Key Takeaways

  • Medicare in 2025 still leaves significant gaps in coverage that could lead to high out-of-pocket costs without supplemental insurance.

  • The Postal Service Health Benefits (PSHB) program fills many of those gaps, especially for those also enrolled in Medicare Part B.

Medicare Still Has Gaps You Can’t Ignore

If you’re relying on Medicare alone in 2025, you’re likely exposed to healthcare costs you didn’t expect. While Medicare covers a wide range of services, it does not cover everything, and the portions it doesn’t cover can be surprisingly expensive. Understanding where those gaps exist is critical—especially now that you’re part of the Postal Service Health Benefits (PSHB) program.

Original Medicare, which includes Part A (hospital insurance) and Part B (medical insurance), has deductibles, coinsurance, and out-of-pocket costs that add up quickly. And unless you enroll in a supplemental plan or have employer-based coverage like PSHB, those costs come straight out of your pocket.

Hospital Costs Can Escalate Quickly

Medicare Part A covers hospital care, but only after you pay a $1,676 deductible per benefit period in 2025. After 60 days of inpatient care, daily coinsurance kicks in:

  • $419 per day for days 61–90

  • $838 per day for lifetime reserve days (up to 60 days over your lifetime)

If you exceed those limits, Medicare covers nothing beyond them.

Also, skilled nursing facility care is only partially covered. After 20 days, you owe $209.50 per day through day 100. After that, you’re responsible for all costs.

Medical Services Still Come With Monthly Bills

Part B, which covers outpatient services, doctor visits, and durable medical equipment, has a standard monthly premium of $185 in 2025. But that’s just the beginning:

  • You pay a $257 deductible each year before Medicare begins to pay.

  • Once that’s met, you pay 20% of the Medicare-approved amount for most services.

There’s no cap on what you might spend under Part B. So if you need surgery, physical therapy, or chemotherapy, you could owe thousands depending on the number and cost of services.

Prescription Drugs: The New $2,000 Cap Helps, But It’s Not Foolproof

For 2025, Medicare Part D includes a new out-of-pocket cap of $2,000 for prescription drug costs. That’s a major improvement from prior years, eliminating the old donut hole. However, it’s still a separate cost, and not every enrollee will reach the cap—but many will get close.

PSHB plans that include Medicare integration often cover more than standard Part D plans, especially if you’re eligible for the Part D Employer Group Waiver Plan (EGWP) included in many PSHB options.

Why PSHB Makes a Difference in 2025

If you’re a USPS retiree or annuitant, you’re now covered under the Postal Service Health Benefits (PSHB) Program, not the Federal Employees Health Benefits (FEHB) Program. This change took effect January 1, 2025, and it directly impacts how your healthcare coverage works with Medicare.

Here’s how PSHB supports you when paired with Medicare:

  • Lower Out-of-Pocket Costs: Many PSHB plans waive or reduce deductibles, copayments, and coinsurance if you’re also enrolled in Medicare Part B.

  • Prescription Drug Coverage Integration: If you have Medicare, your prescription drug benefits now flow through an EGWP under your PSHB plan. This includes the $2,000 cap and often enhanced coverage.

  • Automatic Enrollment for Drug Coverage: You’re automatically enrolled in the PSHB Part D EGWP unless you actively opt out. Opting out means you lose drug coverage under PSHB.

What Happens If You Don’t Enroll in Medicare Part B?

This year, some PSHB annuitants and their eligible family members are required to enroll in Medicare Part B to maintain full PSHB coverage. If you are:

  • Already retired on or before January 1, 2025, and not enrolled in Part B, you’re generally exempt.

  • Actively employed and were age 64+ as of January 1, 2025, you are also exempt.

  • Others may be required to enroll in Medicare Part B to keep your PSHB benefits intact.

If you don’t enroll when required, your PSHB plan may not cover your services the same way it would for someone enrolled in both.

Medicare Doesn’t Cover These Common Services

Another risk of relying on Medicare alone is the long list of services it doesn’t fully cover. These include:

  • Dental care: Medicare doesn’t cover routine dental exams, cleanings, or dentures.

  • Vision care: Eye exams and corrective lenses are not covered.

  • Hearing aids: Medicare excludes hearing aids and exams for fitting them.

  • Foreign travel emergencies: Medicare coverage outside the U.S. is extremely limited.

If your PSHB plan includes these services and you don’t enroll, you could lose access or face higher out-of-pocket expenses.

Coordinating Medicare and PSHB Isn’t Automatic

Even if you have both Medicare and PSHB, you need to ensure they’re properly coordinated. Here’s what you should do:

  • Inform your PSHB plan: Let your plan know you’re enrolled in Medicare Part A and/or B so they can coordinate benefits.

  • Verify claims processing: Medicare generally pays first, then your PSHB plan picks up the balance. If your plan doesn’t know you have Medicare, it could delay or deny claims.

  • Understand how billing works: Some providers may not bill Medicare first unless you remind them. This can lead to errors or surprise bills.

PSHB Drug Coverage Offers a Broader Safety Net

In 2025, Medicare Part D costs are lower than in prior years, but the best protection still comes from PSHB integration:

  • Automatic EGWP enrollment ensures you have Part D-level drug coverage without needing to shop for a standalone plan.

  • $35 insulin cap applies across all plans.

  • No coverage gap means more predictable costs through the year.

  • Wider pharmacy networks help ensure you can fill prescriptions more easily.

Just remember: if you opt out of this coverage, re-enrollment opportunities are limited.

Don’t Overlook the Annual Out-of-Pocket Maximums

Original Medicare doesn’t place a cap on your annual spending. That means there’s no upper limit to what you might owe in a bad health year. However, PSHB plans do have out-of-pocket maximums.

For 2025, PSHB plans generally set in-network out-of-pocket limits at:

  • $7,500 for Self Only

  • $15,000 for Self Plus One or Self and Family

These caps provide a vital layer of financial protection. Without them, serious illness or injury could lead to unaffordable bills.

You Might Be Paying More Without PSHB

One hidden cost of skipping PSHB or failing to coordinate it with Medicare is what you lose in value. Here’s what you’re giving up:

  • Government contributions: The Postal Service covers about 72% of your PSHB premiums.

  • Lower coinsurance and copayments when Medicare is involved.

  • Access to the EGWP drug plan that offers better coverage than most individual Part D options.

  • Special support programs, like nurse lines, chronic condition support, and wellness resources.

All of these are designed to work best when you’re enrolled in both PSHB and Medicare Part B.

Enrollment Periods Matter—Timing Is Key

Medicare enrollment is not automatic unless you’re already receiving Social Security. You typically need to sign up during one of the following windows:

  • Initial Enrollment Period: 7-month period around your 65th birthday.

  • General Enrollment Period: January 1 to March 31 each year, with coverage starting in July.

  • Special Enrollment Period: For example, if you delayed Part B due to having employer coverage.

In 2024, there was a special window from April 1 to September 30 just for PSHB members who needed to enroll in Medicare Part B to keep their benefits. While that specific period is over, understanding the enrollment windows is critical to avoiding penalties and lapses in coverage.

Choosing Not to Enroll in Medicare Part B Is a Financial Gamble

Some annuitants may be tempted to skip Medicare Part B due to the monthly premium. But if you do so, here’s what you risk:

  • No coordination of benefits means PSHB may pay less.

  • You’ll owe 100% of costs Medicare would have covered.

  • You lose access to waived deductibles and lower cost-sharing.

Worse, if you decide to enroll in Part B later, you may face permanent late enrollment penalties that increase your premium for life.

Planning Your Coverage Strategy Now Makes All the Difference

As a PSHB enrollee in 2025, you’re in a strong position—but only if you understand how Medicare fits into your plan. Simply assuming Medicare covers everything is a costly mistake. You must:

  • Know what’s covered and what’s not.

  • Coordinate your Medicare enrollment with your PSHB plan.

  • Avoid opting out of key components like Medicare Part B and prescription coverage unless you meet specific exemptions.

Failing to do so could mean higher bills, denied claims, and fewer benefits when you need them most.

Secure Your Health and Finances This Year

You’re not alone in navigating Medicare and PSHB. With changes now in full effect for 2025, the safest choice is to evaluate your enrollment, verify your plan coordination, and protect yourself against out-of-pocket surprises.

For help understanding your Medicare and PSHB options, speak with a licensed agent listed on this website. They can walk you through plan details, check if you’re exempt from enrollment requirements, and help you get the most out of your coverage.