Key Takeaways

  • PSHB is not simply a rebranding of FEHB for postal retirees—it introduces new Medicare coordination requirements and enrollment rules that may significantly affect your healthcare costs and coverage.

  • If you don’t enroll in Medicare Part B when required under PSHB, you may lose your prescription drug coverage or face higher out-of-pocket costs.

Understanding the Shift from FEHB to PSHB

For decades, the Federal Employees Health Benefits (FEHB) Program provided healthcare to active and retired USPS workers. But in 2025, the Postal Service Health Benefits (PSHB) Program officially replaces FEHB coverage for Postal Service employees, retirees, and eligible family members. This shift is not just administrative—it has real implications for how your benefits interact with Medicare once you reach eligibility.

The PSHB Program was created under the Postal Service Reform Act of 2022 and went into effect on January 1, 2025. It affects both current and future annuitants, and its impact is especially critical when you become eligible for Medicare at age 65.

Medicare Part B Enrollment Isn’t Optional for Most

Under PSHB, Medicare-eligible annuitants and family members are required to enroll in Medicare Part B in order to maintain full PSHB coverage. This is a significant departure from the FEHB model, which allowed retirees to opt into or out of Part B without affecting their health plan eligibility.

Who Must Enroll in Medicare Part B

You must enroll in Medicare Part B if:

  • You are a Postal Service annuitant eligible for Medicare as of January 1, 2025 or later

  • You are a covered family member of a PSHB enrollee who is eligible for Medicare

Exemptions

You may be exempt from the Medicare Part B requirement if:

  • You retired on or before January 1, 2025 and were not enrolled in Medicare Part B at that time

  • You were actively employed and aged 64 or older as of January 1, 2025

  • You live outside the United States and do not qualify for Medicare Part B coverage

  • You receive qualifying healthcare through the VA or Indian Health Services

If you meet any of these exemptions, you can maintain PSHB coverage without enrolling in Part B, but you will need to provide documentation during enrollment.

Prescription Drug Coverage Has Been Reconfigured

Starting in 2025, PSHB enrollees who are eligible for Medicare automatically receive prescription drug benefits through a Medicare Part D Employer Group Waiver Plan (EGWP) linked to their PSHB plan.

This new structure offers benefits like:

  • A $2,000 out-of-pocket cap on prescription drugs

  • A $35 cap on insulin costs

  • Expanded access to a broad network of pharmacies

However, to remain eligible for this Part D coverage, you must stay enrolled in Medicare Part B. Declining Part B enrollment will lead to automatic disenrollment from the EGWP drug plan. That means you could lose prescription coverage entirely, unless you find alternative private drug coverage.

How PSHB Plans Coordinate With Medicare in 2025

Once enrolled in both PSHB and Medicare, your benefits will work together—but the order of payment changes depending on your situation:

  • If you are retired and enrolled in both PSHB and Medicare, Medicare becomes your primary payer.

  • PSHB becomes your secondary payer, helping to cover costs Medicare does not, such as deductibles or coinsurance.

  • If you are still actively working and eligible for Medicare, PSHB remains the primary payer, and Medicare is secondary.

This coordination can significantly reduce your out-of-pocket costs, but only if you are enrolled in both parts. Skipping Part B means PSHB becomes your only coverage—and in many plans, this results in higher deductibles and copays.

What Happens If You Delay Medicare Part B

Delaying Medicare Part B when you’re required to enroll under PSHB rules can come with consequences:

  • Loss of Prescription Drug Coverage: You will be disenrolled from the Medicare EGWP Part D plan linked to your PSHB plan.

  • No Access to Lower Cost Sharing: Without Medicare as primary coverage, you may have higher deductibles, coinsurance, and out-of-pocket maximums under PSHB.

  • Late Enrollment Penalties: If you choose to enroll in Part B later, you may face a permanent penalty added to your monthly premium for every 12-month period you delayed enrollment.

Changes to Enrollment and Plan Selection

Enrollment for the PSHB program runs annually from November to December, similar to the former FEHB open season. However, there are added complexities if you’re approaching Medicare eligibility:

  • You must ensure timely enrollment in both PSHB and Medicare Part B

  • If you’re transitioning into retirement in 2025, coordinate your retirement date with your Medicare eligibility to avoid any gaps in coverage

  • Use your Special Enrollment Period if you lose other coverage or become newly eligible for Medicare during the year

Costs You May Not Expect

While the PSHB program is designed to integrate well with Medicare, there are still costs you need to prepare for. These include:

  • Medicare Part B Premiums: In 2025, the standard premium is $185 per month. Higher-income enrollees may pay more due to IRMAA.

  • PSHB Premiums: Retiree shares vary by plan. For example, in 2025, monthly premiums for annuitants range from $241 for Self Only to over $567 for Self and Family.

  • Deductibles and Copayments: If Medicare is your primary coverage, PSHB often waives or reduces deductibles. Without Medicare, expect higher cost-sharing.

Why Coordination Matters More Than Ever in 2025

Unlike FEHB, where you could manage your health costs with or without Medicare, PSHB expects Medicare to play a central role in keeping your costs low. That means coordination isn’t just helpful—it’s essential.

Here’s why:

  • Cost Efficiency: Most PSHB plans are structured to offer lower out-of-pocket costs only when Medicare is the primary payer.

  • Coverage Continuity: Coordinated benefits minimize claim denials and maximize coverage for services like hospital stays, diagnostics, and prescriptions.

  • Compliance Requirements: Your eligibility for full PSHB benefits now depends on staying current with Medicare enrollment if you are required.

Plan Ahead to Avoid Surprises

If you’re nearing age 65 or retirement, the time to start preparing is now. Here’s what you should do:

  • Check your Medicare eligibility date and set reminders for enrollment deadlines.

  • Review your PSHB plan’s summary to see how it coordinates with Medicare.

  • Gather any exemption documents if you believe you qualify to delay Part B.

  • Budget for premiums: Calculate the combined cost of PSHB and Medicare Part B to ensure you can maintain both.

  • Consult a licensed agent listed on this website to help you understand your plan’s coordination rules and make informed choices.

What This Means for Your Retirement Healthcare Strategy

You can’t afford to treat PSHB and Medicare as separate choices. In 2025, they are deeply interconnected. The PSHB system was built with the assumption that Medicare will take over as primary coverage for eligible retirees, and it rewards you financially for doing so. Failing to align the two can leave you exposed to higher premiums, loss of benefits, or coverage gaps.

Be proactive. Make sure your Medicare enrollment matches the expectations of your PSHB plan. Know the rules. And don’t leave your health or finances to chance.

Get Personalized Help With PSHB and Medicare

You’re not expected to figure all this out alone. The rules have changed, and they can impact your access to prescription drugs, doctor networks, and affordability in retirement. A licensed agent listed on this website can help you evaluate your current situation, check for any required action on your part, and walk you through Medicare enrollment.

Don’t wait until your coverage is interrupted. Reach out now for guidance that ensures you get the most from your PSHB and Medicare benefits.