Key Takeaways

• Failing to enroll in Medicare on time could lead to permanent penalties that increase your healthcare costs for life.

• Understanding how PSHB and Medicare work together helps you avoid coverage gaps and unnecessary expenses.

Don’t Let Medicare Mistakes Drain Your Retirement Savings

Enrolling in Medicare seems straightforward, but small missteps can lead to thousands of dollars in penalties and lifelong higher premiums. As a postal retiree or worker transitioning to the Postal Service Health Benefits (PSHB) program, understanding Medicare enrollment is crucial. Missing key deadlines or misunderstanding your coverage could leave you paying more than necessary. Let’s go over the most common Medicare enrollment mistakes and how you can avoid them.

1. Missing Your Initial Enrollment Period (IEP)

Your Medicare Initial Enrollment Period (IEP) is a seven-month window surrounding your 65th birthday:

• Begins: Three months before your 65th birthday

• Includes: The month of your birthday

• Ends: Three months after your birthday month

If you miss this window, you could face late penalties. The Medicare Part B penalty increases your monthly premium by 10% for every 12-month period you were eligible but didn’t enroll. This penalty is permanent, meaning you will pay more for Medicare for the rest of your life. Since Medicare is essential for PSHB retirees, failing to sign up on time means unnecessary costs that will accumulate over the years.

Another crucial point is that your Medicare coverage doesn’t start immediately even if you sign up during the later months of your IEP. If you enroll in the last three months of your IEP, your Medicare benefits could be delayed, leaving you without coverage when you need it.

2. Assuming PSHB Covers Everything After Retirement

PSHB provides excellent health coverage, but once you become eligible for Medicare, your PSHB benefits change. Medicare becomes your primary insurance, while PSHB serves as secondary coverage. This means Medicare pays first, and PSHB covers some of the remaining costs. If you don’t enroll in Medicare, you could end up paying more for healthcare services that Medicare would have otherwise covered.

Even if you plan to continue working past 65, it’s critical to check whether your PSHB plan requires Medicare enrollment to maintain full benefits after retirement. Some PSHB plans may offer limited benefits if you don’t enroll in Medicare, resulting in higher out-of-pocket expenses for hospital stays, outpatient care, and specialist visits.

3. Enrolling in the Wrong Medicare Plan

Medicare consists of multiple parts, each covering different services:

• Part A: Covers hospital stays and skilled nursing care.

• Part B: Covers doctor visits, outpatient care, and preventive services.

• Part C (Medicare Advantage): An alternative to traditional Medicare with additional benefits.

• Part D: Covers prescription drugs.

For most postal retirees, enrolling in Parts A and B is essential because PSHB coordinates with these Medicare benefits. Some postal retirees mistakenly think that they only need Medicare Part A (which is often premium-free for those who paid Medicare taxes for at least 10 years). However, Part B enrollment is required for full PSHB coordination, meaning that without it, you may face significant coverage gaps and higher medical costs.

Additionally, Medicare Advantage (Part C) plans may not work well with PSHB, depending on the coverage rules. Before enrolling in any plan outside of Medicare Parts A and B, confirm whether your PSHB benefits will still apply.

4. Misunderstanding Medicare Enrollment Periods

Medicare has specific enrollment periods beyond your IEP:

• General Enrollment Period (GEP): Runs from January 1 to March 31 each year for those who missed their IEP. Coverage starts July 1, and penalties apply.

• Special Enrollment Period (SEP): Available if you have qualifying coverage, such as employer-sponsored health insurance. However, PSHB retirees must ensure their plan qualifies for an SEP before delaying Medicare enrollment.

• Open Enrollment (October 15 – December 7): Allows you to change Medicare plans if needed, but does not help if you missed your initial sign-up window.

Ignoring these periods could result in late penalties and higher costs. For example, if you don’t enroll in Medicare during your IEP and don’t qualify for an SEP, you will be forced to wait until the GEP, leaving you uninsured for months.

5. Not Understanding Medicare and PSHB Prescription Coverage

As of 2025, Medicare-eligible postal retirees are automatically enrolled in a Medicare Part D Employer Group Waiver Plan (EGWP) through their PSHB plan. This provides prescription drug coverage, often with cost-saving benefits.

However, if you enroll in a separate Part D plan, you could lose access to PSHB prescription benefits. Stick with the PSHB-provided Medicare prescription coverage to avoid unnecessary expenses and ensure that your medications remain covered.

6. Thinking Medicare Enrollment is Automatic

While Medicare Part A enrollment may be automatic if you receive Social Security benefits, Part B requires active enrollment. Many postal retirees mistakenly assume they are automatically covered, only to face penalties when they need healthcare.

Check your Medicare status before turning 65 and ensure you actively enroll in Part B if required. You should receive a Medicare enrollment notice in the mail before your eligibility period, but it’s your responsibility to follow through with enrollment.

7. Delaying Medicare Enrollment Without a Valid Exemption

Some people delay Medicare because they have other coverage, but PSHB retirees must follow specific rules. If you plan to continue working past 65 and have health coverage through USPS, you might qualify for a Special Enrollment Period.

However, if you retire and lose employer coverage, you must enroll in Medicare immediately. Failing to do so results in late penalties and a costly coverage gap. PSHB retirees need to be especially cautious about this because employer coverage rules change once retirement begins.

8. Overlooking Medicare’s Impact on Spousal Coverage

If your spouse is covered under your PSHB plan, your transition to Medicare may affect their benefits. Some PSHB plans require retirees to enroll in Medicare for dependents to maintain full coverage. If you do not enroll in Medicare, your spouse’s healthcare costs could rise significantly or they could lose benefits altogether.

Before making any Medicare decisions, check how your choices impact your spouse’s healthcare options and discuss alternative coverage if necessary.

9. Assuming You Can Enroll Anytime

Medicare enrollment is not flexible. If you miss your IEP and don’t qualify for an SEP, you can only enroll during the General Enrollment Period. This means:

• You may go months without coverage.

• You will pay a late enrollment penalty that lasts for life.

• Your coverage will be delayed until July of the year you enroll.

Plan ahead and enroll on time to avoid unnecessary risks and expenses.

10. Ignoring the Costs of Late Enrollment

Medicare penalties add up quickly:

• Part B late penalty: 10% increase for every 12 months without coverage.

• Part D late penalty: 1% increase for every uncovered month without prescription drug coverage.

These penalties last for life, making healthcare significantly more expensive in retirement. Enrolling on time ensures you avoid these unnecessary costs.

Secure Your PSHB and Medicare Coverage Without Costly Mistakes

Understanding Medicare enrollment rules is essential for protecting your retirement savings. Failing to sign up on time, choosing the wrong plan, or misunderstanding PSHB coordination could cost you thousands in unnecessary penalties and healthcare expenses.

Don’t leave your future to chance—get in touch with a licensed agent listed on this website for professional advice on Medicare and PSHB enrollment.