Key Takeaways

• Medicare Part A works silently behind the scenes but plays a major role in how your PSHB plan works once you’re eligible for Medicare.

• Even though Part A is premium-free for most, failing to enroll at the right time could result in coverage gaps or higher costs under PSHB.

What You Need to Know About Medicare Part A

Medicare Part A, also known as hospital insurance, often seems simple: it covers inpatient hospital care, skilled nursing facility care, hospice, and some home health services. If you or your spouse paid Medicare taxes for at least 40 quarters, you qualify for it without a monthly premium.

But here’s the part most people overlook: once you become eligible for Medicare and are enrolled in a Postal Service Health Benefits (PSHB) plan, Part A becomes a crucial component of how your coverage coordinates. It doesn’t just sit on the sidelines. It directly affects the order of payment, cost-sharing, and how much your PSHB plan is required to pay.

When Medicare Becomes Primary

Medicare becomes your primary payer once you’re both enrolled in it and eligible due to age (typically 65 and over). At that point:

• Medicare Part A pays first for hospital-related expenses.

• Your PSHB plan becomes secondary and covers costs Medicare doesn’t pay, like coinsurance or charges exceeding Medicare-approved amounts.

If you’re enrolled in PSHB but delay Medicare Part A enrollment, your PSHB plan becomes your primary insurance. This seems fine until you realize that PSHB plans are structured with the assumption that Medicare will be there to pick up the first layer of cost.

The Risk of Delayed Enrollment

Most Postal retirees qualify for premium-free Medicare Part A. But if you don’t enroll at your Initial Enrollment Period (IEP), you may face penalties and coordination issues.

Your IEP is a 7-month window:

• 3 months before the month you turn 65

• The month you turn 65

• 3 months after the month you turn 65

If you miss this period, you can only enroll during the General Enrollment Period (January 1 to March 31 each year), and your coverage won’t begin until July 1. That delay can leave you exposed, especially if your PSHB plan expects Medicare to cover certain claims first.

How PSHB Plans Coordinate With Medicare Part A

Starting in 2025, PSHB plans are structured with an assumption that Medicare Part A (and Part B) will be in place for eligible annuitants. Here’s how that affects your experience:

• Reduced Cost-Sharing: If you’re enrolled in Part A, your PSHB plan often waives or reduces deductibles and coinsurance.

• Hospital Coverage: Medicare pays its portion of your hospital stay, and PSHB fills in the gaps.

• Automatic Coordination: Claims usually get sent from Medicare to your PSHB plan automatically.

However, if you don’t have Medicare Part A in place, the PSHB plan pays as the primary insurer. This might sound beneficial, but it often results in higher out-of-pocket costs for you because your PSHB plan assumes Medicare will pay first and structures benefits accordingly.

What Happens if You’re Exempt from Enrolling in Part A

There are very few cases where a Postal retiree would be exempt from Medicare Part A enrollment. You may be exempt if:

• You retired on or before January 1, 2025, and are not already enrolled in Part A.

• You live overseas permanently and are not eligible for Medicare coverage.

In such cases, your PSHB plan will remain primary, but again, you may be responsible for higher cost-sharing. PSHB plans are not required to adjust their benefit structures to compensate for the absence of Medicare coordination.

Why Medicare Part A Affects Your Prescription Drug Coverage

Even though Medicare Part A does not cover prescriptions, it indirectly affects your drug coverage under PSHB.

In 2025, PSHB plans automatically enroll Medicare-eligible members into a Medicare Part D Employer Group Waiver Plan (EGWP). This provides enhanced prescription drug coverage. But this seamless enrollment only works correctly when Part A (and B) enrollment is verified. If you’re not enrolled in Part A, the system may flag you as ineligible, which could disrupt your drug benefits under the PSHB plan.

In short: Part A indirectly helps confirm your eligibility for Part D EGWP coverage within your PSHB plan.

Part A and Hospital Deductibles in 2025

Here’s what Medicare Part A covers in 2025:

• Inpatient hospital deductible: $1,676 per benefit period

• Coinsurance: $419 per day for days 61–90, and $838 for lifetime reserve days

• Skilled nursing facility coinsurance: $209.50 per day for days 21–100

If you only had Medicare, you’d be responsible for these charges. But your PSHB plan, acting as a secondary payer, often covers most or all of these costs. That’s one of the most valuable interactions between PSHB and Medicare Part A.

This means having Part A not only reduces your costs on the Medicare side but also activates cost-sharing benefits on the PSHB side.

What If You Have FEHB Instead of PSHB?

If you’re a Postal Service retiree in 2025, you’re automatically transitioned to PSHB unless you are covered as a family member under someone else’s FEHB. PSHB differs from FEHB in one important way: Medicare Part B is often required.

While FEHB retirees could previously avoid enrolling in Medicare altogether, the PSHB program has a tighter link to Medicare enrollment.

But even in FEHB, the role of Medicare Part A was always significant. The difference now is that failure to coordinate with Medicare properly in PSHB may directly reduce your plan’s value.

Don’t Confuse Part A with Part B

It’s important not to lump Medicare Parts A and B together when evaluating your PSHB benefits. Part A is nearly always premium-free, making it a low-barrier enrollment. Part B, on the other hand, requires a monthly premium and is where most retirees hesitate.

However, enrolling in Part A alone already enhances your PSHB plan. The PSHB program is designed to reward this coordination by reducing your costs and allowing the system to flow claims through Medicare before reaching your PSHB benefits.

Part B is important too, and often required under PSHB in 2025, but your starting point should always be secure enrollment in Part A.

Enrollment Timeline Recap

To avoid penalties or coverage disruptions, you should:

• Enroll in Medicare Part A during your 7-month Initial Enrollment Period (around your 65th birthday).

• Confirm your enrollment is active before January 1 of the year you turn 65.

• Notify your PSHB plan (or OPM) if you receive notice that your Medicare enrollment has been delayed.

Missing these deadlines could result in:

• Higher out-of-pocket costs for hospital care

• Disruption in prescription drug coverage under PSHB

• Delays in secondary claim payments

Medicare Part A for Spouses and Family Members

If your spouse or dependent is covered under your PSHB plan, and they become eligible for Medicare, the same coordination rules apply. Their Part A status will determine:

• Whether Medicare or PSHB pays first for their inpatient care

• Their eligibility for Part D EGWP drug benefits under your PSHB plan

• The level of cost-sharing they experience

Make sure your covered family members enroll in Medicare Part A when eligible to keep the full benefit coordination intact.

Hospital Networks and Provider Choice

Some PSHB plans may have provider networks for hospital services. With Medicare Part A in place, your hospital stay is covered under Medicare’s network and billing rules. Then, your PSHB plan steps in to pay the remaining eligible amounts.

This helps expand your hospital access because:

• Medicare has a wide hospital provider network

• PSHB covers excess charges or coinsurance for Medicare-covered services

Without Medicare Part A, you’d be limited to your PSHB plan’s network and pay more out-of-pocket when using non-network hospitals.

How Claims Flow Between Medicare and PSHB

Here’s a simplified version of how claims are processed when you have both Part A and PSHB:

1. You are admitted to the hospital.

2. The provider sends the claim to Medicare.

3. Medicare pays its share based on 2025 cost-sharing rules.

4. The claim is forwarded automatically to your PSHB plan.

5. Your PSHB plan pays remaining eligible costs.

This automatic crossover only works smoothly if you’re properly enrolled in Medicare Part A and your PSHB plan has that information on file.

If You’re Still Working at Age 65

If you’re an active Postal employee, you are not required to enroll in Medicare Part A when you turn 65, although you may choose to. In this case:

• Your PSHB plan remains primary

• Medicare pays second (if enrolled)

• You don’t face a penalty for delaying enrollment in Part A until retirement

But once you retire, the expectation changes. You’ll need to enroll in Medicare to avoid paying more for the same care.

The Role of Part A Is Bigger Than It Appears

Medicare Part A quietly supports your PSHB benefits in ways you might not immediately notice. It allows the PSHB plan to reduce your out-of-pocket expenses, process claims efficiently, and unlock full access to prescription drug coverage. What seems like a basic, no-cost benefit actually functions as a foundational layer of your overall PSHB strategy.

If you’re approaching age 65 or have already reached it and haven’t signed up for Part A, now is the time to get informed. The longer you wait, the more you risk higher costs and denied coordination of benefits.

For personalized help, get in touch with a licensed agent listed on this website who can guide you through your PSHB and Medicare options.