Key Takeaways

  • If you decline Medicare Part D coverage inside a PSHB plan, you could lose access to your prescription drug benefits for the rest of the year.

  • Opting out doesn’t just affect your current coverage—it also affects your ability to re-enroll until a future qualifying event or open season, leaving you with major gaps.

How Medicare Part D Works Within PSHB in 2025

In 2025, all Medicare-eligible annuitants and family members enrolled in Postal Service Health Benefits (PSHB) plans are automatically enrolled in a Medicare Part D prescription drug plan through an Employer Group Waiver Plan (EGWP). This integration is designed to provide seamless and enhanced coverage for medications under the new PSHB framework.

If you’re enrolled in Medicare Part A and/or B and covered under a PSHB plan, you’re also placed into the plan’s corresponding Part D benefit unless you actively decline it. But what might sound like a simple choice comes with far-reaching consequences.

What Happens If You Decline PSHB Part D Coverage

You are allowed to opt out of the Part D prescription drug coverage provided by your PSHB plan. However, doing so triggers automatic and immediate consequences:

  • Your PSHB plan will not provide any prescription drug benefits.

  • You cannot rejoin the PSHB drug benefit until a future qualifying life event or the next Open Season.

This means you would have to pay full retail cost for any medications you need, without assistance from PSHB or Medicare Part D.

Why Part D Is No Longer Just Optional Under PSHB

Before 2025, opting into a standalone Part D plan was a personal choice. For postal retirees, the introduction of the PSHB program has changed that dynamic.

Now, your PSHB plan is tied directly to its own Part D drug component. If you decline that built-in coverage, your plan is required by CMS regulations to remove all prescription drug coverage for you. This is not a matter of reduced benefits—it means zero coverage for prescriptions.

When Can You Rejoin If You Opt Out?

If you mistakenly decline the Part D component of your PSHB plan, you can only re-enroll:

  • During the next Open Season, which takes place from November to December each year, with coverage starting the following January.

  • During a Special Enrollment Period (SEP) triggered by a qualifying life event (e.g., loss of other creditable drug coverage).

Until then, you cannot get drug coverage through your PSHB plan.

Why This Lockout Period Matters

A single decision during enrollment could mean months of:

  • Paying out-of-pocket for every prescription.

  • Missing out on catastrophic protection after reaching the $2,000 out-of-pocket cap introduced in 2025.

  • Delayed access to high-cost medications or restricted use of critical prescriptions.

In 2025, once you hit $2,000 in out-of-pocket costs for covered medications, your Part D plan pays 100% of the cost for the rest of the year. If you opt out of Part D, you lose this critical protection.

Key Differences From Previous Years

In the past, some retirees coordinated their FEHB plans with a separate Medicare Part D policy. But PSHB has consolidated your medical and prescription coverage into one unified package with integrated benefits.

You no longer have the option to keep PSHB medical coverage while declining only the prescription component without major consequences.

In short, PSHB in 2025 requires you to take a more all-in or all-out approach.

What If You Already Have a Standalone Part D Plan?

You may be tempted to decline the PSHB drug coverage if you’re already enrolled in a standalone Medicare Part D plan. But this can lead to duplicate or conflicting coverage—and in many cases, your standalone plan would be terminated by CMS once you’re enrolled in the PSHB plan.

PSHB plans coordinate their EGWP drug benefit with Medicare Part D, including many enhancements like:

  • Lower cost-sharing for brand-name drugs

  • A $35 monthly insulin cap

  • Access to a national pharmacy network

So sticking with your PSHB-linked drug coverage usually provides better overall value and fewer administrative problems.

What If You Receive Drug Coverage from the VA or TRICARE?

Some postal retirees also qualify for drug benefits through the Department of Veterans Affairs (VA) or TRICARE. These are considered creditable coverage under Medicare.

If you prefer to use your VA or TRICARE drug coverage, you can decline the PSHB Part D benefit without penalty from Medicare. But be aware:

  • You will still lose prescription benefits under your PSHB plan.

  • You will have to rely solely on your VA or TRICARE coverage for medications.

  • You can only rejoin the PSHB drug plan during the next Open Season or after a qualifying event.

Make sure the alternative coverage is sufficient before opting out.

How to Avoid Mistakes During Enrollment

Whether you’re new to PSHB or reviewing your options during Open Season, the enrollment process can feel overwhelming. To ensure you don’t decline drug coverage by mistake:

  • Read your PSHB enrollment letter carefully.

  • Watch for instructions on Medicare Part D integration.

  • Don’t decline coverage unless you are certain you have sufficient alternative drug coverage.

  • Contact a licensed agent listed on this website for personalized advice.

You should also be aware that if you’re automatically enrolled in a PSHB plan and do nothing, you’ll be enrolled with both medical and drug coverage intact. In most cases, this is your safest route.

Understanding the Prescription Payment Plan in 2025

In 2025, Medicare introduces a new program for beneficiaries with high drug costs: the Prescription Payment Plan. This allows you to spread out your out-of-pocket drug expenses throughout the year in monthly payments.

It’s a helpful budgeting tool if you take expensive medications and expect to hit the $2,000 out-of-pocket cap. This feature is only available to you if you’re enrolled in Medicare Part D through your PSHB plan. Declining the drug benefit means losing access to this cost-spreading option as well.

Common Reasons People Decline (And Why They Backfire)

People who decline the PSHB drug coverage usually do so for one of the following reasons:

  • They assume they don’t need many prescriptions.

  • They already have another Part D plan.

  • They want to avoid perceived overlap with TRICARE or VA coverage.

However, these decisions often result in:

  • Gaps in coverage they didn’t expect.

  • Ineligibility for enhanced PSHB benefits.

  • Confusion when trying to switch back later.

Make no mistake—declining PSHB drug benefits is not the same as opting out of an optional perk. It removes a core part of your health plan.

What Happens If You Change Your Mind Later

If you opt out now but later realize you need drug coverage:

  • You can enroll during the next Open Season (November to December).

  • Your coverage will begin in January of the following year.

  • You may have to go months without coverage.

You can’t just change your mind mid-year unless a qualifying life event allows a Special Enrollment Period.

Your PSHB Plan Is Built to Work With Medicare

The structure of PSHB is different from past FEHB coverage. PSHB plans are specifically built to work alongside Medicare Parts A, B, and D. When you decline one of those components, the whole structure becomes less effective.

Most PSHB plans reduce or eliminate deductibles, lower coinsurance, and waive certain copayments if you enroll in both Medicare Part B and Part D. So when you opt out of drug coverage, you may be giving up more than just your prescription benefit—you’re giving up savings on medical care, too.

Protect Your Future Access to Medication

Prescription needs can change suddenly. While you may not need regular medication now, future illnesses, surgeries, or chronic conditions could arise. If you’ve opted out of PSHB drug coverage, you’ll face full-cost prescriptions until the next enrollment opportunity.

This risk is even greater if you don’t have alternative drug coverage that meets Medicare’s standards. A single expensive prescription could wipe out months of your retirement budget.

Why You Should Think Twice Before Opting Out

The bottom line: declining PSHB Part D coverage is not just a paperwork formality—it’s a decision with immediate and long-term effects.

You lose:

  • All prescription drug coverage under PSHB

  • Access to cost-saving benefits like the $2,000 out-of-pocket cap

  • Protection from inflation and rising drug prices

  • The ability to re-enroll until the next Open Season or qualifying event

That’s a lot to risk for a perceived short-term benefit or to avoid what may seem like duplicate coverage.

Make the Most of Your PSHB Benefits by Staying Enrolled

The new PSHB program represents a major evolution in how postal retirees manage their healthcare. Staying enrolled in the Part D drug benefit that comes with your PSHB plan ensures you:

  • Keep your full medical and drug coverage

  • Avoid gaps in prescription access

  • Maximize the coordination between PSHB and Medicare

  • Reduce out-of-pocket costs over time

Stay Covered, Stay Protected

Choosing to decline Medicare Part D under your PSHB plan could mean locking yourself out of prescription benefits right when you need them most. In 2025, that decision has more weight than ever.

Make sure you review your options carefully, especially during Open Season. If you’re unsure about your situation or need help comparing benefits, reach out to a licensed agent listed on this website.