Key Takeaways

• While it might seem like doubling up on PSHB and Medicare gives you the most coverage, in reality, it could mean unnecessary costs and overlapping benefits.

• Understanding how PSHB and Medicare work together can help you avoid paying more than you need to or getting confused about which plan pays for what.

When Two Plans Don’t Always Equal Twice the Value

If you’re a USPS retiree or nearing retirement, you’re probably hearing a lot about the new Postal Service Health Benefits (PSHB) program and Medicare. It sounds like a good idea to keep both, right? After all, more coverage should mean more peace of mind.

But here’s the thing: having both PSHB and Medicare isn’t always the smart move. In some situations, it could cost you more than it’s worth. Let’s break down why it might not be the best combo for everyone—and how you can figure out what makes the most sense for you.

The Big Shift: From FEHB to PSHB

Starting in 2025, USPS employees and annuitants are moving from the Federal Employees Health Benefits (FEHB) program to the new PSHB program. It’s designed just for postal workers and retirees, offering plans that coordinate more closely with Medicare once you hit 65.

Here’s what’s changed:

• If you’re 65 or older and retired, you’re generally required to enroll in Medicare Part B to stay in PSHB.

• If you’re still working or not yet 65, you can stick with PSHB only for now.

• Medicare Part A is usually premium-free if you have 40 work credits, so most people enroll in that no matter what.

What Medicare Covers (and What It Doesn’t)

Let’s do a quick recap of what Medicare brings to the table in 2025:

• Part A (Hospital Insurance): Covers inpatient hospital care, skilled nursing facility care, and hospice. Deductible: $1,676 per benefit period.

• Part B (Medical Insurance): Covers doctor visits, outpatient care, preventive services. Monthly premium: $185. Annual deductible: $257.

• Part D (Prescription Drug Coverage): Caps out-of-pocket costs at $2,000 for the year.

When combined with PSHB, these can duplicate some services you’re already paying for.

When You Have Both, Who Pays First?

One of the most confusing parts of keeping both PSHB and Medicare is figuring out who pays first. That order matters.

• If you’re retired and over 65, Medicare pays first, and PSHB pays second.

• If you’re still working and over 65, PSHB pays first, and Medicare pays second.

Why does this matter? Because having two plans doesn’t mean both pay 100%. Medicare pays its share, and PSHB pays after that—if there’s anything left to pay. So you could be paying two premiums for limited additional benefit.

The Cost Layer You Didn’t Expect

Let’s talk about the elephant in the room: cost. Keeping both PSHB and Medicare means paying two premiums—PSHB plus Medicare Part B. Even though Medicare Part A is free for most, Part B isn’t. So every month, you’re shelling out extra, and you might not be getting much more in return.

You also need to consider:

• Deductibles: Each plan has its own. You could be meeting two deductibles every year.

• Copayments and coinsurance: These may not go away just because you have dual coverage.

• Prescription coverage: If your PSHB plan already has strong drug coverage, adding Part D might not help much unless your prescriptions are particularly expensive.

Situations Where You Might Be Overpaying

There are a few cases where having both PSHB and Medicare might be overkill:

• You rarely see the doctor: If your healthcare usage is low, you might be spending hundreds more in premiums each month for services you barely use.

• You’re already in a low-cost PSHB plan: The added Medicare Part B premium could outweigh the secondary benefits.

• You qualify for other financial help: If you have other benefits like Medicaid or a Medicare Savings Program, you may not need to keep both.

What You Gain (and What You Don’t)

There are reasons why people choose to keep both, especially when it comes to avoiding out-of-pocket surprises. But don’t assume double coverage equals double protection.

Pros:

• Lower cost-sharing after Medicare pays first

• Potentially better coordination of benefits

• Some PSHB plans offer extra perks when combined with Medicare

Cons:

• Higher monthly premiums

• Duplication of benefits you may not need

• Confusion over who covers what

Medicare Requirement Isn’t One-Size-Fits-All

While Medicare Part B is required for most USPS annuitants under PSHB starting in 2025, there are exceptions. You don’t need to enroll in Part B if:

• You retired on or before January 1, 2025 and aren’t already enrolled in Part B

• You’re still working past 65

• You qualify for a specific exemption based on your status

So if you fall under one of these categories, you could keep just PSHB and not add Medicare. That alone could save you thousands a year in premiums.

Timing Matters More Than You Think

Don’t forget that your decisions are tied to specific enrollment periods:

• Initial Enrollment Period (IEP): This is your 7-month window around your 65th birthday to sign up for Medicare.

• General Enrollment Period (GEP): From January 1 to March 31 every year if you missed IEP. Coverage starts in July.

• Special Enrollment Periods (SEPs): These apply if you’re still working and lose employer coverage later on.

If you don’t enroll in Medicare when you’re supposed to, you might pay a late enrollment penalty that lasts for life. But enrolling too early—or unnecessarily—could lock you into higher costs.

Your Retirement Timeline Changes the Equation

A big factor in whether keeping both plans is worth it is when you plan to retire. If you’re retiring soon, or already retired, Medicare may become more central to your coverage. If you’re a decade out, sticking with PSHB alone might be enough for now.

Ask yourself:

• How long do I plan to keep working?

• When will I be eligible for Medicare?

• Will my health needs increase soon?

Your answers will help shape a smarter, more cost-effective strategy.

Coordinated Plans vs. Independent Coverage

Some PSHB plans are designed to work hand-in-hand with Medicare. They may waive deductibles, offer enhanced benefits, or streamline claims processing when paired with Medicare Part B.

But other plans don’t do this as well. In those cases, you’re just doubling up without getting any real extras. That’s why it’s critical to compare how your PSHB plan interacts with Medicare before you commit to both.

Know What You’re Paying For

Every benefit sounds great on paper—until you realize it’s overlapping. A good rule of thumb: Don’t pay for coverage you don’t need, just because it sounds safer. Review the following:

• Your PSHB plan brochure to see how it works with Medicare

• Medicare’s coverage limits and costs

• The services you actually use

Use that info to weigh how much value you’re really getting.

Talk to the Right People Before You Decide

It can be hard to make sense of all the options—and you don’t want to guess your way into hundreds of dollars of avoidable costs. Talk to someone who understands how Medicare and PSHB interact. A licensed agent can walk you through your unique situation and help you pick what’s best for you now and later.

Overlapping Plans Don’t Always Mean Better Coverage

Just because you can have both PSHB and Medicare doesn’t mean you should. Depending on your timeline, health needs, and budget, it might be smarter to keep it simple. You don’t want to spend extra each month for services you won’t use—or worse, confuse your providers about which plan to bill first.

If you’re feeling unsure, it’s always a good idea to talk to a licensed agent listed on this website. They can break down the numbers, the coverage, and help you avoid costly missteps.