PSHB Medicare Part B Mandatory Enrollment: Rules, Exemptions, and Costs

The Mandate in Plain Terms

The Postal Service Reform Act created the Postal Service Health Benefits (PSHB) program, which replaced FEHB for USPS employees and annuitants effective January 1, 2025. The most consequential change for retirees: most postal annuitants who are entitled to Medicare Part A must also enroll in Medicare Part B to keep their PSHB health coverage.

This isn't a recommendation or a best practice — it's a statutory requirement. If you're a postal annuitant entitled to premium-free Part A (which covers most people at 65 who have 40 quarters of work history) and you don't enroll in Part B, you lose your PSHB coverage entirely. If you disenroll from Part B after initially enrolling, you also lose PSHB coverage — and the termination is permanent.

Who Is Exempt

Four categories of postal annuitants are exempt from the mandatory Part B enrollment:

1. Annuitants who retired on or before January 1, 2025. If your CSRS or FERS annuity began before the PSHB transition date, the mandate doesn't apply to you. You remain enrolled in PSHB (which replaced your FEHB plan automatically), and Medicare Part B enrollment remains optional — exactly as it was under the old FEHB structure.

2. Active postal employees who were age 64 or older as of January 1, 2025. This grandfathering provision protects workers who were close enough to Medicare eligibility at the transition date that forcing Part B enrollment would have created a financial hardship. When these employees retire, the Part B mandate does not apply.

3. Annuitants who permanently reside outside the United States and its territories. Medicare doesn't cover services outside the U.S. (with narrow exceptions), so requiring Part B enrollment for overseas retirees would impose costs without corresponding benefits.

4. Annuitants eligible for VA or Indian Health Service coverage. If you qualify for comprehensive health care through the Department of Veterans Affairs or IHS, the Part B mandate is waived.

If you don't fall into one of these categories and you retire from USPS after January 1, 2025, Medicare Part B enrollment at 65 is mandatory to maintain health coverage.

The Part B Premium in 2026

The standard Medicare Part B premium is $202.90 per month in 2026. If you're receiving Social Security benefits, the premium is automatically deducted from your monthly Social Security payment. If you haven't claimed Social Security yet, you'll receive a bill from Medicare (typically quarterly) or can set up automatic payment through Medicare Easy Pay.

Higher-income retirees pay more. Income-Related Monthly Adjustment Amounts (IRMAA) add surcharges to the base premium based on your modified adjusted gross income from two years prior:

For postal retirees who received a retroactive lump sum under the Social Security Fairness Act in 2025, that one-time payment inflated their 2025 MAGI — which means their 2027 Part B premiums could be subject to an IRMAA surcharge they wouldn't normally face. Filing Form SSA-44 to request a recalculation based on a more representative income year may reduce the surcharge.

How PSHB Plans Work With Medicare

Under PSHB, Medicare Part A and Part B serve as the primary payer for covered services, and your PSHB plan provides secondary coverage. This reverses the order from how FEHB worked for many retirees — under FEHB, the federal health plan was often primary.

The practical effect is that PSHB plans are designed with Medicare integration in mind. Many PSHB plans are Medicare Advantage-style products that wrap around Parts A and B, potentially offering lower out-of-pocket costs than standalone FEHB plans did. Some also include Part D prescription drug coverage.

Because Medicare is the primary payer, your PSHB plan's premiums are generally lower than comparable FEHB premiums were. But you're now paying the Part B premium on top of the PSHB premium — so your total health care cost may be higher, lower, or roughly the same depending on which plan you choose and your personal health care usage.

The Late Enrollment Penalty

If you don't enroll in Part B during your Initial Enrollment Period (the seven-month window around your 65th birthday) and don't qualify for a Special Enrollment Period through active employment coverage, you face a late enrollment penalty. The penalty increases your Part B premium by 10% for every full 12-month period you could have been enrolled but weren't. This surcharge applies for as long as you have Part B.

For postal employees still actively working past 65, PSHB coverage qualifies as "coverage based on current employment" for purposes of the Special Enrollment Period. This means you won't face a late enrollment penalty if you sign up for Part B when you retire, even if that's years after 65. But once you retire and your PSHB coverage shifts to retiree status, the clock starts — delay at that point and the penalty accumulates.

Coordinating Part B With Social Security Claiming

The timing of your Social Security claim and your Part B enrollment are linked through premium mechanics but independent as legal decisions. You can enroll in Part B at 65 without claiming Social Security — you'll just pay the premium by direct bill instead of automatic deduction.

However, if you're delaying Social Security past 65 for the delayed retirement credits (8% per year from FRA to age 70), the direct premium billing can be an administrative hassle. Some retirees find it simpler to claim Social Security at 65 or FRA and let the premium deduction happen automatically, even if the optimal claiming strategy would be to wait.

The Social Security for Federal Employees guide covers the complete claiming timeline from the FERS supplement through age 70, including how Medicare Part B premiums, PSHB mandates, and the post-repeal benefit adjustments interact at each milestone.

See more United States guides →