Key Takeaways

  • Enrolling in Medicare Part B remains essential for most postal retirees, even if you’re enrolled in a PSHB plan that seems to offer full coverage.

  • Without Medicare, you could face higher out-of-pocket costs, lose access to important coordination benefits, or even jeopardize your prescription drug coverage.

Why Medicare Still Matters, Even Under PSHB

With the introduction of the Postal Service Health Benefits (PSHB) Program in 2025, many postal retirees and workers feel like they’re finally getting a benefits structure tailored just for them. If you’re already happy with your PSHB coverage, you might wonder why you’d still need Medicare, especially Part B, once you become eligible.

But even with strong PSHB coverage, Medicare still plays a vital role in your healthcare security. In fact, skipping Medicare could cost you more in the long run or leave you exposed in ways you didn’t expect.

Let’s break down what happens when Medicare and PSHB work together—and why you shouldn’t ignore Medicare, even if you’re satisfied with your PSHB plan.

Understanding the PSHB-Medicare Link in 2025

In 2025, PSHB replaces FEHB for all Postal Service employees and retirees. This change brings new plan options, streamlined benefits, and one big new rule: if you’re eligible for Medicare Part B, you must enroll to keep your full PSHB benefits.

This Requirement Applies If:

  • You’re a Medicare-eligible annuitant or family member.

  • You retired after January 1, 2025.

  • You are turning 65 and become Medicare eligible after the program starts.

If you fall into these categories and don’t enroll in Medicare Part B, you risk losing critical components of your PSHB coverage, especially prescription drug benefits.

There Are Exemptions

If you retired on or before January 1, 2025, or meet other criteria (such as being enrolled in VA or Indian Health Services), the requirement may not apply to you. Still, enrolling in Medicare often helps reduce your out-of-pocket expenses, whether or not it’s mandatory for you.

How Medicare Works with PSHB

When you have both Medicare and PSHB, your benefits coordinate—usually to your advantage.

Medicare is Primary, PSHB is Secondary

Medicare typically pays first. Your PSHB plan picks up many of the remaining costs, which might include deductibles, coinsurance, or copayments.

This layering of benefits can drastically reduce your out-of-pocket costs, especially if your plan waives cost-sharing when you have Medicare.

Integrated Pharmacy Coverage

PSHB includes prescription drug coverage for Medicare-eligible enrollees through a Medicare Part D Employer Group Waiver Plan (EGWP). This is automatically included if you’re enrolled in Medicare Part B and your PSHB plan.

If you don’t have Medicare Part B, you may lose this drug coverage altogether—and there’s no guarantee you’ll be allowed to re-enroll later.

What You Risk If You Skip Medicare

You might be tempted to avoid the added premium of Medicare Part B. But before you do, consider the costs—both visible and hidden—that come with opting out.

1. Higher Out-of-Pocket Costs

Without Medicare Part B, your PSHB plan becomes your sole insurer. This means you’ll be responsible for:

  • The full deductible

  • Higher coinsurance

  • Potentially larger copayments for specialist visits, hospital stays, and more

Some plans offer cost-sharing reductions when combined with Medicare. Without Medicare, you lose that advantage.

2. Loss of Drug Coverage

Many PSHB plans use a Part D plan to deliver prescription drug benefits. That Part D coverage is only accessible if you’re enrolled in Medicare Part B. Skipping it can mean losing drug coverage entirely.

You also may not have the opportunity to regain it later, which could force you to find standalone Part D coverage or pay full price for medications.

3. Penalties for Delayed Enrollment

If you don’t enroll in Medicare Part B when you’re first eligible, you may pay a permanent late enrollment penalty—an increase of 10% for each 12-month period you delay.

This isn’t a one-time fee. It applies to your monthly premium for the rest of your life.

4. Missed Supplemental Benefits

Some PSHB plans offer additional benefits—like premium reimbursements, waived deductibles, or vision and dental perks—when you combine PSHB with Medicare.

Skipping Medicare means losing access to these extras that could enhance your overall healthcare experience and lower your expenses.

When Medicare Enrollment Matters Most

The ideal time to enroll in Medicare is during your Initial Enrollment Period (IEP), which starts three months before your 65th birthday, includes the month you turn 65, and ends three months after.

Failing to enroll in this window could trigger late enrollment penalties and leave you with a gap in coverage.

If you’re still working past age 65 and have PSHB coverage through active employment, you may be able to delay Part B without penalty. However, once you retire, you’ll need to enroll in Medicare during a Special Enrollment Period or face financial consequences.

Medicare Part A Is Free for Most—So Enroll Regardless

Even if you’re not ready for Part B, you should almost always sign up for Medicare Part A when you turn 65. For most postal retirees, it comes with no premium and acts as your primary hospital insurance.

PSHB plans coordinate well with Part A, and it can help reduce your out-of-pocket costs in hospital-related care, skilled nursing, and hospice services.

What PSHB Offers with Medicare That You Won’t Get Without It

Combining PSHB with Medicare creates a stronger, more complete safety net than either option alone.

You Can Expect:

  • Reduced or waived deductibles in many PSHB plans

  • Lower coinsurance and copayments for doctor visits and hospital care

  • Access to a broad Medicare pharmacy network

  • Financial assistance options like Part B premium reimbursements (depending on plan)

  • Priority coordination of care to avoid billing conflicts

Not all of these benefits are guaranteed with every plan, but they are only available if you’re enrolled in Medicare.

Myths You Might Hear—And Why They’re Misleading

Some postal retirees believe they don’t need Medicare at all if they’re on a good PSHB plan. Others assume it’s just an optional extra. Here’s what to keep in mind:

  • Myth: PSHB is enough on its own

    • Reality: In 2025, PSHB is built to work with Medicare—not replace it.

  • Myth: Medicare isn’t mandatory for everyone

    • Reality: For many, it is required to maintain full PSHB coverage.

  • Myth: Medicare is too expensive

    • Reality: The cost of not having it—especially due to penalties and higher out-of-pocket expenses—can far exceed the monthly premium.

What to Do Before Turning 65

Planning ahead is crucial if you want to take full advantage of what Medicare and PSHB can offer together. Here’s a quick list to follow:

  • Three months before you turn 65:

    • Review your PSHB plan details

    • Start the Medicare enrollment process

    • Confirm whether your PSHB plan offers Part B premium reimbursements

  • The month you turn 65:

    • Ensure both Medicare Parts A and B are active

    • Notify your PSHB plan if required

  • Three months after your birthday:

    • This is the last window of your IEP

    • If you miss this, you may need to wait until the General Enrollment Period

Looking Ahead—Planning for Long-Term Healthcare

Having both PSHB and Medicare helps reduce surprises. Healthcare costs in retirement can be unpredictable, but dual enrollment adds a layer of protection you won’t want to miss.

As more PSHB plans start offering benefits like reduced cost-sharing and expanded pharmacy access tied to Medicare enrollment, failing to enroll could mean falling behind in the value your plan can offer.

It’s not just about staying covered. It’s about staying protected, financially and medically.

Why Coordination with Medicare Strengthens Your PSHB Experience

Medicare doesn’t compete with PSHB—it enhances it. The two systems are designed to work in tandem, especially as healthcare costs continue to rise and the need for reliable, affordable coverage grows.

If you’re already satisfied with your PSHB plan, Medicare might feel redundant. But by enrolling, you unlock a broader range of services, more financial protection, and full access to the benefits your plan offers.

Don’t let good coverage today turn into regret tomorrow.

Get in touch with a licensed insurance agent listed on this website to review your eligibility, timelines, and how to make the most of your PSHB plan when Medicare enters the picture.