Key Takeaways

• Enrolling in Medicare may seem like a natural step once you’re covered by a PSHB plan, but several rules determine how well the two work together—or if they even do at all.

• Your age, employment status, and Medicare Part B enrollment decision can drastically impact your premiums, drug coverage, and out-of-pocket costs under PSHB.

Medicare Enrollment Isn’t Automatic—And That Matters

While PSHB is now the health benefits system for Postal Service employees and annuitants, it does not include automatic Medicare enrollment. If you’re turning 65 or are already Medicare-eligible, you must take active steps to enroll in Medicare Parts A and B. This is crucial because, starting in 2025, your continued access to full PSHB benefits may depend on your Medicare enrollment status.

You’re generally first eligible to sign up for Medicare during your Initial Enrollment Period, a 7-month window beginning three months before the month you turn 65 and ending three months after. Missing this window could result in penalties or delayed coverage.

The Rule That Impacts Most Annuitants: Mandatory Part B

As of 2025, most Medicare-eligible Postal Service annuitants and their family members are required to enroll in Medicare Part B to keep their PSHB plan. This rule applies unless you fall into one of the exempt categories:

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

• You were age 64 or older as of January 1, 2025

• You live permanently overseas

• You receive coverage from the VA or Indian Health Services

If none of these apply to you and you fail to enroll in Part B, you risk losing critical portions of your PSHB coverage.

What Medicare Brings to the Table—If You Enroll on Time

When coordinated correctly, Medicare and PSHB can complement each other to reduce your out-of-pocket spending. Medicare typically becomes the primary payer, while PSHB serves as secondary coverage. This coordination can offer real savings:

• Lower deductibles and coinsurance: Many PSHB plans reduce or waive your deductibles and coinsurance if you are enrolled in Part B.

• Enhanced prescription drug benefits: With automatic enrollment into a Medicare Part D EGWP (Employer Group Waiver Plan), your PSHB drug coverage becomes more robust, often including lower copayments and a $2,000 annual out-of-pocket cap.

• Extended provider access: Medicare’s vast network may include providers who do not accept your PSHB plan alone.

Missing Part B Enrollment Has Ripple Effects

Failing to enroll in Medicare Part B when required not only affects your PSHB plan eligibility—it also impacts your financial future. Here’s what you could face:

• Loss of benefits under PSHB: Without Part B, some plans may deny coverage for services Medicare would have paid first.

• Late enrollment penalty: For each year you delay enrolling in Part B, you could face a 10% increase in monthly premiums—for life.

• Limited re-enrollment opportunity: If you opt out of the integrated Medicare Part D drug coverage under PSHB, you may not be able to rejoin later, limiting access to essential medications.

Coordination of Benefits: What You Need to Know

Understanding who pays first—Medicare or PSHB—can help avoid billing surprises. In most cases:

• If you are retired and enrolled in Medicare, Medicare pays first, and PSHB pays second.

• If you are still working at USPS and have Medicare, PSHB pays first, Medicare pays second.

This difference matters because some providers may bill based on whichever plan is primary. Knowing your coordination order helps you confirm coverage and avoid unnecessary charges.

Drug Coverage Under PSHB and Medicare Part D

Your PSHB plan will automatically enroll you in a Medicare Part D drug plan (specifically, an EGWP) if you’re eligible for Medicare. The good news is that this integrated setup works better than traditional standalone Part D plans:

• You get the $2,000 annual cap on out-of-pocket drug costs.

• Covered insulin products are capped at $35 per month.

• Formularies tend to be more comprehensive, including access to specialty medications.

However, if you decline this Part D coverage, you forfeit your PSHB prescription benefits. And unlike standalone plans, you may not have the option to opt back in mid-year. This decision is often final for the rest of the year.

Common Misunderstandings That Lead to Costly Errors

Many PSHB enrollees assume they don’t need to take action at 65 or that PSHB will always act as their safety net. In reality, these assumptions can lead to coverage gaps and penalties:

• Misunderstanding 1: “I don’t need Medicare because I already have PSHB.”

  • Truth: If you’re required to enroll in Medicare Part B and don’t, PSHB may reduce or stop paying for services Medicare would have covered.

• Misunderstanding 2: “Turning 65 means I’m automatically covered by Medicare.”

  • Truth: Enrollment in Medicare is not automatic unless you are already receiving Social Security benefits.

• Misunderstanding 3: “I can just sign up for Part B whenever I want.”

  • Truth: Missing your enrollment window may result in permanent late penalties and delayed coverage.

Key Dates You Cannot Afford to Miss

Timing plays a vital role in how your PSHB and Medicare benefits align. Mark these critical dates:

• Turning 65: Start considering Medicare enrollment 3 months prior.

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

• General Enrollment Period (GEP): January 1 – March 31 each year (coverage starts July 1).

• PSHB Open Season: Every year from November to December, you can adjust your plan to match your Medicare status.

Missing these windows can reduce your benefits or increase your costs significantly.

If You’re Still Working Past 65

You can delay enrolling in Medicare Part B without penalty if you’re still working at USPS and covered under an active employee PSHB plan. In this case:

• Medicare becomes secondary until you retire.

• You qualify for a Special Enrollment Period (SEP) once you retire, allowing you to enroll in Part B without penalty within 8 months.

It’s essential to remember that once you retire, Medicare must become your primary coverage if you’re eligible.

Plan Options After Medicare Enrollment

Once you’re enrolled in Medicare Parts A and B, you can review PSHB plans during Open Season that better align with your new coordination of benefits. While all plans work with Medicare to some extent, some plans:

• Waive deductibles and coinsurance for Medicare enrollees

• Offer lower premiums if you are enrolled in Part B

• Include special benefits like wellness programs or international emergency coverage

Comparing plans each year ensures that you’re not overpaying for coverage that doesn’t match your Medicare status.

How PSHB and Medicare Impact Family Members

If your spouse or dependents are also Medicare-eligible, the same coordination rules apply to them. But if they are not yet eligible for Medicare, PSHB continues to provide their coverage independently. You’ll need to consider each family member’s status when selecting coverage during Open Season.

For families with mixed eligibility, choosing a PSHB plan that works well regardless of Medicare status can help reduce complications.

Getting the Balance Right

When PSHB and Medicare are paired strategically, you can reduce your out-of-pocket costs, gain stronger benefits, and protect your long-term health finances. But that only happens if you:

• Understand your Medicare enrollment timeline

• Enroll in the required parts at the right time

• Reassess your PSHB plan each Open Season to match your Medicare coordination

Ignoring these elements may result in limited coverage or long-term financial penalties.

Make the Coverage Work for You in 2025

Don’t assume PSHB and Medicare will align automatically—each decision you make influences how well they serve you. Take the time to:

• Understand your enrollment requirements

• Pay attention to critical Medicare timelines

• Reevaluate your PSHB plan choices annually

If you’re unsure about your next steps, connect with a licensed agent listed on this website to help you review your options and ensure your coverage remains strong.