Key Takeaways

• Medicare and PSHB deductibles function independently, and they do not automatically offset each other. This means you may face two separate deductibles if you are enrolled in both.

• Understanding which plan pays first, how much you must pay out of pocket, and which costs are waived or reduced with dual enrollment is essential to managing your annual healthcare expenses.

The Basics: Medicare and PSHB Deductibles Explained

Both Medicare and the Postal Service Health Benefits (PSHB) program include deductibles, but they apply differently depending on your enrollment status, eligibility, and the type of care you receive.

• Medicare Part A covers inpatient hospital services. In 2025, the Part A deductible is $1,676 per benefit period.

• Medicare Part B covers outpatient and physician services. The annual Part B deductible is $257 in 2025.

• PSHB deductibles vary by plan. In-network deductibles typically range from $350 to $500 annually for low-deductible plans and from $1,500 to $2,000 for high-deductible health plans. Out-of-network deductibles are generally higher.

If you are retired and enrolled in both Medicare and a PSHB plan, you are likely to deal with some form of overlap. But the question is: how do these deductibles interact, and what does that mean for your wallet?

Who Pays First: Understanding Coordination of Benefits

Coordination of benefits (COB) determines the order in which your health plans pay. Here is how it works in the PSHB context:

• Medicare is primary for most annuitants and their eligible family members if you are retired and enrolled in both Medicare and PSHB.

• PSHB becomes secondary, covering costs that Medicare does not—provided the service is covered by both plans.

• If you are an active postal employee over age 65, PSHB remains primary and Medicare is secondary.

This distinction is critical because it affects how your deductibles are applied. Medicare applies its deductible first, and only after that will your PSHB plan step in to pay its share. If Medicare pays in full (after its deductible), your PSHB plan might not need to contribute at all.

Two Deductibles, One Service? Yes, That’s Possible

If you receive care that both Medicare and your PSHB plan cover, you might assume that one deductible offsets the other. That’s rarely the case.

Here’s what typically happens:

• You pay the Medicare Part B deductible out of pocket first for outpatient services.

• Once that’s met, Medicare pays its share (usually 80%), and your PSHB plan pays part or all of the remaining 20%, depending on your plan.

• Your PSHB plan may waive its own deductible if Medicare has already paid its portion, but this depends entirely on the plan.

If your PSHB plan does not waive its deductible, then you could face paying both deductibles in a single year: one for Medicare, and one for PSHB.

How PSHB Plans Handle the Medicare Deductible

Some PSHB plans are more generous than others in terms of integrating with Medicare. In 2025, a number of plans offer reduced or waived deductibles if you are enrolled in both Medicare Part A and B.

Common features you may see:

• Waived PSHB deductibles when Medicare is primary.

• Reduced coinsurance or copayments for services Medicare already paid on.

• Automatic crossover billing, where Medicare sends claims directly to PSHB, streamlining reimbursements.

However, not all PSHB plans offer this level of coordination. That’s why you should never assume your PSHB deductible will vanish simply because you enrolled in Medicare.

Inpatient vs. Outpatient Deductibles

Let’s separate the two major categories of care, because the deductible behavior differs based on the type of service.

• Inpatient Care (Hospitalization): Medicare Part A applies its $1,676 deductible per benefit period. If your PSHB plan is secondary, it might cover what’s left after Medicare pays, but some plans require you to pay a portion of the hospital stay.

• Outpatient Care (Doctor Visits, Tests, Procedures): Medicare Part B applies its $257 deductible. Once met, Medicare covers 80%, and your PSHB plan may or may not cover the rest, depending on your cost-sharing rules and whether you’ve met your PSHB deductible.

In both categories, the Medicare deductible applies first when Medicare is the primary payer. Your PSHB deductible may kick in only for the portion not covered by Medicare.

What About Prescription Drugs?

Prescription drug coverage under PSHB is integrated with Medicare Part D in 2025 through an Employer Group Waiver Plan (EGWP). If you are Medicare-eligible and enrolled in PSHB, you are automatically enrolled in this enhanced Part D coverage.

• The Part D deductible in 2025 is $590.

• Some PSHB plans reduce or eliminate this deductible for annuitants enrolled in Medicare.

• Once you hit the $2,000 annual out-of-pocket cap, you pay nothing for the rest of the year for covered drugs.

Importantly, your drug deductible is separate from medical deductibles, so you may have up to three distinct deductibles: one for Part A/B, one for PSHB medical, and one for Part D prescription drugs.

Exceptions and Exemptions

There are specific exemptions to these overlapping deductible rules. For instance:

• If you retired on or before January 1, 2025, you are not required to enroll in Medicare Part B to keep PSHB coverage, though you still can.

• If you are living overseas, PSHB coverage may remain primary, since Medicare typically doesn’t cover services outside the U.S.

• If you receive care from the VA or Indian Health Services, these systems may bypass both Medicare and PSHB billing.

These scenarios affect which deductible applies first, and sometimes eliminate certain deductibles altogether.

Tips to Minimize Your Deductible Exposure

You can’t always avoid deductibles, but you can be strategic in reducing your total out-of-pocket costs.

Here are ways to approach this in 2025:

• Review your PSHB plan’s coordination with Medicare. Some plans waive their own deductible when Medicare pays first. Others don’t.

• Consider Medicare Part B enrollment if you haven’t already, especially if your PSHB plan reduces your out-of-pocket expenses in return.

• Track your expenses across all deductibles. Know when you’ve hit your Part B, PSHB, and Part D thresholds.

• Use in-network providers for your PSHB plan to keep your deductible lower. Out-of-network costs often don’t count toward your in-network deductible.

• Take advantage of preventive care. Many services are fully covered without applying toward a deductible, especially under Medicare.

How to Plan for Deductibles in Retirement

When building your healthcare budget in retirement, deductibles deserve just as much attention as premiums. In some cases, they can impact your short-term costs more than your monthly premiums.

Here’s how to factor them in:

• Plan for at least two deductibles per year if you’re enrolled in both Medicare and PSHB.

• Add in the Part D deductible if you use prescription drugs.

• Remember that high-deductible PSHB plans may also have Health Savings Accounts (HSAs), but only if you are not enrolled in Medicare.

Since Medicare enrollment disqualifies you from contributing to an HSA, switching to Medicare means you lose that tax-advantaged savings option. That’s another reason to weigh the impact of overlapping deductibles before making any enrollment changes.

Your Overall Cost Picture in 2025

In 2025, Medicare and PSHB both introduce predictable costs (premiums) and variable costs (deductibles, copayments, coinsurance). The better you understand how these interact, the more control you’ll have over your spending.

Key numbers to keep in mind:

• Medicare Part A deductible: $1,676 per benefit period

• Medicare Part B deductible: $257 annually

• Part D drug deductible: $590 annually

• PSHB in-network deductibles: $350 to $2,000 annually, depending on plan type

Add these together, and your upfront out-of-pocket exposure each year can be several thousand dollars before full coverage kicks in. That’s why planning ahead, comparing plan details, and knowing your cost-sharing responsibilities are critical.

What This Means for Your 2025 Healthcare Strategy

Deductibles can quietly shape how much you truly spend on healthcare—even more than premiums in some cases. With Medicare and PSHB plans functioning separately, and rarely absorbing each other’s deductibles, you’ll need to prepare for the possibility of double exposure.

Review your plan documents, understand which plan pays first, and look closely at which deductibles apply in different care settings. That knowledge can save you hundreds—sometimes thousands—over the course of the year.

If you still have questions about how your deductibles will work under your specific PSHB plan and Medicare enrollment, reach out to a licensed agent listed on this website for expert advice.