When Medicare and PSHB Plans Don’t Talk to Each Other, You’re Left Holding the Bill

Key Takeaways

• If your Medicare and PSHB plans aren’t properly coordinated, you could end up paying more out of pocket than necessary—even for services that should be covered.

• Understanding which plan is primary and which is secondary is essential to prevent billing errors, delays, or denials in 2025.

Understanding the Medicare and PSHB Connection

If you’re a Postal Service retiree or annuitant, you now fall under the Postal Service Health Benefits (PSHB) Program as of January 1, 2025. This new system replaces the Federal Employees Health Benefits (FEHB) Program for USPS employees and retirees. But here’s where it gets more complicated: Medicare coordination is no longer optional for many enrollees.

In 2025, Medicare-eligible annuitants and eligible family members must enroll in Medicare Part B to maintain their PSHB coverage, unless they qualify for an exemption. If you skip this step or misunderstand how Medicare works alongside PSHB, you could face unnecessary expenses and coverage issues.

What Happens When Coordination Fails

When Medicare and PSHB don’t “talk” to each other effectively, several billing issues can arise:

• Providers may bill you instead of coordinating with Medicare and PSHB.

• Claims might be processed incorrectly, leading to overpayments.

• You could experience denials for services that should be covered.

Coordination of benefits (COB) ensures both plans know who pays first (the primary payer) and who pays second (the secondary payer). In most cases for retirees, Medicare is primary and PSHB is secondary—but not always.

Medicare as Primary: What That Means in Practice

Once you’re enrolled in Medicare Part A and B, Medicare typically becomes your primary payer. This means:

• Medicare pays first on covered medical services.

• Your PSHB plan pays second, often covering remaining costs like coinsurance and deductibles.

• You typically save on out-of-pocket expenses when both plans are active and properly coordinated.

But if Medicare doesn’t know you have PSHB or vice versa, neither plan may cover what you expected.

Scenarios That Trigger Costly Errors

You might assume once you enroll, everything syncs automatically. Unfortunately, that isn’t always the case. Some common missteps include:

1. Enrolling in Medicare Part A but skipping Part B

Many retirees enroll in Part A because it’s usually premium-free, but hesitate with Part B due to its monthly cost. However, under PSHB rules, failing to enroll in Part B (unless exempt) means your PSHB plan may reduce benefits or deny coverage altogether.

2. Enrolling late in Medicare Part B

Delaying enrollment can lead to late penalties and gaps in coverage. It also creates confusion for your PSHB plan, especially if you miss the required coordination window.

3. Failing to update Medicare and PSHB records

Your information must be current across both programs. If Medicare isn’t aware of your PSHB plan, or if your PSHB plan doesn’t have updated Medicare enrollment records, bills might come directly to you.

4. Dual enrollment in Medicare Advantage

If you enroll in a Medicare Advantage plan instead of Original Medicare (Part A and B), your PSHB benefits could be affected. Most PSHB plans coordinate best with Original Medicare, not private Medicare Advantage plans. Some PSHB benefits may be limited or denied if you’re enrolled in a Medicare Advantage plan not aligned with your PSHB coverage.

How to Make Sure Your Coverage Coordinates Correctly

To prevent billing surprises and ensure smooth coordination, follow these important steps:

Keep Both Plans Informed

• Notify both Medicare and your PSHB plan of any changes in enrollment or coverage.

• Ensure your Medicare Beneficiary Identifier (MBI) is correctly listed with your PSHB plan.

Verify Your Coordination of Benefits Status

• Contact your PSHB plan to confirm it has Medicare listed as your primary insurer.

• Use Medicare’s Benefits Coordination & Recovery Center (BCRC) to validate your file.

Check Your Explanation of Benefits (EOBs)

Regularly review EOBs from both Medicare and PSHB. Make sure:

• The primary plan pays first.

• The secondary plan pays its share.

• You’re not being billed for services that should be covered.

Use the Right Providers

• Confirm your provider accepts Medicare assignment.

• Check that they’re also in-network with your PSHB plan to avoid higher out-of-pocket costs.

Why Timing Matters in 2025

The transition to PSHB took full effect on January 1, 2025, and its coordination rules are already impacting Medicare-eligible enrollees. Here’s why timing is now critical:

• The window to enroll in Medicare Part B without penalty may already be closed if you delayed past your Initial Enrollment Period or missed the Special Enrollment Period that ended in 2024.

• Your PSHB plan coverage may be restricted or adjusted if you’re not enrolled in Medicare Part B.

• Claims coordination and processing could be delayed if you didn’t confirm Medicare enrollment status with your PSHB provider before 2025.

Don’t Assume Automatic Enrollment Solves Everything

While current FEHB enrollees were automatically enrolled in a corresponding PSHB plan for 2025, Medicare coordination is a separate process. It requires your attention. You must:

• Review your enrollment confirmation from both Medicare and PSHB.

• Make sure your coverage levels match.

• Clarify whether your dependents are also Medicare-eligible and properly enrolled.

Situations That Require Special Attention

Several conditions may affect how your PSHB and Medicare plans interact:

• You or your dependent live overseas: Medicare typically doesn’t cover services abroad. PSHB may offer some coverage, but not all plans do.

• You have VA or Indian Health Service benefits: These may exempt you from enrolling in Part B, but you must verify exemption status to avoid PSHB penalties.

• You were actively employed past age 65: If you delayed Medicare because of employment-based coverage, make sure your PSHB plan knows your retirement date and adjusts your coordination status.

The Cost of Getting It Wrong

When your Medicare and PSHB plans don’t coordinate correctly, the result is often the same: you get billed. Here’s what that might look like:

• Higher out-of-pocket costs

• Denied claims for routine care

• Delayed reimbursements

• Surprise medical bills from providers

You may also miss out on valuable cost-sharing benefits, such as waived deductibles or lower copays that your PSHB plan offers when paired with Medicare Part B.

How to Fix Errors If They Happen

Mistakes happen. If you discover that Medicare and your PSHB plan aren’t coordinating correctly:

• Contact your PSHB customer service line immediately.

• Call Medicare and ask for the Benefits Coordination & Recovery Center (BCRC) to review your file.

• Resubmit claims if necessary with proper coordination documentation.

• Keep detailed records of all calls, forms, and billing statements.

Use Resources Available to You

You don’t have to figure this out on your own. In 2025, the Office of Personnel Management (OPM) and the PSHB Navigator Help Line offer direct support. If you’re unsure about Medicare coordination, eligibility, or how your plan should pay, get help:

• Call your plan’s customer service number

• Use the PSHB Help Line (1-833-712-7742)

• Review your Annual Notice of Change for coordination updates

Staying Ahead of Coordination Pitfalls

Taking a proactive approach in 2025 can save you hundreds or even thousands in unexpected bills. Do the following:

• Enroll in Medicare Part B if required

• Notify all parties of any coverage change

• Regularly review your claims and benefits

• Use only Medicare-approved and PSHB-network providers

• Get written confirmation of all coordination changes

Let Your Coverage Work For You, Not Against You

When PSHB and Medicare plans are properly coordinated, they can provide robust, cost-effective coverage. But when they don’t align, you’re the one who ends up holding the bill. Don’t let miscommunication or missed deadlines get in the way of your benefits.

If you have questions or want to make sure your plans are working together the way they should, get in touch with a licensed agent listed on this website. A quick review now could prevent months of billing stress later.