• Face limited options for prescription drug coverage,

• Increase your overall medical costs long-term.

Being proactive with your Medicare enrollment isn’t just a smart financial move. It’s now a requirement for most.

Why You Should Take Action Before It’s Too Late

By the time you’re 65, every missed decision becomes more consequential. Medicare’s integration into PSHB means it’s no longer something you can afford to ignore.

Take time to:

• Review your eligibility,

• Understand PSHB’s Medicare requirements,

• Mark critical deadlines on your calendar,

• Talk to a professional if you’re unsure about your situation.

Make Medicare Work for You—Not Against You

If you’re a Postal Service retiree or an annuitant approaching Medicare age, now is the time to act. Medicare is no longer a separate issue—it’s central to your PSHB coverage. Waiting could cost you your benefits and your savings.

To get personalized help with understanding your Medicare obligations and PSHB options, get in touch with a licensed agent listed on this website who can walk you through your choices and keep your coverage on track.