When PSHB and Medicare Work Together, Who Pays What and When?

Key Takeaways

• If you’re enrolled in both PSHB and Medicare in 2025, coordination between the two determines who pays first, how much you owe, and what services are fully covered.

• Medicare typically pays first when you are a postal retiree, followed by PSHB plans covering some or all remaining costs—but only if you stay within network and follow proper claim procedures.

Why Coordination of Benefits Matters Now More Than Ever

Starting January 1, 2025, the new Postal Service Health Benefits (PSHB) Program officially replaces your FEHB plan. With this change, Medicare Part B enrollment becomes a condition for continuing PSHB coverage for many postal retirees and their covered family members. If you’re Medicare-eligible and don’t enroll in Part B (with limited exceptions), your PSHB benefits will be significantly reduced or even denied.

That means understanding how PSHB and Medicare work together isn’t optional anymore. It affects your access to care and your out-of-pocket costs.

Who Pays First: The Primary vs. Secondary Rule

When you’re enrolled in both Medicare and PSHB:

• Medicare pays first if you’re a postal annuitant aged 65 or older.

• PSHB pays first only if you are an active postal employee, not retired.

This matters because the plan that pays first sets the coverage terms. If Medicare pays first, it determines the allowable charges. PSHB then picks up some or all of the remaining amount—but not always all of it.

Medicare’s Role in the Payment Chain

Medicare is broken into multiple parts. For the purposes of coordination with PSHB:

• Part A (Hospital Insurance) covers inpatient hospital stays, hospice, and some skilled nursing care.

• Part B (Medical Insurance) covers doctor visits, outpatient care, preventive services, and durable medical equipment.

In 2025, the standard Part B premium is $185/month, and the deductible is $257 annually. Once the deductible is met, Medicare typically pays 80% of the Medicare-approved amount for covered services. The remaining 20% is where PSHB plans may step in.

PSHB’s Role After Medicare Pays

Your PSHB plan generally acts as the secondary payer, which means:

• It covers your remaining costs after Medicare pays its share.

• This can include the 20% coinsurance, excess charges (if applicable), and sometimes deductibles.

• Depending on your PSHB plan, it may also cover services that Medicare doesn’t, like dental or vision.

You need to ensure that providers accept both Medicare and your PSHB plan. Otherwise, you might be responsible for full charges beyond what Medicare covers.

What You Still Pay After Both Plans Pay

Even with both plans in place, you may still face out-of-pocket expenses. These could include:

• Copayments for doctor visits or prescriptions.

• Coinsurance on services with high costs.

• Non-covered services that neither Medicare nor PSHB pays for.

In 2025, PSHB plans have out-of-pocket maximums of $7,500 for Self Only and $15,000 for family-level coverage for in-network care. If your PSHB plan integrates well with Medicare, you may never hit those caps—but that depends on your usage.

Timing and Claim Filing

In most cases, you don’t need to file claims manually. Medicare automatically forwards claims to your PSHB plan through a process called “crossover.” But for that to happen, you need to:

• Be enrolled in both Medicare and a PSHB plan.

• Use providers that accept both Medicare and your PSHB plan.

If you use a provider that only takes Medicare, your PSHB plan might not get the claim.

Prescription Drugs: Who Pays What?

Prescription drug coverage is also changing in 2025:

• PSHB enrollees with Medicare automatically get drug coverage through a Part D Employer Group Waiver Plan (EGWP).

• This plan coordinates with your PSHB plan.

Here’s how it works:

• You pay the standard Part D deductible of $590 (if applicable).

• After that, you pay coinsurance or copayments until you reach the $2,000 out-of-pocket cap introduced in 2025.

• Once that threshold is hit, your plan pays 100% of covered drugs for the rest of the year.

If you opt out of this Part D coverage, you lose access to all prescription drug coverage under PSHB.

The Impact of Not Enrolling in Medicare Part B

If you’re required to enroll in Part B and don’t, here’s what could happen:

• Your PSHB plan may deny payment for services that Medicare would have covered.

• You may face late enrollment penalties from Medicare.

• Your total out-of-pocket expenses can rise dramatically, especially for outpatient services.

You are exempt from the Part B enrollment requirement if:

• You retired on or before January 1, 2025.

• You are an active postal worker aged 64 or older as of January 1, 2025.

• You live overseas and aren’t eligible for Medicare.

• You receive health services through the VA or Indian Health Service.

If you’re not exempt and don’t enroll, your PSHB coverage becomes limited.

Provider Access and Network Rules

Another thing to keep in mind is that your costs depend heavily on your providers:

• If you use Medicare-participating providers, your claims will usually process smoothly.

• If your provider is out-of-network for your PSHB plan, your secondary coverage may not apply.

This is especially true for specialists, outpatient services, and durable medical equipment suppliers.

To avoid surprise bills, confirm that your provider participates in both Medicare and your specific PSHB plan before receiving services.

Services Covered Differently by Each Plan

Some services are treated differently by Medicare and PSHB, such as:

• Chiropractic care

• Hearing aids

• Dental and vision services

• Routine physicals and screenings

Medicare may not cover these at all, or may offer limited coverage. Your PSHB plan may step in, but benefits vary widely between plans. Review your plan brochure to check what’s included.

Annual Coordination and Open Season Timing

From now on, Open Season (every November to December) is your annual chance to:

• Review your PSHB plan.

• Make changes based on your Medicare enrollment status.

• Ensure your plan still meets your medical and financial needs.

You should also review your Annual Notice of Change (ANOC) if you have Medicare drug coverage, as it will tell you about any updates to your EGWP plan.

Get Answers Before You Owe More Than Expected

It’s not enough to have both PSHB and Medicare. How they coordinate determines:

• What services are covered.

• How much you pay.

• Whether your providers get reimbursed properly.

Mistakes or misunderstandings in how the two work together can lead to denied claims, uncovered costs, or delayed care.

Your Next Move Can Save You Thousands

Understanding who pays what, and when, in a PSHB + Medicare setup is the difference between smooth coverage and costly surprises. If you’re already enrolled or about to be eligible, now is the time to make sure you’re positioned correctly.

If you have questions about your plan options, provider networks, or enrollment timing, get in touch with a licensed insurance agent listed on this website. They can walk you through plan benefits and help ensure you’re covered in the most efficient way possible.