Postal worker retirement guide: FERS, PSHB and Medicare Part B
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Published November 1, 2026 · By the OnPAR Federal Retirement Education editorial team · Last reviewed Nov 2026
Short answer: Postal employees retire under the same FERS (or CSRS) rules as other federal workers: the same pension formula, MRA and TSP. Health coverage is different. Since January 1, 2025, Postal employees and annuitants are in the Postal Service Health Benefits (PSHB) Program, not regular FEHB plans. Most Postal workers who retire after January 1, 2025 must enroll in Medicare Part B when they become eligible to keep PSHB in retirement (OPM PSHB, 5 CFR 890.1604).
Your FERS pension
- Formula: 1% of your High-3 per year of service, or 1.1% if you retire at 62 or older with 20+ years (OPM).
- When you can retire: 62 with 5 years, 60 with 20, MRA with 30, or MRA with 10 (reduced 5% a year under 62). Your MRA is 55 to 57, depending on birth year (OPM).
- Early outs: with an approved offer, 50 with 20 years or any age with 25. See VERA and VSIP.
- Still in CSRS? See CSRS vs FERS.
Planning tools at USPS
The USPS Employee and Labor Relations Manual says (ELM 589):
- Annuity estimates come through eRetire on LiteBlue. They're also sent automatically once a year after you meet optional retirement age and service, or on request within three years of your first eligibility date.
- Individual retirement counseling is available from the HR Shared Service Center (HRSSC), mainly by phone.
- At least one FERS retirement seminar is held each fiscal year, open to all employees and their spouses.
Applying
OPM's Online Retirement Application (ORA) works like this: HR starts your application, you get an email invitation at your personal email, and you sign in with Login.gov to finish and upload your documents (OPM ORA). Start through eRetire on LiteBlue or the HRSSC. See your first FERS payment.
PSHB in retirement
- PSHB is a separate program within FEHB, run by OPM. Postal employees and annuitants can't enroll in or keep a regular FEHB plan as of January 1, 2025 (OPM).
- OPM says the general FEHB rules also apply to PSHB unless stated otherwise (OPM). That includes the requirement to have coverage for your last 5 years of service (or since first eligible) to keep it in retirement. See FEHB in retirement.
- The PSHB plan year runs January 1 to December 31 (OPM).
- You can change PSHB plans during Open Season, November 9 to December 14, 2026.
Medicare Part B: the big difference
Under the Postal Service Reform Act of 2022, a Postal annuitant entitled to Medicare Part A must be enrolled in Part B to enroll in or keep PSHB. The same applies to Medicare-eligible family members (5 CFR 890.1604). Regular FEHB has no such rule (OPM).
If you skip Part B when you're first eligible and don't qualify for an exception, OPM says you won't be eligible for PSHB in retirement, and you can't get it back even if you enroll in Part B later (OPM).
Exceptions (OPM, 5 CFR 890.1604(d)):
- You were a Postal annuitant on or before January 1, 2025, and weren't already in Part B.
- You were a Postal employee age 64 or older on January 1, 2025.
- You live outside the United States and its territories (documentation required).
- You're enrolled in certain VA health care.
- You're eligible for Indian Health Service care.
Family members of an excepted annuitant are generally also excepted.
Prescription drugs (Part D)
If you're eligible for Part D, your PSHB plan automatically enrolls you in its Medicare drug benefits. OPM warns that if you opt out and don't join a separate Part D plan, you'll have no drug coverage at all. You can re-enroll at Open Season or after a qualifying life event, and you should contact your plan within 90 days if you opted out by mistake (OPM).
Taxes
USPS ELM 589.5 notes that FERS annuities are partly tax-free (the return of your contributions) and otherwise taxable. See how the FERS pension and TSP are taxed in 2026.
Your Postal retirement checklist
1. Get an annuity estimate in eRetire.
2. Confirm you'll have 5 years of PSHB/FEHB coverage before you retire.
3. Know your Medicare date. Sign up for Part B on time unless you have an exception.
4. Schedule HRSSC counseling, then start your application.
5. Use our FERS retirement calculator and book a free call with questions.
Questions and answers
Do postal workers retire under FERS?
Yes. Postal employees use the same FERS (or CSRS) pension rules as other federal employees.
Do Postal retirees have to enroll in Medicare Part B?
Generally yes. A Postal annuitant entitled to Medicare Part A must be enrolled in Part B to enroll in or keep PSHB, unless an exception applies (5 CFR 890.1604).
Who is exempt from the PSHB Part B requirement?
Postal annuitants on or before Jan 1, 2025 not already in Part B, employees age 64+ on Jan 1, 2025, people living abroad, certain VA enrollees, and those eligible for Indian Health Service care.
What happens if I skip Part B?
OPM says if you do not enroll and have no exception, you will not be eligible for PSHB in retirement, even if you enroll in Part B later.
Can Postal retirees keep a regular FEHB plan?
No. OPM says Postal employees and annuitants could no longer enroll in or continue an FEHB plan as of Jan 1, 2025, except as a family member on someone else's non-Postal FEHB plan.