Key Takeaways

• Medicare offers valuable hospital and medical coverage, but it doesn’t cover everything—especially routine care, prescription drugs, and out-of-pocket costs. Without additional coverage, your financial exposure could be significant.

• If you’re eligible for Medicare and enrolled in a Postal Service Health Benefits (PSHB) plan, coordinating the two can help you reduce costs, fill critical coverage gaps, and protect your long-term financial well-being.

Medicare’s Role: Strong, But Incomplete

Medicare serves as an important foundation for your health care in retirement, especially once you turn 65. It offers coverage through two main parts:

• Part A covers inpatient hospital stays, skilled nursing care, and hospice care.

• Part B covers doctor visits, preventive services, outpatient care, and medical equipment.

However, Medicare doesn’t cover everything. And for Postal Service annuitants who assume it works like a traditional employer plan, that can lead to a painful misunderstanding—especially when it comes to:

• Prescription medications

• Dental, vision, and hearing services

• Long-term custodial care

• Routine foot care

You also face deductibles, coinsurance, and coverage gaps that can leave you paying hundreds or even thousands out-of-pocket each year.

What You Actually Pay With Original Medicare in 2025

Medicare might seem simple at first, but the actual out-of-pocket expenses can add up quickly. In 2025:

• The Part A deductible is $1,676 per benefit period.

• The Part B premium is $185 per month.

• The Part B annual deductible is $257.

• After the deductible, Part B coinsurance is typically 20% of the Medicare-approved amount.

This doesn’t include the cost of medications, which require enrolling in a separate Part D plan, or services Medicare doesn’t cover at all. And if you don’t have any additional coverage through PSHB, these expenses come directly out of your pocket.

PSHB Can Be the Coverage Bridge You Need

The Postal Service Health Benefits (PSHB) Program exists to help reduce these financial risks. Beginning in 2025, it replaces FEHB for postal employees and retirees. If you’re Medicare-eligible and enrolled in both Medicare and a PSHB plan, your benefits can coordinate to reduce or even eliminate much of the cost-sharing that Medicare leaves behind.

Some of the most important protections PSHB provides when paired with Medicare include:

• Lower or waived deductibles

• Reduced coinsurance and copays

• Broader access to prescription drug coverage

• A cap on your out-of-pocket drug costs

• Coverage for dental, vision, and hearing services (depending on the plan)

Prescription Drug Coverage: A Key Gap Without PSHB

Original Medicare does not cover outpatient prescriptions unless you enroll separately in a Part D plan. But PSHB plans include prescription drug benefits automatically.

If you’re Medicare-eligible and enrolled in a PSHB plan in 2025, you’ll receive your drug benefits through a Medicare Part D Employer Group Waiver Plan (EGWP). This special structure provides:

• Access to a wide network of pharmacies

• A federally capped out-of-pocket drug maximum of $2,000 per year

• Lower costs on insulin and other commonly used medications

• Protections from the eliminated Part D coverage gap (previously known as the “donut hole”)

You don’t need to enroll in a separate stand-alone Part D plan—in fact, doing so could jeopardize your PSHB coverage.

PSHB and Medicare Part B: Why Enrollment Matters

In 2025, Medicare Part B enrollment is mandatory for many Medicare-eligible Postal Service annuitants and their family members to maintain PSHB coverage. This rule applies unless you fall under specific exemption categories, such as:

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

• You are an active employee who was 64 or older as of January 1, 2025

• You reside permanently overseas

• You are covered under Indian Health Services or Veterans Affairs programs

If you are required to enroll in Part B and fail to do so, you risk losing access to the full PSHB benefits. Without Part B, the plan won’t pay as your primary coverage, which could leave you exposed to high costs for outpatient care.

Out-of-Pocket Costs Can Still Be Substantial

Even with Medicare and a PSHB plan, you’re still responsible for:

• Monthly premiums for both Medicare Part B and your PSHB plan

• Copayments for doctor visits, urgent care, emergency room visits, and some specialty services

• Deductibles, depending on the PSHB plan tier you select

• Coinsurance on certain services or when seeing out-of-network providers

That said, these costs are generally far more predictable and capped compared to Medicare alone. Many PSHB plans set annual out-of-pocket maximums for medical care, which protect you from runaway costs in the event of serious illness or injury.

Avoiding Late Enrollment Penalties

Failing to enroll in Medicare Part B when you’re required to can result in a permanent late enrollment penalty that increases your premium for life. The penalty is 10% for each 12-month period you were eligible but didn’t enroll. This penalty applies even if you eventually join Part B to keep your PSHB plan.

To avoid penalties, ensure that you:

• Enroll during your Initial Enrollment Period (the 7-month window surrounding your 65th birthday)

• Use the Special Enrollment Period if you deferred Part B while still working

• Meet any other deadlines specified by the PSHB program

Missing these deadlines can make your health care significantly more expensive over time.

What PSHB Doesn’t Cover Even With Medicare

While the combination of PSHB and Medicare offers extensive coverage, some things still fall outside the scope:

• Long-term custodial care in nursing homes

• Cosmetic procedures

• Over-the-counter drugs (unless included as a supplemental benefit)

• Alternative therapies such as acupuncture (only covered in limited medical circumstances)

It’s important to review your PSHB plan brochure or speak with a licensed agent to understand exactly what your specific plan does or does not cover beyond Medicare.

Planning Ahead: Cost Protection Starts With Coordination

Health care costs tend to rise as you age. Planning now by ensuring proper coordination between Medicare and your PSHB plan can spare you future financial stress. You don’t want to wait until a health crisis to find out that your coverage is incomplete.

Here are a few steps you can take today:

• Confirm your Medicare enrollment status

• Review your PSHB plan benefits to understand how they integrate with Medicare

• Compare out-of-pocket limits, deductibles, and copayments

• Avoid enrolling in standalone Part D or Medicare Advantage plans, as they may disrupt your PSHB benefits

• Reach out to a licensed agent to get clarification and personalized guidance

Being Proactive With Your Coverage Gives You Real Protection

Simply enrolling in Medicare might make you feel insured, but without PSHB as a backup, you’re vulnerable to out-of-pocket shocks. And if you’re ineligible for cost-sharing reductions due to not enrolling in Medicare Part B, you may face steeper expenses than necessary.

PSHB exists to bridge the gap between what Medicare covers and what you actually need. When you plan ahead, enroll correctly, and understand how your coverage coordinates, you take control of your health care—and your wallet.

For tailored advice that accounts for your eligibility, retirement status, and PSHB enrollment, get in touch with a licensed agent listed on this website today.