Key Takeaways

• Simply having Medicare doesn’t guarantee cost savings under the Postal Service Health Benefits (PSHB) Program. You need to understand how Parts A and B actually coordinate with your PSHB plan.

• Enrolling in Medicare Part B is mandatory for many PSHB annuitants in 2025, and failing to do so can result in a complete loss of health coverage through PSHB.

Why Medicare Alone Isn’t Enough Under PSHB

If you’re approaching Medicare eligibility and enrolled in the Postal Service Health Benefits (PSHB) Program, it’s essential to rethink what Medicare actually means for your health coverage. Many assume that Medicare will automatically take over the bulk of their costs or that simply enrolling in Medicare guarantees comprehensive protection.

The truth is more nuanced. In 2025, the interaction between Medicare and PSHB can either work to your advantage or create gaps in your coverage, depending on the choices you make.

The Medicare Part B Requirement Under PSHB

As of January 1, 2025, the rules have changed. If you’re a Medicare-eligible annuitant enrolled in a PSHB plan, you are now required to enroll in Medicare Part B to maintain full benefits under PSHB. This requirement applies unless you meet a narrow set of exceptions:

• You retired on or before January 1, 2025

• You were age 64 or older as of January 1, 2025

• You reside outside the U.S.

• You receive care exclusively through the Indian Health Service or Department of Veterans Affairs

If you fall outside these exceptions and don’t enroll in Part B, you may lose your PSHB coverage entirely.

Understanding the Financial Interaction Between Medicare and PSHB

Many PSHB plans are designed to work in tandem with Medicare, especially when both Parts A and B are in effect. This coordination can reduce your out-of-pocket costs, but only if both components are in place.

Here’s how the alignment typically works:

• Medicare pays first, covering hospital (Part A) and medical (Part B) services.

• PSHB becomes secondary payer, picking up remaining eligible costs like copayments, coinsurance, and deductibles.

But if you’re missing Part B, your PSHB plan may treat you as if you have full Medicare and refuse to cover the services that Part B would have covered. This is where surprises occur—and they aren’t the good kind.

Common Misunderstandings That Create Coverage Gaps

Many retirees mistakenly believe one of the following:

• “I have Medicare Part A. That’s enough.”

• “I can skip Part B and still keep my PSHB plan.”

• “PSHB will automatically coordinate with Medicare, no matter what.”

These assumptions no longer hold true under PSHB in 2025. If you decline Medicare Part B without a qualifying exemption, your PSHB plan may either terminate your enrollment or significantly reduce what it pays. That means you could be liable for thousands in uncovered medical expenses.

Why Medicare Part B Matters More in 2025

The importance of Part B enrollment under PSHB isn’t just administrative. It has direct cost implications:

• Waived or reduced deductibles: Many PSHB plans waive your plan deductible entirely when you have both Medicare Parts A and B.

• Lower copayments and coinsurance: Your share of costs may be dramatically lower when PSHB acts as a secondary payer.

• Enhanced coordination of benefits: Services like outpatient surgery, diagnostic imaging, and doctor visits are better covered when Medicare Part B is involved.

Skipping Part B may mean forfeiting these cost-saving features.

The Timeline That Matters

If you are turning 65 in 2025 and are eligible for Medicare, you must enroll in Part B during your Initial Enrollment Period (IEP)—the 7-month window that starts 3 months before your 65th birthday month and ends 3 months after.

Miss it, and you could face:

• Late enrollment penalties: These are lifelong surcharges added to your Part B premium.

• Gaps in PSHB coverage: Your PSHB plan may drop or restrict benefits.

Alternatively, if you’re already enrolled in PSHB and become eligible for Medicare due to disability, you must act promptly when you receive your eligibility letter.

What Happens If You Delay Part B Enrollment?

Delaying Part B when you’re required to have it can trigger a cascade of issues:

• Loss of PSHB coverage if you don’t meet the exemption criteria

• Denial of claims for services Medicare Part B would have covered

• Limited opportunity to re-enroll in both Part B and your PSHB plan later on

There was a Special Enrollment Period (SEP) for Part B from April through September 2024 for those affected by the transition, but this window is now closed. If you missed it and still haven’t enrolled, act now to prevent further consequences.

What About Prescription Drug Coverage?

PSHB plans now offer integrated Medicare Part D drug coverage through an Employer Group Waiver Plan (EGWP). Here’s what this means for you in 2025:

• You’re automatically enrolled in the drug plan if you have both PSHB and Medicare

• The Part D coverage includes a $2,000 annual cap on out-of-pocket drug costs

• You benefit from reduced copays on brand-name and specialty drugs

But again, if you opt out of Medicare, you lose access to this enhanced drug coverage under PSHB.

Can You Opt Out of Medicare Part B?

Yes—but you must be willing to accept the trade-offs. Opting out may:

• Cause termination of your PSHB plan

• Result in higher out-of-pocket medical expenses

• Limit your ability to rejoin Part B or your PSHB plan in the future

This is why the 2025 PSHB system treats Medicare enrollment as a central part of your coverage—not just a supplement.

Additional Benefits When Medicare and PSHB Work Together

When you have both PSHB and Medicare in 2025, you often gain access to additional value:

• Wider provider networks: More doctors accept Medicare than PSHB alone

• Simplified billing: Claims coordination means fewer surprise bills

• Potential Part B premium reimbursement: Some plans help cover your premium, though this varies by plan

To get these advantages, Medicare Part B must be active and in good standing.

Coordinating Medicare and PSHB Effectively

To ensure your coverage works as intended, take these steps:

• Enroll in Medicare Parts A and B as soon as you’re eligible

• Confirm your enrollment with your PSHB plan to avoid claim issues

• Review your plan brochure to see what cost-sharing is waived or reduced when Medicare is primary

• Avoid gaps by acting within the proper enrollment timelines

Also remember, PSHB premiums and benefits vary by plan. Reviewing your plan during each Open Season (November through December) helps ensure it still meets your needs in tandem with Medicare.

What PSHB Enrollees Need to Watch Going Forward

The 2025 landscape introduces more stringent rules around Medicare coordination. Watch for these developments:

• Future Open Season changes to how benefits interact with Medicare

• Updates to Medicare cost thresholds, such as new IRMAA brackets

• Enhanced enforcement of the Part B enrollment requirement

These factors could affect your healthcare strategy and expenses, so staying informed is critical.

Protecting Your Coverage Starts with the Right Medicare Decision

Medicare might seem like an automatic benefit, but under PSHB in 2025, it functions more like a required building block. If you don’t add it to your plan the right way, the entire structure of your health coverage can falter.

You don’t have to figure it out alone. If you’re unsure about how Medicare fits with your PSHB plan, speak with a licensed agent listed on the website. They can guide you through your enrollment timeline, assess your exemption status, and help you understand what you may be risking by opting out.