Key Takeaways

• Once you reach age 65, becoming eligible for Medicare significantly changes what you pay under your PSHB plan. Premiums, deductibles, and cost-sharing can all shift based on whether or not you enroll in Medicare Part B.

• If you fail to enroll in Medicare Part B when required, your PSHB coverage may become more expensive and offer fewer benefits. But if you do enroll, many PSHB plans reduce your cost-sharing or even reimburse Part B premiums.

Understanding Medicare Eligibility at 65

At age 65, most Americans become eligible for Medicare. For PSHB participants—especially retirees—this milestone marks more than just a birthday. It signals a required adjustment in your healthcare coverage responsibilities. If you’re a Postal Service annuitant or covered family member who is Medicare-eligible, your participation in Medicare Part B becomes more than a suggestion: it may be mandatory to maintain full PSHB benefits.

To be clear, Medicare eligibility doesn’t automatically enroll you. You must actively sign up during your Initial Enrollment Period, which begins three months before your 65th birthday, includes your birth month, and continues for three months after.

Why Medicare Matters Under PSHB in 2025

Beginning January 1, 2025, PSHB coverage officially replaced FEHB coverage for Postal Service employees and annuitants. While many of the coverage basics remain similar, the relationship between PSHB and Medicare is not optional for many enrollees. Here’s why:

• If you were retired on or before January 1, 2025, and are not already enrolled in Medicare Part B, you are exempt from mandatory enrollment.

• But if you retire after January 1, 2025, and are Medicare-eligible, you are required to enroll in Medicare Part B to keep your PSHB plan’s full benefits.

• Failure to enroll could result in losing drug coverage and facing higher out-of-pocket costs for medical services.

What Changes at Age 65: Cost Breakdown

Once you turn 65 and become eligible for Medicare, here’s what may shift in your PSHB plan:

1. Your Premium May Stay the Same—But Your Overall Costs Might Not

PSHB premiums are not directly lowered just because you enroll in Medicare. However, many PSHB plans offer premium offsets or reimbursements to enrollees who carry both PSHB and Medicare Part B. This reimbursement is not automatic and varies by plan, but it can reduce your monthly Medicare burden.

2. Lower Out-of-Pocket Costs If You Enroll in Medicare

If you enroll in Medicare Part B, many PSHB plans coordinate benefits to reduce what you owe for:

• Primary and specialty care visits

• Hospital stays

• Lab tests and imaging

• Durable medical equipment

When Medicare pays first and your PSHB plan picks up the rest, your coinsurance and deductibles may be significantly lower than if you relied solely on PSHB.

3. Drug Coverage Transitions Automatically

For Medicare-eligible annuitants, PSHB includes prescription drug coverage through a Medicare Part D Employer Group Waiver Plan (EGWP). This transition happens automatically when you are enrolled in Medicare Part A and B. This coverage:

• Offers expanded pharmacy networks

• Caps insulin costs

• Includes a $2,000 out-of-pocket maximum for drugs in 2025

If you decline Part B, you will lose access to this enhanced drug coverage and face coverage gaps.

Cost of Not Enrolling in Medicare Part B

Avoiding Medicare Part B enrollment when required isn’t just a clerical issue—it leads to real financial consequences:

• You may lose access to prescription drug benefits.

• You will not benefit from cost-sharing reductions.

• You may face late enrollment penalties for Medicare if you enroll later.

The Medicare Part B late enrollment penalty adds 10% to your monthly premium for each 12-month period you delay enrollment when you should have signed up. These penalties are permanent.

How PSHB and Medicare Work Together to Lower Your Costs

When enrolled in both Medicare and a PSHB plan, Medicare becomes your primary payer for most services. Your PSHB plan then pays as secondary. This coordination typically leads to the following financial advantages:

• Lower deductibles: In many plans, your Part B enrollment reduces or waives your PSHB deductible.

• Reduced coinsurance: Because Medicare covers most of the initial costs, your plan’s coinsurance is often minimal.

• Fewer copayments: Some PSHB plans waive certain copays if Medicare has already paid its share.

The end result: while you may pay a separate Part B premium, you could save considerably on your total annual healthcare spending.

Important Enrollment Timelines to Watch

• Initial Enrollment Period (IEP): 7 months around your 65th birthday.

• Special Enrollment Period (SEP): If you’re covered by an active employee group health plan, you can delay Part B without penalty and enroll during an SEP when that coverage ends.

• General Enrollment Period (GEP): January 1 to March 31 if you miss your IEP or SEP. Coverage begins July 1 and may include late penalties.

For PSHB annuitants retiring after 2025, missing the IEP or SEP can have costly implications on your PSHB plan access.

How Your Costs Look Before and After Age 65

Before Age 65:

• You pay full PSHB plan premiums.

• PSHB is your only health coverage.

• You pay plan deductibles, copays, and coinsurance in full.

After Age 65 (With Medicare):

• You pay Medicare Part B premiums in addition to your PSHB premium.

• Medicare becomes primary payer; PSHB is secondary.

• Deductibles and copays under PSHB may be reduced or waived.

• Prescription drug coverage transitions to EGWP with better caps.

After Age 65 (Without Medicare):

• PSHB remains your sole coverage, but drug benefits may be dropped.

• You’re subject to full PSHB cost-sharing.

• You lose access to reduced cost-sharing and potential premium reimbursement.

• You may owe Medicare late penalties if enrolling later.

What If You’re Still Working at 65?

If you are still employed with USPS at age 65, you are not required to enroll in Medicare Part B immediately. Your PSHB plan continues to serve as your primary coverage while you’re actively working. When you retire, a Special Enrollment Period allows you to enroll in Medicare without penalties.

However, once you retire, PSHB rules kick in and may require you to enroll in Part B. Failing to do so will reduce your benefits under the PSHB program.

Planning Ahead for Your 65th Year

Here’s what you should do as you approach age 65:

• Check your retirement date: If it’s after January 1, 2025, Medicare enrollment will likely be mandatory.

• Track your Initial Enrollment Period: It begins three months before you turn 65.

• Compare your PSHB plan’s Medicare coordination benefits: Look for premium reimbursements, waived deductibles, and EGWP participation.

• Get advice: If you’re unsure about when to enroll or how your costs will change, consult a licensed agent listed on this website.

Retiring After 2025? Your PSHB and Medicare Timeline Looks Like This

• 3–6 months before age 65: Start evaluating your Medicare enrollment options.

• 3 months before turning 65: Begin your Medicare Part B application.

• Month of your 65th birthday: Ensure your Medicare begins without delay.

• Post-65: Enroll in PSHB as a retiree with Medicare coordination.

Smart Coordination Lowers the Lifetime Cost of Care

If you think Medicare is just an extra premium, think again. For most PSHB enrollees, especially retirees, combining Medicare with PSHB results in substantial savings. While you’ll pay the Part B premium, your lower out-of-pocket spending often offsets the cost.

PSHB plans are designed to complement Medicare—not compete with it. By enrolling in both, you access better protection against large medical bills, smoother claim processing, and better drug coverage.

Learn How to Align Medicare and PSHB for Better Results

Turning 65 under PSHB coverage is a turning point that comes with responsibilities and benefits. Whether you’re retiring soon or already past your 65th birthday, it’s essential to know how Medicare eligibility affects what you owe—and what you can save.

If you’re confused about timelines, coordination, or how your benefits will shift, speak with a licensed agent listed on this website. The right advice today can save you thousands tomorrow.