Should USPS Annuitants Stay Enrolled in the PSHB program after Age 65?

You could drop PSHB coverage once you enroll in Parts A and B. But you should understand the implications of that choice before deciding to do so.

Medicare Part B requires you to pay 20 percent of the cost of doctors’ fees, and deductibles, with no upper limit. The Medicare Part A hospital deductible for 2024 is about $1,676 and the Part B medical deductible is $257. To obtain Medicare coverage roughly comparable to PSHB plans you would have to pay a Part B premium of about $185 a month, or about $2,220 for the year and a Part D premium for drug coverage of about $30 a month and $400 for the year (there is a wide range of prescription drug premiums, some lower and some higher). Therefore, the total annual premium cost for all three parts of Medicare is about $2,600 a person—higher than in many PSHB plans and with cost-sharing worse than most and no protection against catastrophically high medical expenses.

You could improve your protection by enrolling in what are called “Medigap” plans, but only at the cost of paying another $2,000 a year in premium, the exact amount depending on the Medigap plan chosen. Therefore, if paying both PSHB and Medicare premiums presses you financially, and you are not sure which program to retain, the PSHB program alone is a better bargain than Medicare alone, unless you are willing to enroll in a Medicare Advantage plan. And even then you should never drop PSHB coverage completely, but “suspend” enrollment with the option of rejoining in the next Open Season.

Moreover, almost all Federal annuitants over age 65 have premium-free Medicare Part A, and in combination with almost all PSHB plans will never have to pay more than a few hundred dollars for hospital costs. Finally, PSHB plans, unlike Medicare (except in parts of Canada and Mexico), have emergency overseas care.