Key Takeaways

  • Medicare Part B covers medically necessary outpatient services, but its monthly premium, deductible, and coinsurance costs often surprise Postal retirees who expect coverage to be more complete.

  • For those enrolled in Postal Service Health Benefits (PSHB), integrating Part B effectively can reduce costs and improve benefits, but only if you understand how the pieces work together.

Why Understanding Part B Is So Critical in Retirement

Medicare Part B is one of the most essential yet misunderstood components of healthcare for retirees, including those under the Postal Service Health Benefits (PSHB) program. It covers outpatient care, preventive services, durable medical equipment, and more. But it’s also the part of Medicare that most often leads to confusion over what you’ll pay, how it works with your PSHB plan, and what happens if you don’t enroll when you’re supposed to.

If you’re eligible for Medicare at age 65, you’ll want to understand the implications of enrolling in or skipping Part B, particularly if you’re relying on PSHB to manage your healthcare costs in retirement.

What Part B Covers and What It Doesn’t

Medicare Part B covers a wide range of medical services, including:

  • Doctor’s office visits

  • Lab work and diagnostic tests

  • Preventive screenings (like mammograms and colonoscopies)

  • Outpatient surgeries

  • Physical therapy

  • Durable medical equipment (wheelchairs, walkers)

  • Mental health outpatient care

However, it doesn’t cover:

  • Prescription drugs (those fall under Part D or PSHB drug benefits)

  • Routine dental, vision, or hearing services

  • Long-term care (custodial care)

  • Most care received outside the U.S.

This creates potential coverage gaps that PSHB may or may not fill, depending on your specific plan and whether you’ve also enrolled in Medicare.

The Monthly Premium Isn’t the Only Cost

In 2025, the standard monthly premium for Medicare Part B is $185. But that’s just the beginning.

You’ll also face:

  • An annual deductible of $257

  • 20% coinsurance on most services after the deductible is met

If your income is above certain thresholds (based on your 2023 tax return), you’ll pay an Income-Related Monthly Adjustment Amount (IRMAA), which increases your monthly premium.

This means Part B can become a significant ongoing expense if you’re not prepared for it. PSHB plans that coordinate with Medicare can help reduce this cost burden, but only if you’ve enrolled properly.

Enrollment Is Not Optional If You Want Full PSHB Coverage

Under current PSHB rules, certain Medicare-eligible retirees are required to enroll in Medicare Part B to maintain full access to their PSHB benefits. This applies if you:

  • Retire after January 1, 2025

  • Turn 65 after that date

If you don’t enroll in Part B when you become eligible, you may lose the medical portion of your PSHB coverage. That’s a major financial risk many retirees don’t anticipate.

Those who retired on or before January 1, 2025, are exempt from this requirement and may choose whether or not to enroll in Part B without affecting their PSHB coverage.

Late Enrollment Comes with Penalties That Last for Life

If you delay Part B enrollment beyond your Initial Enrollment Period (IEP) — the 7-month window that starts 3 months before your 65th birthday — you’ll face a permanent late enrollment penalty. The penalty adds 10% to your monthly premium for every 12-month period you delayed, and you’ll pay it for as long as you have Part B.

Even worse, if you miss your IEP and don’t qualify for a Special Enrollment Period (SEP), you’ll need to wait until the General Enrollment Period (January 1 to March 31) to sign up. Your coverage then won’t begin until July, leaving you with a potential gap in medical insurance.

PSHB and Part B Can Work Together—If You Let Them

Most PSHB plans are designed to coordinate with Medicare. When you enroll in both, Medicare typically becomes your primary payer and your PSHB plan acts as secondary. This structure can reduce your out-of-pocket costs by:

  • Covering Medicare’s coinsurance

  • Waiving deductibles

  • Providing additional services Medicare doesn’t cover

Some PSHB plans even offer reimbursement for part or all of your Medicare Part B premium, making enrollment more financially attractive. But you only get these enhanced benefits if you actually enroll in Part B.

The Risks of Relying on PSHB Alone

If you decide to rely solely on your PSHB plan and skip Medicare Part B (when you’re required to enroll), you may face serious consequences:

  • You could lose your PSHB medical coverage entirely.

  • You’ll be liable for the full cost of outpatient care.

  • You may miss out on coordination of benefits that reduces costs.

Even if you’re exempt from the enrollment requirement, skipping Part B may not be cost-effective. Many services—especially those tied to outpatient procedures or therapies—are heavily subsidized when Medicare is primary. Without Part B, you’re leaving yourself exposed to much higher costs.

The Timing of Enrollment Matters

Getting your timing right is just as important as deciding to enroll. Here are key timelines to remember:

  • Initial Enrollment Period (IEP): Starts 3 months before your 65th birthday, includes your birthday month, and extends 3 months after.

  • Special Enrollment Period (SEP): Applies if you’re still working past age 65 and covered by active employer insurance. You have 8 months from the end of employment or coverage to enroll without penalty.

  • General Enrollment Period (GEP): Runs from January 1 to March 31 each year. If you enroll during this period, your coverage starts July 1 and late penalties apply.

For Postal retirees, aligning your PSHB plan with timely Medicare Part B enrollment helps you avoid penalties and unexpected gaps.

What If You’re Still Working at 65?

If you’re still working for the Postal Service and covered by an active PSHB plan, you don’t have to enroll in Medicare Part B at 65. You can delay enrollment without penalty as long as your employer coverage is considered creditable.

Once you retire, your 8-month SEP begins. But if you miss this window, the late enrollment penalty kicks in.

Many active employees still choose to enroll in Part A (which is usually premium-free if you have enough work history) but delay Part B until retirement. This can work well if you understand the enrollment rules and plan accordingly.

Coordination of Benefits Makes a Big Difference

When both Medicare and PSHB are active, coordination of benefits determines who pays first:

  • Medicare pays first for retired Postal Service annuitants who are 65 or older.

  • PSHB pays second, often covering the leftover 20% coinsurance.

This dual-layer protection reduces the chance of large medical bills. Skipping Part B means your PSHB plan becomes primary and you’re responsible for more out-of-pocket costs.

Cost Control with Part B and PSHB

Here’s how having both Part B and PSHB can help keep your medical expenses manageable:

  • Preventive Services: Covered 100% by Medicare when medically necessary

  • Outpatient Surgery: Medicare pays 80%, and PSHB may cover the rest

  • Doctor Visits: Same cost-sharing structure with both programs active

  • Durable Medical Equipment: After deductible, you’ll likely pay little to nothing if both cover the item

Having both in place allows you to benefit from the strengths of each program, rather than relying entirely on one and risking gaps.

Common Misunderstandings to Avoid

A number of misconceptions continue to trip up retirees:

  • Thinking you don’t need Part B because you have PSHB

  • Assuming you can enroll in Part B at any time without penalty

  • Believing PSHB will always cover everything Medicare doesn’t

  • Not realizing PSHB medical coverage can be lost without Part B enrollment

Understanding the actual rules in 2025 is critical for making smart healthcare choices.

Make a Confident Decision with the Right Help

Navigating Medicare Part B and PSHB together can be complex, especially with changing requirements and timelines. If you’re nearing retirement or already Medicare-eligible, take the time to review your situation and options.

It’s not just about avoiding penalties. It’s about ensuring your health coverage is complete, affordable, and reliable. If you’re unsure how your PSHB plan will coordinate with Medicare, now is the time to get help.

Talk to Someone Who Knows How PSHB and Medicare Work Together

Choosing whether and when to enroll in Medicare Part B can shape your entire retirement health strategy. When combined correctly with your PSHB plan, it can reduce costs and improve coverage. But if misunderstood or ignored, it can lead to surprise bills, lost benefits, and long-term penalties.

If you need clarity, contact a licensed agent listed on this website. They can walk you through the specifics based on your retirement timeline, income level, and current PSHB enrollment.