Key Takeaways

• When properly coordinated, your PSHB plan and Medicare benefits can work together to lower your out-of-pocket costs and reduce redundant coverage.

• Understanding how each program handles hospital, medical, and prescription drug services is essential to avoid penalties, denied claims, and wasted premiums.

Understanding the PSHB-Medicare Relationship in 2025

If you are a Postal Service retiree or eligible annuitant in 2025, you likely have questions about how the Postal Service Health Benefits (PSHB) program interacts with Medicare. Both are significant components of your healthcare in retirement, and when used correctly, they can provide broad coverage without overlapping or unnecessary spending.

But if misunderstood or mismanaged, you could end up paying more than needed, or worse, facing coverage gaps. This article explains how PSHB works with Medicare Parts A, B, and D, how enrollment affects your benefits, and how to avoid duplicative coverage.

Medicare Enrollment Requirements for PSHB Annuitants

Starting January 1, 2025, the PSHB program officially replaces Federal Employees Health Benefits (fehb) for Postal Service employees, retirees, and their eligible family members. A major change under PSHB is its integration with Medicare.

You are required to enroll in Medicare Part B if:

• You are a Postal Service annuitant or a family member who is entitled to Medicare Part A,

• And you are aged 65 or older on or after January 1, 2025.

Some individuals are exempt from this requirement:

• Those who retired on or before January 1, 2025,

• Those who were already enrolled in Medicare Part A but not Part B before this date,

• People living overseas,

• Those who receive health services through the VA or Indian Health Service.

If you fall under the requirement and fail to enroll in Part B, you risk losing your PSHB coverage entirely.

What Each Program Covers

To avoid confusion, it’s helpful to understand what PSHB and Medicare typically cover and where they complement one another.

Medicare Part A (Hospital Insurance)

• Inpatient hospital stays

• Skilled nursing facility care

• Hospice care

• Limited home health services

Cost in 2025: Part A is usually premium-free if you or your spouse paid Medicare taxes for at least 40 quarters. The inpatient deductible is $1,676 per benefit period.

Medicare Part B (Medical Insurance)

• Doctor visits

• Outpatient care

• Lab tests and preventive services

• Durable medical equipment

Cost in 2025: The standard premium is $185 per month, with a $257 annual deductible. Higher-income earners pay more due to IRMAA.

PSHB Coverage

PSHB plans cover:

• Hospital and medical services (often overlapping with Medicare A and B)

• Prescription drugs

• Preventive and routine care

• Vision and dental services (varies by plan)

Once you are enrolled in both PSHB and Medicare, Medicare becomes your primary payer, and your PSHB plan becomes secondary. This coordination is key to avoiding duplication and waste.

How They Coordinate Benefits

When you’re enrolled in both Medicare and a PSHB plan, the plans work together in a coordinated fashion. Here’s how it typically plays out:

• Medicare pays first for any services it covers.

• Your PSHB plan pays second, often picking up some or all of what Medicare doesn’t.

• This can result in reduced or eliminated out-of-pocket costs for many covered services.

For example:

• If Medicare covers 80% of a doctor’s visit, your PSHB plan may cover the remaining 20%.

• For services not covered by Medicare, your PSHB plan might provide coverage, depending on the plan design.

Importantly, most PSHB plans waive cost-sharing (like deductibles or copayments) when you are enrolled in both Medicare Part A and Part B. This coordination can significantly reduce your financial burden.

What About Prescription Drugs?

Prescription coverage under PSHB is integrated with Medicare Part D for eligible retirees and family members. Here’s how it works:

• You are automatically enrolled in a Medicare Part D Employer Group Waiver Plan (EGWP) through your PSHB plan.

• You do not need to enroll separately in a standalone Medicare Part D plan.

Key benefits of this setup include:

• A $2,000 annual out-of-pocket cap for covered prescription drugs starting in 2025

• A $35 monthly cap on insulin (if applicable)

• An expanded network of retail and mail-order pharmacies

Be aware: If you opt out of this EGWP coverage, you lose all prescription drug benefits under your PSHB plan and may not be allowed to re-enroll.

Avoiding Duplicative Coverage

To avoid paying for unnecessary coverage:

• Do not enroll in a separate Medicare Part D plan if you’re already getting drug coverage through PSHB.

• Avoid buying private Medigap or Medicare Advantage plans. These are not designed to coordinate with PSHB and could create conflicting coverage.

• Understand your plan’s cost-sharing structure so you can see where Medicare and PSHB benefits align.

Wasting money often happens when retirees sign up for overlapping plans out of fear or confusion. But the PSHB structure in 2025 is built to work alongside Medicare—not compete with it.

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

If you are required to enroll in Medicare Part B and don’t, the consequences are serious:

• You lose your PSHB coverage entirely. There is no fallback or partial coverage.

• You may face a late enrollment penalty from Medicare if you sign up later, increasing your Part B premium by 10% for every 12-month period you delay.

• You will not have drug coverage under PSHB since Part B enrollment is tied to EGWP eligibility.

That’s why the deadline matters. The Special Enrollment Period for Medicare Part B for impacted annuitants ran from April 1 to September 30, 2024, to allow smooth compliance before the January 1, 2025 requirement took effect. If you missed that window, consult a licensed agent immediately to understand your next options.

The Value of Dual Enrollment in 2025

If you are eligible for Medicare and are enrolled in PSHB, dual enrollment generally results in:

• Lower out-of-pocket costs due to waived or reduced copays and deductibles

• More complete coverage through coordination

• Automatic drug coverage without needing a standalone Part D plan

• Continued access to provider networks familiar with federal health benefits

You also gain protection from the Medicare Part D out-of-pocket cap, which can be especially valuable if you take high-cost medications.

Your Costs Under Dual Coverage

Although you’ll pay both the PSHB premium and the Medicare Part B premium, your total out-of-pocket spending is likely lower because:

• PSHB plans often waive deductibles and coinsurance when Medicare is primary

• Medicare pays first, which reduces what your PSHB plan has to pay

• Drug costs are limited by Medicare’s new caps

This combination often results in fewer unexpected bills, especially during hospitalizations or chronic care.

Key Dates and Deadlines to Remember

• January 1, 2025: PSHB replaces FEHB for Postal Service workers and annuitants

• January 1, 2025: Medicare Part B enrollment becomes mandatory (with exceptions) for eligible annuitants and dependents

• Open Season (November to December each year): Review and change your PSHB plan

Stay vigilant during these periods. Missing key dates could result in losing benefits or paying penalties.

Making Smart Decisions With Your Coverage

To get the most from your combined Medicare and PSHB coverage in 2025:

• Review your PSHB plan’s Summary of Benefits

• Verify that your Medicare enrollment is active and includes Part A and B

• Keep a copy of your Medicare card and share it with your providers

• Contact a licensed agent listed on this website if you are unsure about how your benefits coordinate

This is not a one-size-fits-all system. Every retiree’s health and budget needs are different. But informed coordination helps you avoid paying more than necessary.

Coordinating Medicare and PSHB Is the Smartest Move You Can Make

When used together, Medicare and PSHB offer a powerful layer of protection. But that protection only works if you know the rules and take action at the right time. Enrolling in Medicare Part B when required, understanding how drug benefits are handled, and reviewing how your PSHB plan handles coordination are critical steps.

If you’re unsure where you stand, or if you want help reviewing your options, reach out to a licensed agent listed on this website. The right advice can save you both time and money.