Under the PSHB Medicare Part B rule, a postal retiree who is entitled to Medicare Part A generally must be enrolled in Part B to keep Postal Service Health Benefits coverage. Prescription drugs for Medicare-eligible postal retirees come through each PSHB plan's Medicare Part D Employer Group Waiver Plan (EGWP). Both rules have exceptions and deadlines, and both deserve a review during open season.
Open season runs November 9 through December 14, 2026. PSHB changes take effect January 1, 2027. Here is what advisors should cover with postal clients.
The PSHB Medicare Part B Requirement
The rule is in 5 CFR 890.1604. A Postal Service annuitant who is entitled to Medicare Part A must be enrolled in Medicare Part B to enroll or continue enrollment in a PSHB plan. A covered family member who is entitled to Part A must also be enrolled in Part B, unless the family member or the annuitant qualifies for an exception.
Survivor annuitants follow similar rules, with their own exceptions.
Who is excepted
The regulation lists these exceptions for annuitants:
- Postal Service annuitants who were retired on or before January 1, 2025 and were not both entitled to Part A and enrolled in Part B on that date.
- Postal Service employees who were 64 or older on January 1, 2025.
- People who live outside the United States and can document that residency.
- People enrolled in VA health care under 38 U.S.C. chapter 17, with VA documentation.
- People eligible for Indian Health Service care, with IHS documentation.
Family members have parallel exceptions. When the annuitant is excepted, the family member generally is too. Each exception has documentation rules, so clients who rely on one should confirm their paperwork is in order.
Why this matters for younger postal workers
The exceptions mostly protect people who were older or already retired when PSHB began. Younger postal employees should assume they will need Part B when they are retired and entitled to Part A. That makes the Part B premium a permanent part of their retirement budget.
The 2027 standard Part B premium had not been announced by CMS at the time of writing. Clients should check Medicare.gov for the current figure rather than relying on estimates.
The Late Enrollment Penalty Question
Some postal annuitants enrolled in Part B during the 2024 Special Enrollment Period created by the Postal Service Reform Act. OPM's PSHB page explains that USPS pays the Part B late enrollment penalty for those who enrolled during that 2024 SEP and remain enrolled in PSHB or suspend their PSHB coverage.
There is a catch. OPM notes that if the person cancels PSHB coverage for other reasons, they become responsible for the penalty in addition to the monthly Part B premium. Normally the penalty lasts as long as the person has Part B. Clients who used the SEP should think carefully before canceling PSHB.
Prescription Drugs Through the Part D EGWP
Under 5 CFR 890.1616, every PSHB carrier must provide prescription drug benefits to Part D-eligible postal annuitants and family members through a Medicare Part D EGWP. Carriers group-enroll eligible members automatically at the end of each open season and after a qualifying life event.
OPM describes several advantages of the EGWP:
- No additional premium, and no action required to get coverage.
- Out-of-pocket costs for covered drugs that are no higher, and often lower, than regular PSHB prescription coverage.
- A $35 monthly cap on insulin products.
- An annual cap on out-of-pocket Part D drug costs.
- Access to in-network and out-of-network pharmacies.
Opting out has a real cost
Part D-eligible members may opt out of the EGWP, but OPM states plainly that they will then receive no prescription drug coverage through PSHB, even though they pay the same premium. OPM strongly encourages anyone considering opting out to make sure it fits their situation.
If someone opts out or is disenrolled in error, OPM says they may contact the PSHB plan within 90 days to have coverage reinstated retroactive to the effective date.
PDP and MAPD options
Every PSHB plan offers a prescription drug plan (PDP) EGWP. Some also offer a Medicare Advantage plan with prescription drug coverage (MAPD). Clients choosing between them should compare networks, costs and how the plan coordinates with Part B.
What Changes for Plan Year 2027
OPM's plan year 2027 open season highlights include several PSHB items:
PSHB for plan year 2027
17
Carriers
65
Plan options
+8.2%
Average enrollee premium share
One PSHB option is leaving
The UnitedHealthcare Choice Plus Primary Postal East option is terminating. It covered Alabama, Arkansas, the District of Columbia, Florida, the Atlanta metro area in Georgia, Illinois, Iowa, Kansas, Kentucky, Louisiana, Maryland, Mississippi, Missouri, North Carolina, Oklahoma, Pennsylvania, Tennessee, Texas and Virginia. Enrollees who do not choose a new plan will be moved to FEP Blue Focus. Clients in that option should compare plans now rather than accept the default.
Other 2027 changes
- The average PSHB total premium rises 6.7%, with the enrollee share up 8.2%.
- OPM is launching a new PSHBS enrollment portal.
- All FEHB and PSHB carriers will require documented intensive behavioral therapy before and during GLP-1 treatment for weight management.
Planning for Postal Employees Still Working
Clients who are still working for the Postal Service need a different conversation. The Part B requirement applies when they become annuitants entitled to Part A, so the planning question is timing. Advisors should help them understand when Medicare enrollment periods open, how working coverage interacts with Medicare, and what Part B will cost once they retire.
Postal clients also need to understand that PSHB is separate from FEHB. Plan choices, premiums and rules are not identical, and advice written for other federal employees may not apply. When a postal client reads a general FEHB article, it is worth checking whether the PSHB rule is different.
Finally, remind clients that the government contribution formula for PSHB uses the same lesser-of approach described in OPM's highlights, so premium increases can still fall more heavily on the enrollee share.
A Postal Client Review Checklist
- Is the client, or a family member, entitled to Medicare Part A now or soon?
- Does an exception to the Part B requirement apply, and is the documentation in place?
- Did the client enroll in Part B during the 2024 SEP? If so, explain the penalty rule before any cancellation.
- Is the client enrolled in the EGWP, and do they understand what opting out means?
- Is the client in the terminating UnitedHealthcare option?
- Has the client compared 2027 premiums and plan options before December 14?
Bringing It Together
PSHB rewards clients who plan for Medicare and penalizes those who do not. Postal clients need an advisor who understands both systems. For broader premium context, see our post on 2027 FEHB and PSHB premiums, and for the Social Security side of retirement, see 2027 Social Security numbers for federal clients.
FedEd Academy™ covers PSHB and Medicare coordination in its live program, and advisors who want a recognized credential can explore the RFBS℠ designation.
Part B, the Part D EGWP and one terminating plan. Those are the PSHB items to raise with every postal client before December 14. A short review now can prevent lost drug coverage or a lifetime penalty later.
Frequently asked questions
Do postal retirees have to enroll in Medicare Part B to keep PSHB?
Under 5 CFR 890.1604, a Postal Service annuitant who is entitled to Medicare Part A must be enrolled in Medicare Part B to enroll or continue enrollment in PSHB, unless an exception applies. The same rule applies to covered family members who are entitled to Part A, with their own exceptions.
Who is excepted from the PSHB Medicare Part B requirement?
Exceptions include annuitants who were already retired on January 1, 2025 and were not both entitled to Part A and enrolled in Part B on that date, employees who were 64 or older on January 1, 2025, people living outside the United States, people enrolled in VA health care, and people eligible for Indian Health Service care. Documentation requirements apply.
How do PSHB plans provide prescription drugs to Medicare-eligible retirees?
Postal annuitants and family members who are Part D eligible receive prescription drug coverage through their PSHB plan's Medicare Part D Employer Group Waiver Plan, or EGWP. Carriers group-enroll eligible members automatically.
What happens if a postal retiree opts out of the Part D EGWP?
OPM says those who opt out will not receive any prescription drug coverage through PSHB, even though they pay the same premium. If someone opts out or is disenrolled in error, they may contact the plan within 90 days to request reinstatement.
Will USPS pay the Medicare Part B late enrollment penalty?
OPM says USPS pays the Part B late enrollment penalty for annuitants and family members who enrolled in Part B during the 2024 PSRA Special Enrollment Period and remain enrolled in PSHB or suspend PSHB coverage.
