Key Takeaways

• Enrolling in both Medicare and PSHB doesn’t guarantee full coverage—you may still face deductibles, coinsurance, and coordination challenges that shift costs to you.

• Medicare Part B enrollment is mandatory for many Postal retirees to maintain PSHB coverage, but understanding how it integrates with your PSHB plan is essential to avoid coverage gaps and billing surprises.

Understanding the Layers of Coverage

When you’re approaching retirement as a Postal Service employee, one of the biggest assumptions is that combining Medicare with your Postal Service Health Benefits (PSHB) plan gives you seamless, nearly bulletproof healthcare coverage. But in reality, the layers of coverage become more complex than most people expect.

In 2025, PSHB officially replaces FEHB for Postal retirees. While the program promises integration with Medicare, that integration isn’t always simple or complete. Instead, it demands attention to detail, timing, and coordination.

Medicare Is Not All-Inclusive

Medicare on its own doesn’t cover everything. Even with both Part A (hospital insurance) and Part B (medical insurance), you still face the following:

• Part A deductible: $1,676 per benefit period in 2025

• Part B deductible: $257 annually

• Part B premium: $185 monthly for most enrollees in 2025

• Coinsurance: Typically 20% of the Medicare-approved amount after deductibles

Medicare also doesn’t cover routine dental, vision, or hearing, and has strict limits on overseas medical coverage.

This means you still need another layer of insurance—and for Postal retirees, that layer is the PSHB plan.

What the PSHB Program Adds

The Postal Service Health Benefits program builds on the FEHB framework but is now exclusively for USPS employees, retirees, and their families. For retirees who are eligible for Medicare, the PSHB plan is designed to work alongside Medicare Part A and Part B.

Your PSHB plan may:

• Waive or reduce deductibles for those enrolled in Medicare Part B

• Provide prescription drug coverage through a Medicare Part D plan

• Offer enhanced coordination of benefits

• Provide access to nationwide provider networks

However, these advantages depend on your exact plan and your enrollment in Medicare. And this is where the complexity starts.

Medicare Part B Enrollment Is Not Optional for Most

Under 2025 PSHB rules, if you are a Medicare-eligible Postal retiree (or covered family member), you are required to enroll in Medicare Part B in order to maintain full PSHB medical coverage.

There are limited exceptions:

• You retired on or before January 1, 2025

• You were age 64 or older as of January 1, 2025

• You live overseas

• You are eligible for Veterans Affairs or Indian Health Service coverage

If you don’t qualify for an exception and you refuse Part B, you may be disenrolled from your PSHB medical coverage. This rule doesn’t apply to prescription drug benefits under Part D, but it significantly affects your access to medical care through PSHB.

Coordination Isn’t Automatic

Even when you are enrolled in both Medicare and PSHB, the two programs don’t automatically talk to each other in real-time.

• You must notify your PSHB plan of your Medicare enrollment.

• You are typically responsible for showing providers both your Medicare and PSHB ID cards.

• Your plan might require claims to be filed with Medicare first, then with PSHB.

If this process isn’t followed correctly, you may end up with delayed reimbursements or larger-than-expected bills.

Prescription Drug Coverage and Part D Integration

In 2025, the PSHB program integrates prescription drug coverage through a Medicare Part D Employer Group Waiver Plan (EGWP). This plan:

• Automatically enrolls eligible retirees and their covered family members

• Applies the new $2,000 annual out-of-pocket cap for prescription drugs

• Includes protections like a $35 insulin cost limit

However, you can choose to opt out. But opting out of the Part D EGWP means you lose prescription drug coverage under PSHB entirely. And unless you qualify for a future Special Enrollment Period, you may not be allowed to re-enroll.

Don’t Assume All Costs Are Covered

Even with both Medicare and PSHB, you can still face:

• Deductibles: Your PSHB deductible may still apply for non-Medicare-covered services.

• Coinsurance or copayments: Not all are waived for those with Medicare.

• Out-of-network charges: If you receive care outside the PSHB or Medicare network, you may pay more.

• Prior authorization requirements: Certain services may require approval from your PSHB plan, regardless of Medicare approval.

This is why it’s important to understand the fine print of your chosen PSHB plan.

The Out-of-Pocket Maximums Are Not Combined

Both Medicare and PSHB have separate structures for tracking your spending.

• Medicare has no annual out-of-pocket maximum for Parts A and B.

• PSHB plans do have an annual out-of-pocket maximum, but it applies only to costs incurred under the PSHB plan.

That means if Medicare pays 80% and PSHB pays 20%, your PSHB plan may track those payments against its out-of-pocket maximum, but Medicare doesn’t track any of it. You could end up spending more than you expected.

Dental and Vision Still Depend on Additional Coverage

Even with a PSHB plan and full Medicare enrollment, most dental and vision services are still excluded unless you separately enroll in a FEDVIP plan.

PSHB coverage may include limited dental and vision benefits, but they often don’t include full coverage for:

• Dentures

• Root canals

• Eye exams for glasses

• Eyeglasses or contact lenses

If these benefits are important to you, you’ll need to explore separate coverage through FEDVIP.

Timing and Enrollment Periods Matter

Missing a key deadline can lead to late penalties or loss of coverage:

• Initial Enrollment for Medicare: 7-month window around your 65th birthday

• General Enrollment (if you miss the initial): January 1 to March 31

• PSHB Open Season: Occurs each November through December

• Special Enrollment Period for Medicare Part B (2024 exception): Ended in September 2024

Late enrollment in Medicare Part B typically results in a 10% increase in premiums for every 12 months you delay, unless you qualify for a Special Enrollment Period.

You Can’t Set It and Forget It

Your healthcare needs evolve, and so does the structure of Medicare and PSHB. Each year, both programs may change:

• Covered services

• Premiums and deductibles

• Out-of-pocket maximums

• Required forms or enrollment steps

You should review your Annual Notice of Change (ANOC) from your PSHB plan every fall. You should also reassess your Medicare and PSHB integration at least once per year, especially during Open Season.

PSHB Plans Vary Widely

Not all PSHB plans offer the same level of Medicare coordination. Some may:

• Waive more cost-sharing

• Offer better Medicare Part B premium reimbursements

• Provide more comprehensive care coordination

Others may treat Medicare enrollment more passively, resulting in higher costs or administrative burdens on you.

You must carefully compare plan brochures and Summary of Benefits before deciding.

Don’t Confuse PSHB with Medicare Advantage

PSHB plans are not Medicare Advantage plans. PSHB is a federal health benefit that supplements Medicare, while Medicare Advantage (Part C) plans are private alternatives to Original Medicare.

If you enroll in a Medicare Advantage plan, your PSHB plan may no longer be your primary insurer. And in some cases, it could cause conflicts or result in denial of certain benefits.

Always speak with a licensed agent listed on this website before making any changes to your Medicare enrollment.

Getting Coverage Right in 2025 Means Knowing What to Expect

Relying on the combination of PSHB and Medicare in 2025 gives you access to strong benefits—but only if you understand what each program does and doesn’t cover. You can’t assume full protection without reading the fine print, watching your timelines, and keeping track of what each plan pays for.

If you’re unsure whether your PSHB plan is properly coordinated with Medicare, or you want to avoid missteps during Open Season, reach out to a licensed agent listed on this website for personalized guidance.