Medicare 2026

FEHB and PSHB Medicare Drug Coverage: How Automatic Part D Enrollment Works

If you have federal retiree health coverage and are approaching Medicare, you've probably heard that your plan may bundle in Medicare prescription drug coverage automatically. That's true for many Federal Employees Health Benefits (FEHB) plans and for the new Postal Service Health Benefits (PSHB) program. Here's how the automatic enrollment works, what you can opt out of, and the choices you'll want to think through.

How the automatic enrollment works

FEHB plans already include creditable prescription drug coverage, meaning federal retirees don't technically need separate Medicare drug coverage to stay compliant with Part D rules. But many FEHB plans now offer an enhanced Medicare drug benefit for members who become Medicare-eligible. The Office of Personnel Management (OPM) says that if your FEHB plan offers such a benefit, the plan will automatically enroll you in Medicare Part D at no additional premium. You qualify with Part A only, Part B only, or both.

For PSHB — the program that replaced FEHB for Postal Service annuitants and their family members — Medicare Part D-eligible members automatically receive prescription drug coverage through a Medicare Part D Employer Group Waiver Plan, or EGWP. There is no extra premium, and no action is required to be enrolled.

The automatic design is meant to be simple: when you become Medicare-eligible, your drug coverage transitions behind the scenes so you keep filling prescriptions without a gap.

Opting out — and why to think carefully first

You can opt out. For FEHB plans, you contact the plan before Medicare drug coverage begins to decline it, or you disenroll later at any time. Disenrollment takes effect the first day of the following month.

PSHB works the same way in terms of the opt-out mechanics, but there's an important difference in consequence. If a PSHB annuitant or family member opts out of or disenrolls from the plan's Part D EGWP, they get no prescription drug coverage through PSHB at all — and the PSHB premium stays the same. OPM says those who opt out can re-enroll in the plan's Medicare drug benefits during the annual Federal Benefits Open Season or after a qualifying life event. If someone opts out in error, OPM says to contact the plan within 90 days.

One more technical point worth knowing: you can only be covered by one Medicare Part D plan or Medicare Advantage plan at a time. So if you enroll in an FEHB plan that offers Medicare drug benefits — or a Medicare Advantage plan offered through FEHB — any separate Part D or Medicare Advantage plan you had will end.

If you live outside the U.S.

PSHB annuitants and family members living outside the 50 states, the District of Columbia and the U.S. territories do not receive drug benefits through Medicare Part D, because Part D is not available overseas. Instead, they get drug coverage through their PSHB plan's regular pharmacy benefits.

The IRMAA piece for higher-income members

Even when an employer or retirement system pays your plan premiums, the Part D income-related monthly adjustment amount (IRMAA) is billed to you separately by Medicare. Not paying it can cost you your Medicare drug coverage.

For 2026, IRMAA applies when your 2024 modified adjusted gross income was above $109,000 (individual) or $218,000 (married filing jointly). The 2027 IRMAA income brackets and surcharges have not yet been announced; CMS typically publishes them in the fall with the Part B figures. The 2027 Part B standard premium and deductible are also announced in the fall and are not yet available.

What the national Part D numbers look like

Separate from your federal coverage, here are the Medicare program figures to anchor your planning:

• The Part D out-of-pocket cap is $2,100 in 2026 and $2,400 in 2027.
• In 2027, no Part D plan may charge a deductible higher than $700.
• The Part D base beneficiary premium for 2027 is $41.33, a national figure used to calculate the Part D late-enrollment penalty; actual plan premiums are set plan by plan.
• Annual Enrollment (also called Open Enrollment) for 2027 Medicare coverage runs October 15 – December 7, 2026, with changes effective January 1, 2027.
• The Social Security Administration announced a 3.6 percent cost-of-living adjustment for benefits payable beginning January 2027.

A note for people with Medicaid or Extra Help

If you qualify for Medicaid or the Extra Help (Low-Income Subsidy) program, you have a monthly Special Enrollment Period to move to Original Medicare paired with a stand-alone Part D plan, or to switch stand-alone Part D plans. Full-benefit dual-eligible individuals can also join an integrated Dual Eligible Special Needs Plan (D-SNP) in any month.

Weighing your options neutrally

Some federal retirees stick with their FEHB or PSHB coverage plus Medicare and let the automatic drug coverage do its work. Others compare that setup against Original Medicare with a Medigap policy and a stand-alone Part D plan, or against a Medicare Advantage plan. Each path has trade-offs — in costs, network rules, travel coverage, prescription formularies, and how claims are handled — and the right fit depends on your health, budget, and preferences. Reviewing your plan's annual notice of change each fall is a good habit.

Where to go for official information

For program rules, plan comparisons in your area, and help with enrollment questions, visit Medicare.gov or call 1-800-MEDICARE (1-800-633-4227), TTY 1-877-486-2048, available 24 hours a day, 7 days a week. For FEHB and PSHB specifics, OPM and your plan's member services are your primary sources.