Key Takeaways

  • Pairing Medicare with PSHB can reduce your healthcare expenses and enhance coverage—but only if you follow eligibility rules and enroll at the right time.

  • Delays or missteps in aligning your PSHB and Medicare benefits can lead to gaps in care, duplicate premiums, or penalties that last for years.

How Medicare and PSHB Fit Together in 2025

As of 2025, the Postal Service Health Benefits (PSHB) Program officially replaces FEHB coverage for Postal Service workers and retirees. This shift introduces new coordination rules, especially for retirees who are—or will become—eligible for Medicare.

When you have both PSHB and Medicare, they work together to provide layered protection against medical costs. Medicare becomes your primary payer once you’re enrolled in Part A and Part B. Your PSHB plan then acts as secondary coverage, filling in the gaps like deductibles, coinsurance, and certain out-of-pocket limits.

This coordination sounds ideal, but only when both parts are in place and working in sync. That’s where many Postal retirees encounter trouble.

Understanding Who Must Enroll in Medicare Part B

The 2025 PSHB requirements make Medicare Part B enrollment mandatory for some and optional for others. Whether you’re required to enroll depends on your age, retirement date, and Medicare status:

  • If you retired after January 1, 2025, and are eligible for Medicare Part A, you must enroll in Medicare Part B to maintain your PSHB coverage.

  • If you retired on or before January 1, 2025, Medicare Part B is optional, but strongly encouraged.

  • If you turn 65 and become Medicare-eligible after retiring, you will have a seven-month Initial Enrollment Period (three months before your birthday month, your birthday month, and three months after).

Failing to enroll in Part B when required can result in the loss of your PSHB plan or substantial penalties if you try to enroll later.

The Cost Coordination Advantage—When Done Right

When timed properly, Medicare Part B and your PSHB plan can offer substantial financial benefits. Here’s how:

  • Reduced deductibles and coinsurance: Many PSHB plans waive deductibles and significantly lower cost-sharing for those enrolled in Medicare Part B.

  • Lower prescription drug costs: Your PSHB plan integrates with a Medicare Part D Employer Group Waiver Plan (EGWP), which adds robust prescription drug coverage, including a $2,000 annual out-of-pocket cap.

  • Avoiding the Part B late enrollment penalty: The monthly penalty is 10% for each 12-month period you delay enrollment without other creditable coverage. This penalty lasts for life.

These advantages only apply if you enroll on time. If you wait too long, you may lose access to these cost-sharing reductions.

Where Medicare and PSHB Can Clash

The clash usually begins with timing and eligibility misunderstandings. For example:

  • Assuming you’re automatically enrolled in Part B at 65—when you’re not.

  • Thinking PSHB alone is enough after retirement, which may be true for some, but not if you’re subject to the mandatory Medicare rule.

  • Opting out of Medicare Part B to save money, only to face penalties or even coverage disruptions later.

Even worse, some retirees accidentally pay duplicate premiums—one for Part B and another for services already covered under PSHB—because they don’t understand which plan is primary.

What About Spouses and Family Members?

The Medicare + PSHB rule doesn’t apply only to you. It can also affect covered family members:

  • If your spouse or dependent is Medicare-eligible, they too must enroll in Part B to remain on your PSHB plan—unless they qualify for an exemption.

  • These requirements apply only if they are Medicare-eligible due to age or disability and not otherwise exempt under PSHB rules.

Failing to coordinate enrollment for your covered dependents can result in their loss of coverage, even if your own is still active.

Timing Is Everything—And Mistiming Is Expensive

You can only make changes to your PSHB plan during the annual Open Season, which typically runs from mid-November to mid-December each year. Outside of that, your options are limited to Qualifying Life Events (QLEs) like turning 65, losing other coverage, or moving.

That means you can’t afford to delay key decisions like:

  • Enrolling in Medicare Part B during your Initial Enrollment Period

  • Updating your PSHB plan during Open Season

  • Coordinating changes when a covered family member becomes Medicare-eligible

Missing any of these windows can mean paying higher costs or losing your plan altogether.

Why Your PSHB Plan Choice Still Matters

Even with Medicare, your PSHB plan still plays a big role. Here’s why your plan selection remains important:

  • Cost-sharing varies: Not all PSHB plans waive deductibles or reduce coinsurance in the same way. Compare options carefully.

  • Provider access may differ: Some PSHB plans may limit you to certain networks or have narrower provider directories, which could be frustrating if you also rely on Medicare.

  • Drug formulary alignment: Make sure your medications are covered under the EGWP portion of your plan, especially if you take high-cost drugs.

Relying on just one plan to carry the load without confirming how it coordinates with Medicare is risky.

Special Rules If You’re Working Past Age 65

If you’re still employed with the Postal Service and turn 65, you’re generally not required to enroll in Medicare Part B right away. Here’s what you need to know:

  • As an active employee, your PSHB plan remains your primary coverage.

  • You may delay enrolling in Medicare Part B without penalty, as long as you are still covered under an active employer group health plan.

  • Once you retire, you must enroll in Part B within eight months to avoid penalties and maintain PSHB.

Delaying beyond that window—called the Special Enrollment Period—triggers lifelong penalties and possible loss of PSHB eligibility.

Planning for the Part B Premium

The standard Medicare Part B premium for 2025 is $185 per month, with higher-income individuals paying more based on their Modified Adjusted Gross Income (MAGI) from two years prior. When budgeting your retirement expenses:

  • Don’t forget to include this recurring premium.

  • Consider the cost savings in PSHB deductibles and coinsurance that can offset the monthly Part B charge.

  • Review whether your PSHB plan offers any premium reimbursements for Part B, though these vary by plan and may change annually.

What to Do If You Previously Declined Part B

If you opted out of Medicare Part B in the past but are now required to have it to keep your PSHB coverage, you may be eligible for a Special Enrollment Period (SEP) under the new PSHB rules.

The SEP generally allows you to enroll in Part B without penalty if your prior delay was based on being covered under an active group plan. If you miss this SEP, you’ll have to wait for the General Enrollment Period (January 1 – March 31) and your coverage won’t start until July 1—potentially leaving you without full coverage for months.

Staying Ahead of the PSHB-Medicare Curve

The 2025 shift to PSHB isn’t just a policy change—it’s a major fork in the road for your retirement healthcare planning. The smartest thing you can do is prepare early and act on time.

Start with these steps:

  • Know your retirement date and how it affects Medicare Part B requirements.

  • Mark your Medicare enrollment periods on your calendar.

  • Compare PSHB plans for how they coordinate with Medicare.

  • Communicate with covered family members about their Medicare obligations.

  • Stay updated during each year’s Open Season.

Smart Coordination Prevents Costly Consequences

Missteps between Medicare and PSHB don’t just cost you money—they can reduce your access to care and complicate your benefits. A well-coordinated strategy is your best defense.

If you’re not sure where to begin or want to double-check that you’re meeting all requirements, get in touch with a licensed agent listed on this website. They can help ensure that your transition into Medicare + PSHB is seamless and cost-effective.