Key Takeaways

• Missing the required Medicare Part B enrollment under PSHB can lead to a complete loss of drug coverage and limited re-enrollment opportunities.

• There are specific exemptions to the Medicare Part B requirement under PSHB, and understanding these can help you avoid unnecessary coverage gaps.

Why Medicare Is Now a Bigger Piece of Your PSHB Puzzle

The shift from FEHB to the Postal Service Health Benefits (PSHB) Program comes with significant changes, especially if you are nearing Medicare eligibility. While the PSHB is designed to align more closely with Medicare, that alignment now means missing a critical enrollment step can seriously impact your benefits.

Unlike FEHB, which offered more flexibility in how it coordinated with Medicare, the PSHB Program includes mandatory integration with Medicare Part B for certain enrollees. If you’re turning 65 or already Medicare-eligible, your participation in PSHB now hinges on understanding what the rules require—and when.

What Medicare Enrollment Means Under PSHB

Starting in 2025, the PSHB Program requires certain annuitants and family members who are eligible for Medicare to enroll in Medicare Part B in order to maintain full PSHB coverage. This includes automatic enrollment in a Medicare Part D prescription drug plan offered through PSHB.

But it’s not just about signing up. You need to do it at the right time and meet the eligibility requirements. Failing to do so could mean you lose your prescription drug coverage and face late enrollment penalties for Medicare itself.

The Critical Medicare Part B Requirement

Here’s what you need to know right now:

• If you are a Postal Service annuitant or a covered family member and are Medicare-eligible as of January 1, 2025, you are required to enroll in Medicare Part B to continue full PSHB coverage.

• If you turn 65 after January 1, 2025, you must enroll in Part B during your Initial Enrollment Period (IEP) or risk losing access to full benefits under your PSHB plan.

There are no second chances if you miss this step. If you do not enroll in Medicare Part B during your IEP, your PSHB plan can limit your coverage, particularly for prescriptions.

Exemptions to the Part B Requirement

Not everyone is subject to the Medicare Part B mandate under PSHB. You are exempt from the Part B enrollment requirement if:

• You retired on or before January 1, 2025.

• You are an active USPS employee who was age 64 or older on January 1, 2025.

• You live outside the United States and are not eligible for Medicare.

• You are eligible for coverage under Indian Health Services or VA benefits.

If you fall under any of these categories, you may continue your PSHB coverage without being required to enroll in Medicare Part B.

Timing: Enrollment Windows and Deadlines

Medicare enrollment comes with rigid timelines. If you’re approaching age 65, these are the periods that matter most under PSHB:

• Initial Enrollment Period (IEP): This is a 7-month window surrounding your 65th birthday. It includes the 3 months before, the month of, and the 3 months after you turn 65.

• General Enrollment Period (GEP): If you miss your IEP, the GEP runs from January 1 to March 31 annually, with coverage beginning July 1. This can cause a significant gap in your coverage.

• Special Enrollment Period (SEP): This applies if you were still working and covered under an employer plan. However, most annuitants will rely on their IEP or GEP.

Failing to act within your IEP could result in a 10% premium penalty per year delayed for Medicare Part B, and under PSHB rules, you may be ineligible for prescription drug coverage unless you enroll during the limited re-enrollment window.

What Happens If You Miss It

If you fail to enroll in Medicare Part B when required, several consequences can follow:

• You will lose your Medicare Part D drug coverage through PSHB.

• You may be locked out of certain cost-sharing benefits like waived deductibles or reduced copays.

• You may face higher out-of-pocket costs for prescriptions and services that Medicare would have covered.

• You will need to wait for the next General Enrollment Period to sign up, during which you could go several months with no drug coverage at all.

Additionally, opting out of the Medicare Part D plan tied to PSHB could permanently restrict your ability to rejoin PSHB drug coverage.

How PSHB Coordinates With Medicare Part B

If you are enrolled in both PSHB and Medicare Part B:

• Medicare becomes your primary payer.

• Your PSHB plan becomes secondary and often covers the costs Medicare doesn’t fully pay.

• Many PSHB plans waive deductibles and reduce cost-sharing if you have Part B.

• Your prescription drug coverage is delivered through a Medicare Part D Employer Group Waiver Plan (EGWP) integrated with your PSHB plan.

This integration improves coverage value for those enrolled in both programs, but only if you’re properly enrolled in Medicare Part B.

Avoiding Penalties and Pitfalls

To avoid penalties and ensure uninterrupted coverage:

• Review your Medicare eligibility at least 6 months before your 65th birthday.

• Ensure you have a clear understanding of whether your PSHB plan requires Medicare Part B enrollment.

• If you need to enroll, begin the process as early as 3 months before your 65th birthday.

• Watch for your Initial Enrollment Period mailings from Medicare.

• Contact Social Security or visit Medicare.gov to begin enrollment.

Being proactive is critical. Late action can result in coverage delays, out-of-pocket expenses, or even a permanent reduction in your benefits.

Prescription Drug Coverage: Why Opting Out Isn’t Worth It

Even if you believe you don’t take many medications, declining Medicare Part D drug coverage under PSHB can come back to haunt you.

• By default, PSHB will enroll you in a Medicare Part D EGWP.

• If you choose to opt out, you will lose drug coverage under your PSHB plan.

• Rejoining later is extremely limited and may require waiting for the next Medicare Annual Enrollment Period (October 15 to December 7).

Furthermore, once you opt out, you may become ineligible for certain plan benefits permanently, even if you re-enroll in Medicare Part B later.

You Can’t Assume What Worked Before Will Work Now

The rules under FEHB allowed for more flexibility. Many annuitants delayed enrolling in Medicare Part B or chose not to enroll at all. Under PSHB, those options may no longer be available to you.

The PSHB model depends on tight coordination with Medicare. If you plan to remain in PSHB, you must treat Medicare Part B enrollment as a required step, not a preference.

Understanding the PSHB Medicare Notification Process

In 2024, OPM and the Postal Service sent notification letters to those who were affected by this change. These notices included:

• Details about who must enroll in Medicare Part B.

• Instructions for enrollment.

• Deadlines for special enrollment periods.

If you didn’t receive or read these letters, now is the time to act. Contact OPM or Social Security directly, or speak with a licensed agent listed on this website to clarify your enrollment status.

Medicare Advantage: Not a Substitute for PSHB Medicare Requirements

Some individuals consider enrolling in a Medicare Advantage (Part C) plan as a workaround. However:

• Medicare Advantage plans do not replace the requirement to enroll in Part B for PSHB coordination.

• You may still be auto-enrolled in the PSHB Part D plan.

• PSHB coverage and drug benefits still hinge on you being in Original Medicare with Part B.

Your safest route is to enroll in both Original Medicare (Parts A and B) and allow your PSHB plan to handle the rest.

Why the Rules Changed

The integration between Medicare and PSHB was introduced to:

• Reduce healthcare costs for the Postal Service.

• Align retiree benefits with Medicare’s structure.

• Leverage the federal government’s ability to negotiate drug benefits through Part D.

While the goal is cost-saving and consistency, the effect on your individual choices can be dramatic. Medicare enrollment is no longer a background decision—it directly impacts your access to care.

Make PSHB and Medicare Work for You

The PSHB Program gives you access to solid health coverage, but the new Medicare requirements add complexity that can catch you off guard. With very few exceptions, enrolling in Medicare Part B is now part of keeping your benefits intact.

Review your eligibility, confirm your status, and take steps early to avoid gaps in your care. Missing your Initial Enrollment Period or opting out of drug coverage can result in permanent changes to your benefits.

Speak with a licensed agent listed on this website to make sure you are on track with both PSHB and Medicare.