Key Takeaways

  • If you’re enrolled in the Postal Service Health Benefits (PSHB) program and you’re eligible for Medicare, your choices around enrollment directly impact your coverage, out-of-pocket costs, and even your plan eligibility.

  • In 2025, certain PSHB members are required to enroll in Medicare Part B, while others have a choice. Either way, understanding how Medicare and PSHB work together is essential to avoid unexpected costs or coverage gaps.

Understanding the Basics of PSHB and Medicare

The Postal Service Health Benefits (PSHB) program has officially replaced FEHB for USPS workers and retirees starting January 1, 2025. This change came with several new requirements, especially concerning Medicare integration for annuitants and their families.

If you’re 65 or older or approaching Medicare eligibility, you’re likely asking: “Do I really need Medicare if I already have PSHB?” In some cases, the answer is yes—because not enrolling could cost you coverage. In others, it’s not mandatory, but opting in can still save you money. Either way, understanding the overlap between these two systems in 2025 is no longer optional.

Who Must Enroll in Medicare Part B Under PSHB in 2025

Under the Postal Service Reform Act, Medicare Part B enrollment is now a condition for maintaining full PSHB coverage for certain retirees and eligible family members. You are required to enroll in Medicare Part B in 2025 if:

  • You are a Postal Service annuitant entitled to Medicare Part A.

  • You turn 65 on or after January 1, 2025.

  • You are a family member of a Medicare-eligible annuitant turning 65 on or after January 1, 2025.

You are exempt if:

  • You retired on or before January 1, 2025.

  • You are not entitled to Medicare Part A.

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

  • You reside permanently overseas or have qualifying health coverage such as VA or Indian Health Services.

If you fall under the required category and fail to enroll in Medicare Part B, you risk losing drug coverage and possibly broader medical benefits under PSHB.

What Medicare Covers—and What It Doesn’t

Medicare has multiple parts, but for PSHB integration, the most important are:

  • Part A (Hospital Insurance): Covers inpatient hospital stays, skilled nursing facilities, hospice, and some home health care.

  • Part B (Medical Insurance): Covers outpatient care, doctor visits, lab work, durable medical equipment, and preventive services.

Medicare doesn’t cover:

This is where PSHB comes in. Your PSHB plan can fill in many of the gaps left by Original Medicare—particularly when the two work together.

How Medicare and PSHB Work Together

When you’re enrolled in both Medicare and a PSHB plan, Medicare typically pays first (primary payer), and your PSHB plan pays second (secondary payer). Here’s how this coordination benefits you:

  • Reduced Out-of-Pocket Costs: Your PSHB plan often covers the 20% coinsurance left by Medicare Part B.

  • No Need to Meet PSHB Deductibles: Some plans waive deductibles when Medicare is primary.

  • Lower Prescription Drug Costs: You are auto-enrolled into a Part D Employer Group Waiver Plan (EGWP) if you’re Medicare-eligible and enrolled in PSHB.

This coordination leads to a more predictable and lower-cost healthcare experience—if you’re enrolled correctly in both systems.

The Risk of Not Enrolling in Medicare When Required

If you’re required to enroll in Medicare Part B and don’t, the impact isn’t just financial—it can mean a reduction in actual benefits:

  • Loss of Prescription Coverage: PSHB plans integrate Medicare Part D benefits. Without Part B, you may be automatically disenrolled from this crucial drug coverage.

  • Higher Cost Sharing: PSHB plans may apply higher deductibles, coinsurance, and copays if Medicare is not your primary payer.

  • Delayed Enrollment Penalties: If you try to enroll in Medicare later, you may face lifelong late enrollment penalties on Part B premiums.

And those penalties can add up: 10% for each 12-month period you were eligible but didn’t enroll.

Understanding Cost Responsibilities in 2025

Let’s talk about the costs you are expected to cover under Medicare and PSHB in 2025:

  • Medicare Part A: Free if you have 40 quarters of work history. Otherwise, you pay up to $518/month.

  • Medicare Part B: Standard premium is $185/month with a deductible of $257.

  • Part D (through PSHB EGWP): Includes a $2,000 annual out-of-pocket cap on prescription drugs.

  • PSHB Premiums: Vary by plan and enrollment type, but retirees typically pay between $241 to $567/month, depending on coverage tier.

These costs seem high, but when Medicare and PSHB work together, they can reduce your out-of-pocket expenses significantly.

PSHB Plans Tailored for Medicare Coordination

While all PSHB plans integrate with Medicare, some are designed with Medicare-eligible members in mind. These plans often include:

  • Reimbursement for some or all of your Part B premiums

  • Waived deductibles and reduced copays

  • Extended provider networks

  • Automatic enrollment into a Part D EGWP with added protections

If you’re already enrolled in Medicare or approaching eligibility, these plan designs offer better cost-sharing and simpler coordination of benefits.

Timeline of Medicare and PSHB Enrollment

Understanding when to act is just as important as knowing what to do. Here’s what the 2025 timeline looks like:

  • Turning 65 in 2025: You have a 7-month window to enroll in Medicare—3 months before, the month of, and 3 months after your 65th birthday.

  • Open Season (November to December): Review and change your PSHB plan for the following year. If you delayed Medicare enrollment, this is also your chance to revisit that decision.

  • Special Enrollment Periods (SEPs): Available if you’re retiring or losing employer coverage after age 65.

Missing these windows can lead to gaps in coverage or unnecessary costs.

What If You’re Already Over 65 and Retired?

If you retired before January 1, 2025, you’re not required to enroll in Medicare Part B—but you still might want to.

Many PSHB plans in 2025 offer enhanced coordination and financial benefits for those who do enroll. While not mandatory, choosing to sign up for Medicare Part B can mean:

  • More predictable healthcare costs

  • Expanded provider access

  • Better protection from medical debt

Weigh your costs and benefits carefully, especially if you have chronic conditions or frequent healthcare needs.

Avoiding Surprises During the Transition

The shift from FEHB to PSHB came with several layers of change, and Medicare coordination is one of the most complex. To avoid unexpected bills, you should:

  • Read your plan’s 2025 brochure carefully

  • Review Medicare enrollment timelines annually

  • Confirm how your PSHB plan treats non-Medicare members

  • Speak with a licensed agent listed on this website if you’re unsure about your eligibility or requirements

Failing to act or misunderstanding these policies could leave you with higher costs—or no coverage at all.

Getting the Most Out of Medicare and PSHB in 2025

Your goal should be seamless coordination between Medicare and PSHB. To make that happen, you need to:

  • Enroll in both Medicare Part A and B if required

  • Select a PSHB plan that’s Medicare-friendly

  • Track enrollment periods and deadlines

  • Stay informed about any changes from OPM or CMS

By proactively managing both coverages, you create a system that works for you—not against you.

Making the Overlap Work for You

When used together properly, Medicare and PSHB can help reduce risk, improve access to care, and keep your healthcare spending in check. But that only happens if you’re enrolled correctly and understand the timing and coordination rules.

For peace of mind, reach out to a licensed agent listed on this website. They can help you:

  • Identify if you’re required to enroll in Medicare

  • Choose the most cost-effective PSHB plan

  • Avoid coverage loss or late enrollment penalties

Being proactive now saves you headaches later. Use the tools available to make smart, informed choices.