Key Takeaways

• Even with clear PSHB-Medicare integration rules in 2025, retirees frequently misinterpret how the two systems interact, especially regarding enrollment and cost-sharing responsibilities.

• Failing to understand the timeline and role of Medicare Part B within the PSHB structure can lead to gaps in coverage or higher out-of-pocket costs during retirement.

The PSHB-Medicare Relationship: More Complex Than It Appears

On the surface, it may seem like the Postal Service Health Benefits (PSHB) Program and Medicare are built to work in harmony for retirees. But in practice, this coordination is not always intuitive. You might assume your PSHB plan simply picks up where Medicare leaves off, or that enrolling in one automatically covers all bases. In 2025, that kind of assumption can be costly.

Understanding how PSHB and Medicare function together requires you to look closely at how enrollment requirements, coordination of benefits, and payment responsibilities are handled — both on paper and in real-world scenarios.

Mandatory Enrollment in Medicare Part B

As of January 1, 2025, most Medicare-eligible Postal Service annuitants must be enrolled in Medicare Part B to maintain their PSHB coverage. This includes:

• Postal retirees who are entitled to Medicare Part A

• Covered family members who are Medicare-eligible

However, there are notable exceptions:

• If you retired on or before January 1, 2025, and are not currently enrolled in Medicare Part B, you are exempt from this requirement.

• Employees aged 64 or older as of January 1, 2025, are also generally exempt.

Missing the mandatory enrollment deadline, or misunderstanding your exemption status, can mean losing your prescription drug benefits and having no drug coverage under your PSHB plan.

Coordination of Benefits: Who Pays First?

One of the most common misunderstandings comes from assuming PSHB is always the primary payer. In reality, when you are enrolled in both PSHB and Medicare, Medicare typically becomes the primary payer, and PSHB acts as the secondary.

That means:

• Medicare Part B covers outpatient services like doctor visits, durable medical equipment, and preventive screenings first.

• PSHB picks up most of the remaining costs, including coinsurance and copayments.

If you skip Medicare Part B and rely only on PSHB, your plan may require you to pay full cost-sharing amounts — which can quickly become financially burdensome.

Prescription Drug Coverage Under PSHB

In 2025, most Medicare-eligible PSHB enrollees are automatically enrolled in a Medicare Part D prescription drug plan through the Employer Group Waiver Plan (EGWP) model.

Here’s what that means for you:

• You will have an annual out-of-pocket cap of $2,000 on covered prescription drugs.

• You may be eligible for monthly payment options for spreading out drug costs throughout the year.

• Some PSHB plans offer additional incentives such as insulin caps and expanded pharmacy networks.

However, opting out of Medicare Part D disqualifies you from receiving these benefits under your PSHB plan. And once opted out, re-enrollment is highly restricted.

Timing Is Everything: Critical Enrollment Periods

The PSHB and Medicare enrollment timelines don’t always align cleanly. Here’s what to keep in mind:

• Medicare Initial Enrollment Period (IEP): This 7-month window surrounds your 65th birthday. Missing it may result in late penalties.

• PSHB Open Season: Occurs every year from November to December. It allows you to change or enroll in a new PSHB plan.

• Special Enrollment Periods (SEP): Available if you lose other coverage or meet certain exceptions, but eligibility rules are specific.

Failing to align your Medicare enrollment with your PSHB transition can result in delayed coverage, financial penalties, or gaps in services.

Medicare Part A and PSHB: Less Conflict, Still Relevant

Because Medicare Part A is typically premium-free for those who’ve paid sufficient work credits, it’s less controversial. But you still need to understand how it coordinates with PSHB:

• Medicare Part A pays first for inpatient hospital care.

• PSHB pays second and often covers deductibles or coinsurance.

Skipping Part A is rare, but if you do, your PSHB plan may expect you to shoulder hospital cost-sharing.

How Costs Are Shared Between PSHB and Medicare

In theory, PSHB and Medicare together should reduce your out-of-pocket costs. But not all retirees understand how this works in practice:

• When Medicare pays first, PSHB generally covers remaining eligible expenses.

• You still must pay Medicare Part B premiums, which in 2025 are $185 monthly for most enrollees.

• PSHB premiums still apply, and your share depends on your plan selection and enrollment type (Self Only, Self Plus One, or Self & Family).

Many retirees incorrectly assume enrolling in Medicare will replace the need for PSHB, when in fact, both are needed to keep full coverage and cost protection.

Plan Design Differences That Affect Coordination

Not all PSHB plans are created equal when it comes to how they work with Medicare. Some plans:

• Waive or reduce deductibles if you are enrolled in both Medicare Parts A and B

• Offer reimbursements for part of your Part B premium

• Provide lower copayments or broader access to specialists when coordinated with Medicare

If you choose a plan that does not coordinate well with Medicare, you may end up paying more despite dual enrollment. This highlights why reviewing your plan brochure — and not assuming benefits — is critical.

Retiree Confusion Often Stems from Paper Rules vs. Reality

You might read through your PSHB and Medicare materials and come away feeling confident. But the way these benefits work on paper doesn’t always reflect what you’ll experience when you need care.

Here’s why misunderstandings happen:

• Plan brochures are written in technical language

• Medicare integration benefits vary by plan

• Customer service representatives often only know one system, not both

To avoid surprises, it’s important to consult someone who understands both PSHB and Medicare — especially before you make decisions about enrollment, coverage changes, or opting out of Part B.

What Happens If You Miss Part B Enrollment?

Missing your required Medicare Part B enrollment can have cascading consequences:

• You may lose your prescription drug benefits under PSHB.

• You may face a lifelong late enrollment penalty on your Part B premium.

• You could experience gaps in coverage for outpatient services.

In 2025, Medicare provides a General Enrollment Period from January 1 to March 31 if you missed your Initial Enrollment Period — but coverage won’t start until July, and penalties apply. You might face several months without essential coverage.

The Danger of Relying Solely on PSHB in Retirement

You might be tempted to skip Medicare altogether, especially if you’ve been satisfied with your PSHB plan during your career. But in retirement, this strategy rarely works out well.

Without Medicare Part B:

• Your PSHB plan becomes primary and may cost more for services

• You miss out on benefits designed to coordinate with Medicare

• You lose access to cost-sharing reductions

This can increase your total out-of-pocket burden each year, even if your plan premiums seem reasonable at first glance.

Reading Between the Lines of Your PSHB Plan

Many misunderstandings stem from retirees taking plan summaries at face value. But buried within the fine print are critical details about:

• Coordination of benefits rules

• Medicare reimbursement policies

• How prescription coverage changes with Medicare status

Always review the section of your PSHB brochure that covers Medicare coordination. If you’re unsure, it’s worth having a licensed agent explain how your plan works in combination with Medicare.

Understanding the Real-World Impact on Your Wallet

If you think skipping Medicare Part B saves money, that assumption rarely holds. You must consider the full financial picture:

• Part B premiums in 2025 are $185/month

• Skipping Part B can lead to higher PSHB copays and uncovered expenses

• The $2,000 out-of-pocket cap on drugs under Medicare Part D may not apply without enrollment

Pairing PSHB with Medicare typically reduces your risk of unpredictable healthcare costs during retirement.

What to Do Before and After Retirement

If you’re still working:

• Know your age timeline — especially when approaching 64 or 65

• Review PSHB plans that coordinate well with Medicare

• Consider joining informational webinars or speaking with a licensed agent

If you’ve retired:

• Verify your Medicare enrollment status (Parts A and B)

• Check your PSHB plan’s current coordination benefits

• Reassess your plan each year during Open Season from November to December

Getting the Coordination Right from the Start

Misunderstanding how PSHB and Medicare work together isn’t just a paperwork problem — it’s a real risk to your coverage, finances, and peace of mind. In 2025, the rules are clearer than before, but that doesn’t mean they’re easier to interpret.

To make informed decisions, talk to a licensed agent listed on this website. They can help ensure your PSHB and Medicare enrollment align properly — both now and in the future.