Key Takeaways

• If you’re enrolled in both Medicare and the Postal Service Health Benefits (PSHB) Program, understanding which coverage pays first is crucial for avoiding denied claims and unnecessary out-of-pocket costs.

• Medicare generally pays first once you turn 65, but exceptions exist based on your employment status, retirement, and other federal eligibility rules in 2025.

Why This Matters in 2025

The PSHB program is now fully in effect as of January 1, 2025, replacing FEHB coverage for Postal Service employees and retirees. One of the most important issues enrollees face this year is how their PSHB plan interacts with Medicare—especially Medicare Part A and Part B.

The coordination of benefits (COB) determines who pays first when you receive healthcare services. If you’re unclear about this order, you may either end up paying more than necessary or delay treatment due to claim confusion. In 2025, as more Postal retirees enroll in both PSHB and Medicare, this topic has never been more relevant.

The Basic Rule: Medicare Pays First—With Some Exceptions

The general principle in 2025 remains consistent with past years:

• If you are retired and enrolled in Medicare, Medicare typically pays first, and your PSHB plan pays second.

• If you are actively employed at USPS and age 65 or older, PSHB pays first, and Medicare is the secondary payer.

This order matters for your cost-sharing responsibilities—like deductibles, copayments, and coinsurance—and it influences which provider networks and coverage rules apply.

Understanding the Medicare Part A and B Roles

Medicare Part A

Part A (Hospital Insurance) is usually premium-free and covers inpatient hospital stays, skilled nursing facility care, and some home health services. If you’re eligible, Part A almost always becomes the primary payer once you’re retired.

Medicare Part B

Part B (Medical Insurance) covers doctor visits, outpatient care, preventive services, and durable medical equipment. In 2025, the monthly premium for Part B is $185, with an annual deductible of $257.

• If you don’t enroll in Part B when required under PSHB rules, your PSHB plan may not pay for services Medicare would have covered. This could lead to large out-of-pocket bills.

• If you are enrolled in both, Medicare pays first for outpatient and preventive care, and your PSHB plan typically picks up much of the remaining cost, often reducing or waiving cost-sharing.

Key Timelines to Track in 2025

Understanding who pays first also depends on your status during different timeframes:

• At age 65: You become Medicare-eligible. If you are retired, Medicare becomes your primary coverage.

• If still working for USPS at 65+: PSHB remains primary until you retire.

• January 1, 2025: All eligible Postal retirees and family members must now use PSHB instead of FEHB. Medicare coordination rules became more important than ever starting this date.

What Happens If You Don’t Enroll in Medicare Part B?

In 2025, PSHB rules require many annuitants and covered family members to enroll in Medicare Part B to keep full medical and drug coverage. If you fail to enroll:

• Your PSHB plan may exclude payment for any services Medicare would have covered.

• You may face late enrollment penalties if you try to enroll later, which in 2025 equals 10% for every 12-month period you were eligible but not enrolled.

Exceptions apply if you:

• Retired on or before January 1, 2025, and were not already enrolled in Medicare Part B

• Are enrolled in Indian Health Services or Veterans Affairs coverage

• Reside outside the United States

The Coordination of Benefits (COB) Process

Here’s how COB generally works in 2025 for PSHB and Medicare enrollees:

1. Medicare processes your claim first and pays its share of the cost.

2. Your PSHB plan receives the claim next and may pay all or part of the remaining balance.

3. You receive a final Explanation of Benefits (EOB) showing what both plans paid and what, if anything, you owe.

If you’re enrolled in both Medicare Parts A and B and your PSHB plan, this coordination usually results in very low out-of-pocket costs—especially for in-network providers.

Prescription Drug Coverage and Coordination

As of 2025, Medicare-eligible PSHB enrollees automatically receive drug coverage through a Medicare Part D Employer Group Waiver Plan (EGWP) tied to their PSHB plan. This coordination brings specific advantages:

• The $2,000 out-of-pocket cap for Medicare Part D applies to you

• Many PSHB plans waive deductibles and copays for those enrolled in Medicare

• Claims are processed through the Medicare system first, with PSHB picking up the rest

If you opt out of Part D coverage under the PSHB umbrella, you lose drug benefits and can’t re-enroll unless you qualify for a future special enrollment period.

In-Network vs Out-of-Network Claims

When Medicare pays first, providers billing Medicare must follow its allowable charge structure:

• You benefit from standardized pricing, even for complex or high-cost services

• Most PSHB plans will then cover the remaining costs if the provider also participates in their network

• If your provider is not in-network for PSHB but accepts Medicare, you may still owe more than expected, depending on your plan’s out-of-network rules

Disability, ESRD, and Other Special Situations

Some situations alter the payer sequence, even in 2025:

• If you have End-Stage Renal Disease (ESRD): PSHB may be primary for the first 30 months, then Medicare takes over as primary

• If you’re under 65 and qualify for Medicare due to disability: The payer order depends on your employment status

• If you’re covered under a spouse’s plan: The spouse’s active employment status could shift who pays first

These special cases should be discussed with a licensed agent to ensure you’re not caught off guard.

Avoiding Common Mistakes in 2025

1. Assuming PSHB always pays first

   If you’re retired and Medicare-eligible, Medicare is the primary payer.

2. Skipping Part B enrollment

   This can leave you with high out-of-pocket costs and denied claims, especially for outpatient services.

3. Relying on outdated FEHB rules

   PSHB replaced FEHB for Postal Service workers and retirees in 2025. Coordination rules are not identical.

4. Failing to check your provider’s network status

   Just because a provider takes Medicare doesn’t mean they’re in-network for your PSHB plan. Always confirm both.

Making Medicare and PSHB Work for You in 2025

The synergy between Medicare and PSHB in 2025 can reduce your out-of-pocket costs, expand your provider access, and add prescription drug protections. But this only works when you:

• Enroll in Medicare Part A and Part B when eligible

• Stay within your PSHB plan’s provider network whenever possible

• Understand who pays first depending on your employment and retirement status

• Use your plan’s EGWP Medicare drug coverage to avoid gaps and penalties

This knowledge gives you control over your benefits and your budget.

Ensure Your Coverage Works as Intended

Coordinating Medicare and PSHB benefits requires careful attention in 2025—but it’s worth the effort. Missing a step or misunderstanding the payer order could mean lost benefits or unnecessary costs. If you have questions or need help with enrollment or coverage review, contact a licensed agent listed on this website to make sure your coverage is working for you, not against you.