Key Takeaways

• If you’re a Medicare-eligible Postal Service retiree, dropping Part B could jeopardize your PSHB plan and eliminate your prescription drug coverage.

• Certain retirees are exempt from the Part B requirement, but the eligibility rules are strict, and the consequences of noncompliance are significant.

What’s New About PSHB in 2025

The Postal Service Health Benefits (PSHB) Program officially replaces the Federal Employees Health Benefits (FEHB) Program for Postal Service employees and retirees beginning in 2025. While the transition might seem like a simple administrative change, the reality is far more impactful—especially if you are or will soon be eligible for Medicare.

A key requirement of the PSHB program is that Medicare-eligible annuitants and their covered family members must be enrolled in Medicare Part B to retain full access to PSHB benefits. This condition represents a major shift from the old FEHB system, where enrolling in Part B was optional.

Who Must Enroll in Medicare Part B

Under the 2025 PSHB rules, you are generally required to enroll in Medicare Part B if:

• You are a Postal Service annuitant (retiree or survivor annuitant)

• You are eligible for Medicare Part A at no cost

• You are age 65 or older

If these apply to you and you are not enrolled in Part B, you risk losing essential coverage, including prescription drug benefits under the PSHB plan.

Who Is Exempt from the Requirement

You may be exempt from the Part B requirement under specific conditions. These include:

• You retired on or before January 1, 2025 and are not enrolled in Part B.

• You were age 64 or older as of January 1, 2025 and choose not to enroll.

• You live permanently overseas and cannot use Medicare services.

• You are covered by Veterans Affairs (VA) benefits or Indian Health Services.

However, it’s important to understand that these exemptions are limited. Most retirees and annuitants who are newly Medicare-eligible in 2025 and beyond must enroll in Medicare Part B to maintain full PSHB coverage.

What Happens If You Don’t Enroll in Part B

Failing to enroll in Medicare Part B when required can result in more than just higher out-of-pocket costs. In 2025, it could lead to the termination of certain PSHB benefits, especially prescription drug coverage.

Here’s what could happen:

• You may be disenrolled from the Medicare Part D Employer Group Waiver Plan (EGWP) that your PSHB plan provides.

• Without Part B, your PSHB plan will become your primary insurer, but will not coordinate benefits the way it would if you had Medicare.

• You may face higher coinsurance and deductibles because the plan will not assume you have Medicare coverage.

• You could lose access to certain cost-sharing reductions, including waived or reduced deductibles and copayments that depend on dual enrollment.

Prescription Drug Coverage Could Be Lost

Most PSHB plans automatically include integrated prescription drug coverage through a Medicare Part D EGWP. If you decline or disenroll from Part B, you may be ineligible for this coverage, resulting in a loss of prescription drug benefits.

And once you opt out, you may not be able to re-enroll in the drug plan until the next Open Season or a qualifying life event, potentially leaving you without needed medications for months.

Part B Enrollment Deadlines You Need to Know

If you didn’t enroll in Medicare Part B when first eligible and are now required to, your enrollment options are limited to official Medicare enrollment periods:

• General Enrollment Period (GEP): January 1 to March 31 each year. Coverage begins July 1.

• Special Enrollment Period (SEP): Available for those losing employer coverage. You must enroll within 8 months of losing coverage to avoid penalties.

In 2025, a special enrollment period was offered from April 1 to September 30, 2024 for PSHB annuitants to comply before the transition. If you missed that window, the General Enrollment Period may be your only option.

Late Enrollment Penalties and Financial Risks

Not only do you risk losing key benefits if you skip Part B—you could also face late enrollment penalties. Medicare adds a 10% penalty for every 12 months you delay enrollment after becoming eligible, unless you qualify for a special exception.

These penalties are permanent and added to your monthly Part B premium for life. If you’re trying to save money by avoiding Part B, you may find that the long-term costs far outweigh the short-term savings.

PSHB Plans Expect Medicare to Be Primary

Once you enroll in both PSHB and Medicare, your PSHB plan acts as secondary payer. This is where many cost savings and benefits kick in:

• Deductibles are often waived or lowered.

• Coinsurance and copayments may be reduced.

• PSHB plans typically wrap around Medicare, filling in the gaps left by Parts A and B.

But if you don’t enroll in Medicare Part B, PSHB plans are not obligated to reduce your cost-sharing, and they may stop coordinating coverage altogether. You’d pay much more out-of-pocket.

Don’t Confuse PSHB With FEHB

Under FEHB, Medicare Part B was optional. Many retirees chose not to enroll and simply used FEHB as their primary insurance. That model no longer applies under PSHB.

PSHB is a new structure, and it comes with new compliance rules. Assuming you can treat it like FEHB could lead to serious and costly misunderstandings.

Why This Rule Exists

The requirement to enroll in Medicare Part B is rooted in long-term cost management and coordination. By having Medicare as the primary payer, PSHB plans reduce their own liability and maintain stable premiums.

It also aligns the PSHB model more closely with other retiree health benefit structures used in both private and public sectors, which commonly expect retirees to have Medicare.

Planning Ahead for Medicare Enrollment

If you’re approaching age 65 or retirement, plan ahead:

• Know your Initial Enrollment Period—it spans 7 months: 3 months before your 65th birthday, your birth month, and 3 months after.

• Enroll on time to avoid penalties and coverage gaps.

• Don’t assume you can decline Part B without consequence. Verify if you qualify for an exemption.

• Be proactive. Talk to your benefits coordinator or a licensed agent listed on this website to avoid missteps.

What You Can Do Now

If you’re already enrolled in both PSHB and Medicare, verify that your records show active Part B enrollment. If you’ve opted out of Part B and believe you qualify for an exemption, document your eligibility.

For those unsure about their status or next steps:

• Use the Medicare.gov portal to check your enrollment.

• Contact the PSHB Navigator Help Line.

• Compare benefits with and without Part B.

Getting this wrong can mean paying more—or worse, losing access altogether.

Missing Part B Can Be a Costly Oversight

Skipping Medicare Part B might feel like a way to cut costs, but within the PSHB structure, it could lead to coverage loss, penalties, and high out-of-pocket expenses. The requirement is not a suggestion—it’s a core eligibility rule for the 2025 and beyond PSHB landscape.

Protect Your PSHB Coverage by Staying Compliant

Now that PSHB has officially launched, making sure you comply with its Medicare coordination rules isn’t optional—it’s critical. Don’t wait for a coverage denial or drug claim rejection to discover you made a costly assumption.

Get clear on your Medicare Part B requirements now. If you’re unsure how this applies to you or need help enrolling, speak to a licensed agent listed on this website to walk through your options.