Key Takeaways

• If you are eligible for Medicare and enrolled in a Postal Service Health Benefits (PSHB) plan, you are expected to enroll in Medicare Part B. Skipping it may reduce your benefits or raise your out-of-pocket costs.

• PSHB plans in 2025 are designed to work hand-in-hand with Medicare, especially when it comes to hospital, outpatient, and prescription drug coverage.

Why PSHB Integrates with Medicare

The 2025 transition from the Federal Employees Health Benefits (FEHB) Program to the Postal Service Health Benefits (PSHB) Program was more than a simple name change. It was a structural redesign, and at the core of it is the coordination with Medicare.

PSHB plans are built to function in tandem with Medicare for enrollees aged 65 and older. If you are a postal retiree or eligible family member who qualifies for Medicare, especially Part A and Part B, your PSHB coverage assumes you’ll have Medicare in place.

Here’s why:

• Cost-sharing coordination: PSHB plans often lower or even waive certain deductibles, copayments, and coinsurance when Medicare is your primary coverage.

• Reduced total spending: Medicare covers many services first, with the PSHB plan picking up the balance.

• Drug coverage integration: Prescription benefits for Medicare-eligible enrollees are provided through a Medicare Part D plan, embedded in PSHB coverage.

Without Medicare, many of these cost-saving benefits do not apply.

What PSHB Expects from Medicare-Enrolled Members

If you’re eligible for Medicare Part A (usually premium-free) and Part B (which has a monthly premium), PSHB expects you to enroll in both to maintain optimal coverage.

In 2025, the rules are clear:

• Medicare Part B is mandatory for annuitants and eligible family members unless you retired on or before January 1, 2025, or qualify for another exemption.

• Enrollees who opt out of Part B and do not qualify for an exemption may lose out on significant benefits and face higher costs.

• Those enrolled in Medicare and PSHB will receive automatic enrollment in an enhanced prescription drug plan that complies with Medicare Part D.

What You Lose by Skipping Medicare

Skipping Medicare Part B has real consequences in the current PSHB landscape.

1. Higher Out-of-Pocket Costs

Without Medicare Part B, your PSHB plan becomes your sole insurer. You are responsible for:

• The full PSHB deductible

• Coinsurance and copayments that Medicare would have otherwise covered

• Potential non-covered services that would’ve been paid by Medicare first

These costs can add up quickly, especially for outpatient services, durable medical equipment, and diagnostic testing.

2. No Access to Enhanced Drug Coverage

In 2025, PSHB plans provide integrated prescription coverage through a Medicare Part D Employer Group Waiver Plan (EGWP). This includes:

• An annual $2,000 cap on out-of-pocket drug costs

• $35 insulin coverage

• A larger network of pharmacies

You forfeit this benefit if you skip Medicare. Your drug coverage will revert to the basic PSHB plan terms—usually higher costs and fewer protections.

3. Possible Loss of Coverage

Under current rules, if you become Medicare-eligible and do not enroll in Part B, your PSHB plan can:

• Deny reimbursement for certain services

• Require you to pay higher premiums (in plans where this is permitted)

• Restrict your access to certain provider networks

These restrictions are avoidable—but only if you are enrolled in Medicare Part B.

Medicare Enrollment Timing Matters

To maintain uninterrupted PSHB coverage and get full access to benefits, you must enroll in Medicare at the right time.

• Initial Enrollment Period (IEP): Begins 3 months before your 65th birthday, includes your birth month, and ends 3 months after.

• Special Enrollment Period (SEP): Applies if you delayed Medicare because you were still working. You have 8 months after employment or employer coverage ends to sign up.

• General Enrollment Period (GEP): Runs from January 1 to March 31 annually, with coverage beginning July 1. Late penalties may apply.

In 2025, missing your enrollment window could mean late penalties, delayed coverage, or gaps in your PSHB coordination.

Medicare Is the Primary Payer for Retirees

Once you turn 65 and enroll in Medicare, it becomes your primary coverage if you are retired. PSHB acts as secondary coverage. This means:

• Medicare pays first for eligible services

• Your PSHB plan pays the balance, possibly reducing or eliminating out-of-pocket expenses

If you do not enroll in Medicare, PSHB must act as primary—and that comes with higher costs and fewer coordinated benefits.

The Exemptions: Who Doesn’t Have to Enroll in Part B

Not every PSHB enrollee must take Medicare Part B. In 2025, you’re exempt if:

• You retired from the USPS on or before January 1, 2025

• You are an active USPS employee (not retired) and age 65+

• You reside permanently outside the U.S.

• You are enrolled in VA health care or Indian Health Services

If you fall into one of these categories, you may continue with PSHB without enrolling in Medicare Part B—and still retain access to all plan features. However, choosing to enroll could still offer cost-saving benefits.

Why You May Still Want Part B—Even If You’re Exempt

Even if you’re not required to take Medicare Part B, you might still benefit from it.

• Lower deductibles and copays: Most PSHB plans waive or reduce out-of-pocket costs if you have Part B.

• Broader provider access: Some plans limit in-network access unless Medicare is primary.

• Smoother claim processing: Coordination between Medicare and PSHB is usually faster and more reliable.

Skipping Part B might save you a monthly premium—but it could cost you more in unexpected expenses.

How PSHB and Medicare Coordinate Prescription Drugs

Prescription coverage is one of the biggest advantages of having both PSHB and Medicare.

Here’s how it works in 2025:

• When you have Medicare, your PSHB drug coverage is enhanced by a Medicare Part D EGWP.

• This includes:

  • Lower copays

  • A $2,000 cap on annual out-of-pocket expenses

  • Coverage through more pharmacies nationwide

If you are not enrolled in Medicare, your drug benefits default to a less generous version—no Part D integration, higher costs, and fewer protections.

What Happens If You Delay Medicare Enrollment

Delaying Medicare Part B without a valid reason can have financial and administrative consequences:

• Late enrollment penalties: You’ll pay an extra 10% for each full 12-month period you were eligible but didn’t enroll.

• Delayed coverage start: If you miss your enrollment window, your Medicare and Part D coverage may be delayed until the next General Enrollment Period.

• Disrupted PSHB benefits: Your PSHB plan may no longer coordinate benefits the same way—or at all—without Medicare.

In short: timing matters. Delays could lead to lifelong penalties and higher overall costs.

What You Need to Do Now

If you’re approaching age 65—or already there—it’s time to review your status:

• Are you eligible for Medicare?

• Have you enrolled in both Part A and Part B?

• Does your PSHB plan require Medicare for full benefits?

• Do you qualify for an exemption?

You can contact the PSHB Navigator Help Line or a licensed insurance agent listed on this website to help clarify your situation.

Staying Covered Starts with Being Informed

The PSHB Program in 2025 is built around the assumption that eligible enrollees will coordinate their benefits with Medicare. While some exceptions exist, most retirees benefit from enrolling in both Medicare Part A and B to keep costs down and coverage comprehensive.

Skipping Medicare can limit access, increase your bills, and undermine the whole point of having a PSHB plan that was meant to complement it.

If you’re unsure whether you should enroll or qualify for an exemption, speak with a licensed insurance agent listed on this website to get a personalized breakdown of your coverage options.