Key Takeaways

• Depending solely on Medicare to support your PSHB plan in 2025 can either help reduce out-of-pocket costs or leave you with serious coverage gaps—especially if you’re unaware of current rules and coordination requirements.

• Knowing how Medicare Parts A and B integrate with PSHB is essential. Certain enrollees must enroll in Medicare Part B to keep full PSHB benefits, while others have more flexibility.

What It Means to Rely on Medicare as a Backup to PSHB

Many Postal Service annuitants and their family members view Medicare as a secondary or backup option to their primary PSHB health plan. That’s not entirely wrong—but it’s not entirely safe either. In 2025, the stakes are higher than ever. The coordination between PSHB and Medicare has changed, and overlooking the details could cost you access or money—or both.

To be clear: Medicare can absolutely strengthen your healthcare safety net. But only if you understand how it works with your PSHB coverage, not under it.

Who Must Enroll in Medicare Part B in 2025—and Who Doesn’t

The Postal Service Health Benefits (PSHB) program has specific Medicare coordination requirements, effective January 1, 2025:

• If you were retired on or before January 1, 2025, you are exempt from the Medicare Part B enrollment requirement.

• If you are 64 or older as of January 1, 2025, even if still employed, you are also exempt.

• If you retire after January 1, 2025 and are eligible for Medicare Part B, you must enroll to keep full PSHB benefits.

Failing to enroll when required can mean losing significant portions of your PSHB coverage—especially for prescription drugs, hospitalization, and outpatient services.

Medicare and PSHB: How Coverage Actually Coordinates

When you have both PSHB and Medicare:

• Medicare is primary for those enrolled in both Medicare and PSHB in retirement.

• PSHB becomes secondary, meaning it helps cover costs that Medicare doesn’t—like deductibles, copays, and coinsurance.

This setup works well if you have enrolled in Medicare Part A and B. But if you only have Part A (which most people get premium-free), PSHB doesn’t fill in as comprehensively. You’re left with higher out-of-pocket costs.

Coordination rules also affect:

• Inpatient hospital services

• Physician visits

• Emergency care

• Durable medical equipment

The quality of your combined coverage depends heavily on whether you’ve enrolled in Part B when required.

Prescription Drug Coverage Under PSHB and Medicare

Every Medicare-eligible annuitant enrolled in a PSHB plan automatically receives prescription drug coverage through a Medicare Part D Employer Group Waiver Plan (EGWP) in 2025—unless they opt out.

Here’s where things get tricky:

• If you opt out of this EGWP coverage, you lose your drug coverage under PSHB entirely.

• You won’t be able to re-enroll in the PSHB drug plan unless you experience a future qualifying life event.

Drug costs under Medicare Part D in 2025 now have a $2,000 out-of-pocket maximum, making it far more predictable than in prior years. But you only access these benefits if you remain enrolled in both PSHB and Medicare as required.

Financial Upsides—If You Coordinate Correctly

When Medicare and PSHB work together as intended, you could benefit from:

• Lower deductibles: Many PSHB plans reduce or waive deductibles if you have Medicare Part B.

• Lower copayments: Your costs for outpatient care and specialist visits can drop significantly.

• Premium assistance: Some PSHB plans may reimburse a portion of your Medicare Part B premium.

These benefits are conditional. You only unlock them when both coverages are in place and properly coordinated.

Costly Pitfalls When Relying on Medicare Alone

If you decide to drop your PSHB plan and keep only Medicare, you might assume your healthcare needs are fully covered. But in 2025, this strategy has major risks:

• No dental or vision coverage under Original Medicare.

• Limited long-term care benefits.

• Higher coinsurance or copayments for some hospital and outpatient services.

• No family coverage—Medicare only covers the individual.

While Medicare does offer strong hospital and medical insurance, it doesn’t replace the full suite of benefits offered by PSHB.

What Happens If You Delay Part B Enrollment?

If you’re required to enroll in Medicare Part B for PSHB purposes and you delay, here’s what you could face:

• Late enrollment penalties: You pay a higher premium—potentially for life.

• Gaps in PSHB coverage: Your PSHB plan may limit or deny benefits for services Medicare Part B would have covered.

• Loss of prescription drug benefits under PSHB if you don’t participate in the EGWP plan.

The cost of inaction adds up fast. Don’t assume that PSHB will always pick up the slack.

Timeline for Integration: What to Watch in 2025

Several deadlines and processes matter for the PSHB-Medicare coordination in 2025:

• January 1, 2025: PSHB officially replaces FEHB for USPS employees and retirees.

• From November to December: Open Season allows you to change PSHB plans.

• April to September 2024: The Special Enrollment Period (SEP) for Medicare Part B allowed certain USPS retirees to sign up without penalty.

• Ongoing: Those turning 65 in 2025 must act during their Initial Enrollment Period (IEP)—3 months before, the month of, and 3 months after their 65th birthday.

Mark your calendar. Missing any of these milestones could lead to higher premiums, coverage denials, or both.

What PSHB Doesn’t Cover Without Medicare

If you don’t have Medicare, PSHB will still provide coverage—but with higher cost-sharing in many cases. And you’ll miss out on the full set of Medicare-enhanced benefits:

• Some PSHB plans raise your deductible and copays if Medicare isn’t in place.

• Without Part B, certain services may not be covered at all or will be reimbursed at lower levels.

• You lose access to automatic drug coverage under Part D if you opt out.

This makes relying on PSHB alone, without Medicare, a risky move in retirement.

Key Considerations Before Making Changes

Before deciding whether to enroll in or decline Medicare coverage, take a moment to evaluate:

• Your retirement date: Were you retired before January 1, 2025? If yes, you’re exempt from mandatory Part B.

• Your age: Are you 64 or older as of January 1, 2025? You may be exempt.

• Your income: Higher earners may pay more for Part B (IRMAA surcharges apply).

• Your dependents: Medicare doesn’t cover spouses or family members—you’ll need PSHB for them.

• Your travel habits: Original Medicare may not cover international care; PSHB often does.

These factors help you decide if Medicare strengthens your safety net—or adds unnecessary complexity.

Smart Strategies for Balancing Both Plans

If you want to avoid surprises and optimize your coverage:

• Enroll in both Medicare Part A and B when required.

• Review your PSHB plan’s Medicare coordination benefits—some offer premium reimbursement or enhanced cost-sharing.

• Keep family members enrolled under PSHB to protect their access to care.

• Don’t opt out of EGWP prescription drug coverage unless absolutely necessary.

• Consult a licensed agent listed on the website for a personalized evaluation.

Balancing both plans thoughtfully in 2025 ensures fewer out-of-pocket expenses, less paperwork, and better coverage.

Your Healthcare Safety Net Depends on the Right Balance

When you think of Medicare as a backup for PSHB, make sure it’s a supported backup—not a shaky one. It’s not about choosing one or the other. It’s about understanding how the two work in tandem—because relying on Medicare to fill the gaps left by PSHB can work well only if you follow the rules.

In 2025, those rules are clearer but stricter. If you don’t meet the enrollment requirements or misunderstand the coverage limitations, the backup you thought you had may not be there when you need it.

For guidance that fits your specific situation, get in touch with a licensed agent listed on this website. A few minutes of expert help could prevent costly mistakes down the road.