Federal Employees & Postal Workers
FEHB, PSHB & Medicare: What Changed in 2025–2026
If you're a federal employee, retiree, or USPS postal worker turning 65, the rules around Medicare just got more complex — especially for postal workers under the new PSHB program. I help you navigate every decision at no cost.
Important 2025 Change for Postal Workers
As of January 1, 2025, USPS employees and retirees moved from FEHB to the new Postal Service Health Benefits (PSHB) program. Most Medicare-eligible postal retirees are now required to enroll in Medicare Part B to keep their PSHB coverage. If you're turning 65 in 2026, this affects you directly.
How FEHB Works with Medicare
The Federal Employees Health Benefits (FEHB) program covers roughly 8 million federal employees, retirees, and their families — making it one of the largest employer-sponsored health insurance programs in the country. When you turn 65 and become eligible for Medicare, FEHB and Medicare can work together powerfully.
When you have both Medicare Parts A and B and an FEHB plan, Medicare pays first (as the primary payer) and your FEHB plan pays second. Most FEHB plans waive their deductibles, copays, and coinsurance when Medicare has already paid — leaving you with little to no out-of-pocket cost for most medical services.
- Medicare Part A (hospital) is free for most federal retirees with 10+ years of federal service
- Medicare Part B ($202.00/month in 2026) is optional for FEHB retirees — but often worth it
- FEHB acts as secondary payer, filling gaps Medicare leaves behind
- No need for a separate Medigap plan — FEHB already fills the gaps
- Most FEHB plans have creditable drug coverage — no need for Part D
The New PSHB Program (Postal Workers Only)
The Postal Service Health Benefits (PSHB) program launched January 1, 2025, replacing FEHB for all USPS employees, retirees, and eligible family members. PSHB is administered by the Office of Personnel Management (OPM) and offers similar plan options to FEHB — but with one critical difference for retirees.
Choosing not to enroll in Part B has no effect on your FEHB coverage. You keep full benefits either way.
Failing to enroll in Part B when Medicare-eligible means losing your PSHB coverage entirely — unless you qualify for a specific OPM exemption.
The Part B requirement is the single biggest difference between FEHB and PSHB for retirees. If you're a USPS retiree turning 65 in 2026 and you don't enroll in Medicare Part B, you risk losing your PSHB coverage entirely — unless you qualify for one of the narrow exemptions below.
Who Is Exempt from the PSHB Part B Requirement?
Not every postal retiree is required to enroll in Part B. OPM established the following exemptions:
Already Medicare-eligible before January 1, 2025
If you were already eligible for Medicare (age 65 or older, or on Medicare due to disability) and enrolled in FEHB before January 1, 2025 without Part B, you are grandfathered and not required to enroll in Part B to keep PSHB.
Permanent residence outside the United States
Postal retirees who permanently reside outside the U.S. are exempt from the Part B requirement since Medicare generally does not cover overseas care.
Medicare Part B enrollment would cause financial hardship
OPM has indicated limited hardship exemptions may be available in certain circumstances. Contact OPM directly for details.
Not sure if you qualify for an exemption? Call William at (386) 871-3858 for a free review of your specific situation. Getting this wrong can cost you your health coverage.
Should You Enroll in Medicare Part B? (FEHB Retirees)
For non-postal federal retirees, Part B enrollment is a choice — not a requirement. Here's how to think through the decision:
Enroll in Part B if…
- You have frequent doctor visits or specialist care
- Your FEHB plan waives cost-sharing when Medicare pays first
- You want near-zero out-of-pocket costs for most services
- You have a high-deductible FEHB plan
- You want the most comprehensive coverage possible
Consider skipping Part B if…
- You are in excellent health with minimal medical needs
- Your FEHB plan already has low cost-sharing without Medicare
- The $202.00/month Part B premium is a significant budget concern
- You have a comprehensive FEHB plan with low deductibles
- You plan to return to federal employment (active employee coverage)
Important: If you delay Part B and later decide you want it, you may face a 10% permanent premium penalty for every 12-month period you were eligible but didn't enroll — unless you qualify for a Special Enrollment Period. Federal employees with FEHB do qualify for an SEP when they retire, so you won't be penalized for delaying while actively employed.
Your Medicare Enrollment Timeline (Federal Retirees)
3 Months Before Your 65th Birthday
Your Initial Enrollment Period (IEP) begins. You can sign up for Medicare Parts A and B through SSA.gov or your local Social Security office. Part A is usually free — enroll even if you're skipping Part B.
Your 65th Birthday Month
The middle of your 7-month IEP. Coverage starts the month you turn 65 if you enrolled in the 3 months prior.
3 Months After Your 65th Birthday
Your IEP closes. If you haven't enrolled in Part B yet, you'll need to wait for the General Enrollment Period (Jan 1–Mar 31 each year) or qualify for an SEP.
When You Retire from Federal Service
Your 8-month Special Enrollment Period begins. You can enroll in Part B without penalty during this window. This is your safety net if you delayed Part B while working.
After Enrolling in Part B
Notify your FEHB plan that you now have Medicare. Most plans will automatically coordinate benefits. Review your FEHB plan's Medicare coordination rules to maximize your savings.
Frequently Asked Questions
2026 Key Numbers
Confused by PSHB or FEHB?
William has helped dozens of federal and postal retirees navigate this transition. Call for a free review.
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Federal Employee or Postal Worker Turning 65?
The FEHB and PSHB rules are complex — especially with the 2025 PSHB changes. William Gray helps federal and postal retirees make the right Medicare decisions at no cost to you.