Key Takeaways

• Medicare in 2025 introduces new cost structures and out-of-pocket responsibilities that can catch even seasoned retirees off guard.

• If you’re enrolled in a Postal Service Health Benefits (PSHB) plan and eligible for Medicare, you must carefully coordinate your benefits to avoid duplicate costs or coverage gaps.

Medicare’s Familiarity Is Misleading in 2025

If you’re like many Postal retirees or soon-to-be annuitants, you might feel confident about Medicare. After all, it has long been the foundation of retiree healthcare. But 2025 is not business as usual. Despite sounding familiar, today’s Medicare carries hidden costs, expanded requirements, and new coordination rules with PSHB that could affect both your access to care and your wallet.

Understanding these shifts now is critical, especially as you prepare for open enrollment or make decisions about Part B, prescription drug coverage, and PSHB integration.

Medicare Part A Isn’t Always Cost-Free Anymore

Most Medicare-eligible individuals receive Part A without a monthly premium, provided they worked and paid Medicare taxes for at least 40 quarters. That part hasn’t changed in 2025. But the out-of-pocket costs under Part A have increased and may surprise you:

• Inpatient hospital deductible: $1,676 per benefit period

• Daily coinsurance: $419 per day (days 61–90), $838 per day (lifetime reserve days)

• Skilled nursing facility coinsurance: $209.50 per day (days 21–100)

These figures mean a short hospital stay could cost you hundreds or thousands of dollars out of pocket unless your PSHB plan fills in the gaps.

The Rising Cost of Medicare Part B in 2025

In 2025, the standard monthly premium for Medicare Part B has risen to $185. That alone might be manageable. However, it’s the accompanying costs that can escalate:

• Annual deductible: $257

• 20% coinsurance on most covered services after the deductible

• Higher premiums for those with income above $106,000 (individuals) or $212,000 (couples)

The good news is that most PSHB plans, when combined with Medicare Part B, reduce or even eliminate some of these out-of-pocket costs. But that only works if you’re enrolled in both.

Prescription Drug Costs Are Capped, but That Cap May Still Hit You

For the first time, 2025 introduces a $2,000 annual out-of-pocket cap on prescription drug costs under Medicare Part D. This change replaces the old catastrophic phase and coverage gap, offering a clearer ceiling on spending.

However, reaching that cap may still involve substantial costs:

• Maximum deductible: $590 before standard coverage begins

• Coinsurance/copayments until reaching the cap

PSHB enrollees with Medicare typically receive their drug coverage through an Employer Group Waiver Plan (EGWP), which is Part D-compliant. You must remain enrolled in Medicare Part B to keep access to this enhanced coverage.

Medicare Advantage Has Not Gotten Simpler

While not directly part of the PSHB program, some retirees consider Medicare Advantage (Part C) as an alternative. In 2025, Advantage plans continue to vary widely by region, and though average premiums have decreased slightly, the variability in benefits and network restrictions can create unforeseen expenses.

It’s important to note: enrolling in a Medicare Advantage plan instead of Original Medicare with Part B could affect your PSHB coordination. Most PSHB plans are designed to work best with Original Medicare. Mismatching coverage may result in reduced benefits or extra costs.

Coordination With PSHB Is Not Automatic

Starting January 1, 2025, all Postal Service retirees and annuitants must be enrolled in a PSHB plan to maintain their health coverage. But merely being enrolled in PSHB is not enough if you’re eligible for Medicare.

Here’s what you must do to ensure smooth coordination:

• Enroll in Medicare Part A and Part B if you’re Medicare-eligible and not exempt

• Do not opt out of Medicare Part D EGWP coverage unless you’re willing to forfeit prescription benefits under PSHB

• Confirm your PSHB plan coordinates with Medicare to avoid dual payments or uncovered services

Failure to align your PSHB and Medicare coverage correctly can result in:

• Higher deductibles or coinsurance

• Denied claims

• Loss of prescription coverage

Medicare Enrollment Isn’t a One-Time Task

Some Postal retirees mistakenly believe that enrolling in Medicare is a one-and-done event. In truth, your responsibilities continue throughout retirement. Here’s a timeline of key Medicare enrollment periods that can affect you in 2025:

• Initial Enrollment Period (IEP): 7-month window around your 65th birthday

• Special Enrollment Period (SEP): For PSHB members who delayed Part B, the Medicare SEP ended September 30, 2024. If you missed it, you may face penalties.

• General Enrollment Period (GEP): January 1 to March 31 annually. Coverage begins July 1, and late enrollment penalties may apply.

• Annual Enrollment Period (AEP): October 15 to December 7. Review any changes to your Medicare coverage.

Missing these timelines, especially under the new PSHB requirements, could result in permanent premium penalties or delayed coverage.

Premium Penalties Still Exist and Can Be Permanent

If you delay enrolling in Medicare Part B when first eligible, you may be subject to a 10% premium penalty for each 12-month period you could have had Part B but didn’t. This penalty is not a one-time fee. It’s added to your monthly premium for life.

Given that PSHB requires certain retirees to have Part B, failing to enroll could cost you in two ways:

1. You might lose access to PSHB altogether.

2. You’ll pay a higher Medicare premium permanently.

If you’re unsure whether you qualify for an exemption, it’s vital to check before declining Part B.

Retirees Aren’t Always Eligible for a Pass

Some retirees believe they don’t need Medicare if they already have PSHB. While that was sometimes true under FEHB, the PSHB rules are different.

You are required to enroll in Medicare Part B unless you meet one of the following conditions:

• Retired on or before January 1, 2025

• Reached age 64 or older as of January 1, 2025

• Live overseas

• Receive benefits from Veterans Affairs (VA) or Indian Health Service (IHS)

All others must enroll in Part B when eligible. If you’re not sure of your status, now is the time to verify.

Medicare Now Ties Into Prescription Access

In 2025, if you’re Medicare-eligible and enrolled in a PSHB plan, you’re automatically enrolled in an EGWP. This is your source of prescription drug coverage.

However, if you decline this EGWP coverage or drop Medicare Part B, you lose access to Part D benefits through PSHB.

Key limitations include:

• No standalone PSHB drug plan without Medicare

• Re-enrollment in the EGWP is not always guaranteed if you drop out

• You must actively opt out if you don’t want the coverage, but doing so comes with consequences

This is one area where making the wrong assumption about Medicare can cut off your access to essential medications.

Don’t Rely on Your 2024 Assumptions

Even if you had Medicare and federal coverage last year, 2025 brings a whole new set of expectations. Under the PSHB system, Medicare is not just a supplement; it’s a requirement for many. That means your previous strategies—like relying solely on FEHB or avoiding Part B—might no longer be viable.

A few things to re-evaluate:

• Did you retire after January 1, 2025?

• Are you turning 65 this year?

• Did you skip Medicare Part B enrollment in 2024?

• Are you unsure if your PSHB plan coordinates with Medicare?

If you answered yes to any of these, you may need to take immediate action to avoid coverage gaps and unexpected out-of-pocket bills.

Understanding the Financial Impact Starts With Awareness

You may feel that premiums, deductibles, and copays are manageable. But when you combine Medicare’s shifting costs with PSHB coordination requirements, the financial impact can multiply fast. A hospital stay, a specialist visit, or regular prescriptions can lead to hundreds or even thousands in uncovered charges if your plans are not working together.

Use this time to:

• Review the Medicare Summary Notice (MSN) or Explanation of Benefits (EOB) regularly

• Compare your PSHB plan brochure for how it coordinates with Medicare

• Ensure your providers accept Medicare and PSHB networks

• Talk to a licensed agent for a full review of your expected costs

Let 2025 Be the Year You Rethink Your Medicare Plan

Medicare isn’t new, but in 2025, it acts like a program that’s undergone a quiet but significant overhaul. From higher costs to stricter integration rules with your PSHB plan, these changes demand attention—before they cost you financially or medically.

Take the time now to reassess your Medicare strategy, especially if you’re a Postal retiree navigating this new terrain. A simple review of your plan documents or a short conversation with a licensed agent could save you a year’s worth of unexpected expenses.