If you’re a postal retiree and you opt out of one piece of mail from Medicare, you can lose your prescription drug coverage. Not reduced. Gone.
That’s one of four PSHB rules that can cost a postal family money or coverage, and most people have heard the wrong version of at least one of them. With Open Season starting November 9, here’s what you need to know.
PSHB in 30 seconds
The Postal Service Health Benefits (PSHB) Program replaced FEHB for postal employees, postal retirees and their families on January 1, 2025.
- OPM still runs it, with the same funding formula as FEHB.
- It’s postal only. Non-postal federal employees and retirees stay in FEHB.
- Two exceptions: if you’re covered as a family member on someone else’s FEHB plan (for example, a spouse who works for another agency), you stay on that plan. Former postal employees who were on Temporary Continuation of Coverage before 2025 also stayed in FEHB.
2027 PSHB by the numbers
| PSHB 2027 | |
|---|---|
| Average enrollee premium increase | +8.2% |
| Carriers | 17 |
| Plan options | 65 |
For comparison, FEHB enrollees are seeing a 10.9% average increase. Averages hide a lot, though. Your plan’s increase could be much higher or lower, so check your own plan’s 2027 rates.
Retiring? Medicare Part B is required
This is the rule that surprises people most. If you’re a postal retiree entitled to premium-free Medicare Part A, you generally must enroll in Medicare Part B to keep your PSHB coverage. Family members who are entitled to Part A must also enroll in Part B to stay covered.
If you’re still working, this doesn’t apply to you yet. The requirement starts when you retire, not before.
The five exceptions
You’re not required to enroll in Part B if you:
- Were a postal retiree on or before January 1, 2025, and weren’t already enrolled in both Part A and Part B on that date
- Were a postal employee age 64 or older on January 1, 2025
- Live outside the United States (U.S. territories count as inside)
- Are enrolled in VA health care
- Are eligible for services from the Indian Health Service
Read exception #1 carefully. You may have heard “if you retired before 2025, you’re exempt.” That’s not quite right. If you retired before 2025 but already had Part B on January 1, 2025, this exception doesn’t apply to you.
Survivors have a shorter list. Survivor annuitants don’t get the age-64 exception.
What if you were required and skipped Part B?
- No PSHB in retirement. According to OPM, you won’t be eligible for PSHB coverage unless you meet an exception.
- No do-over. OPM says enrolling in Part B later doesn’t restore your PSHB eligibility.
- A Medicare late penalty. Under general Medicare rules, your Part B premium goes up 10% for each full 12-month period you could have had Part B but didn’t, for as long as you have Part B.
The 2024 special enrollment period that let some people enroll without a penalty closed on September 30, 2024. If you’re approaching retirement, settle your Part B decision before you leave.
Don’t opt out of your plan’s drug coverage
If you have Medicare, your PSHB plan automatically enrolls you in its Medicare Part D drug plan (called an EGWP). Medicare may send you mail asking if you want to opt out.
In PSHB, opting out means you lose prescription drug coverage under your plan. This is one of the biggest differences from FEHB. If you get a letter like this and you’re not sure what it means, call your plan before you respond.
Your 5-year clock didn’t reset
To keep health coverage in retirement, you generally need to be enrolled for the five years right before you retire. Many postal workers worry the 2025 switch to PSHB restarted that clock. It didn’t.
- FEHB years before 2025 count.
- PSHB years since 2025 count.
- A mix of both counts.
- You still need to be enrolled in a PSHB plan right before you retire.
Part B premium help: plan by plan
The PSHB program itself doesn’t pay any of your Part B premium. But some individual PSHB plans offer credits or health reimbursement account (HRA) dollars that can help offset it.
These benefits vary by plan and can change every year. It’s one of the best reasons to compare plans during Open Season instead of rolling over.
What’s postal-specific this Open Season
- One plan is leaving PSHB in 2027. If you’re in it and do nothing, you’ll be moved to Blue Cross Blue Shield FEP Blue Focus. Check whether that plan fits your needs before Open Season ends.
- You’ll need documents to add a family member. Under a new rule from the 2025 budget law, every family member added during Open Season must be verified. Have marriage certificates, birth certificates or other proof ready when you make your election. Your enrollment won’t finalize without it.
Your Open Season checklist
- Check your plan’s 2027 premium and benefit changes
- Confirm your plan isn’t leaving PSHB
- Compare Part B credits or HRA dollars if you have Medicare
- Check your prescriptions against the plan’s 2027 drug list
- Gather documents if you’re adding a family member
- Retiring soon? Make your Part B decision before you leave
Open Season runs from Monday, November 9 through Monday, December 14, 2026.
The bottom line
PSHB isn’t complicated once you know the rules that matter: Part B is generally required in retirement, opting out of your plan’s drug coverage can cost you your prescriptions, your 5-year clock didn’t reset, and you’ll need documents to add family members this year.
Retiring from USPS? Settle Part B before you leave. Are you a federal employee within 12 months of retirement, or already retired, with $1 million+ invested? Book a free 15-minute Fit Call. You can also download our free Federal Retirement Roadmap.
Educational only, not tax, investment, insurance, or legal advice. Rules and exceptions can depend on your individual situation, so confirm your eligibility with OPM, Medicare, or your plan. Please consult your own tax, legal and financial advisors for personalized advice. Haws Federal Advisors | HawsFederalAdvisors.com