Key Takeaways

• Combining Medicare with your PSHB plan may reduce some of your out-of-pocket costs, but coinsurance can still apply in unpredictable ways depending on the service and whether Medicare is primary.

• Understanding how coinsurance works when both Medicare and PSHB are involved is critical, especially if you are a retiree with fixed income or managing chronic health conditions.

Why Combining Coverage Doesn’t Always Equal Simplicity

If you are a Postal Service annuitant or family member covered under a PSHB plan and also enrolled in Medicare, you likely expect reduced out-of-pocket spending. While that is often true, coinsurance introduces some unpredictability. This is because coinsurance depends not only on the total cost of care but also on how your benefits coordinate between Medicare and your PSHB plan.

In 2025, many PSHB plans integrate with Medicare Part A and B to provide lower deductibles and copayments. But coinsurance remains in play for certain services, and it is rarely a flat percentage across the board. The amount you owe can change based on:

• Whether Medicare is your primary or secondary payer

• The type of service (inpatient, outpatient, durable medical equipment, etc.)

• Whether your provider accepts Medicare assignment

• Whether the service is covered by both Medicare and your PSHB plan

How Medicare and PSHB Coordinate Benefits

Medicare as Primary Payer

If you are retired and enrolled in both Medicare and PSHB, Medicare usually pays first (primary), and your PSHB plan pays second. In this coordination, Medicare generally covers 80% of the approved amount for most services under Part B. Your PSHB plan may then cover part or all of the remaining 20%, depending on the service and plan design.

However, coinsurance can still apply in certain cases:

• For services not fully covered by either program

• When Medicare determines the service is partially covered but not in full

• When the PSHB plan’s secondary payment leaves a percentage of cost still owed by you

PSHB as Primary Payer

In rare cases, such as when you are actively employed and not required to enroll in Medicare Part B, PSHB can be the primary payer. In this case, your coinsurance obligation follows your PSHB plan’s standard rules, which may require 10% to 30% coinsurance for in-network services and 40% or more out-of-network. Medicare would only pay second, and only for services it covers.

Understanding who pays first is essential to estimating how much you might owe.

What Coinsurance Actually Looks Like in Practice

Coinsurance is different from a flat copayment. Rather than a set dollar amount, it’s a percentage of the allowed charge after any deductible is met. For example:

• Medicare pays 80% of its approved amount

• PSHB might pay 15% of the remaining 20%

• You might owe the remaining 5%, or more if the service is only partially covered

This calculation changes if your provider charges more than Medicare allows or if you see an out-of-network provider. Your PSHB plan might cover less, leaving you to pay the balance.

In 2025, some PSHB plans offer reduced coinsurance rates or even eliminate coinsurance when you’re enrolled in Medicare Part B. But these provisions vary.

Services Where Coinsurance Still Applies

You are likely to encounter coinsurance in several types of care, even when covered by both Medicare and PSHB:

• Outpatient surgery: These services typically involve Medicare Part B. You may still be responsible for part of the 20% coinsurance unless your PSHB plan fully picks it up.

• Durable Medical Equipment (DME): Medicare usually pays 80%, and PSHB may pay part or all of the rest. If the item is not covered in full, you pay the difference.

• Skilled Nursing Facility care: Medicare covers up to 100 days, with coinsurance kicking in after day 20. PSHB coverage may help, but not always completely.

• Home health care: Though Medicare may cover most services fully, any portion left uncovered could result in coinsurance based on PSHB terms.

This complexity means you must look at both your PSHB and Medicare statements to know what you actually owe.

How the $2,000 Part D Cap Impacts Coinsurance

New for 2025, Medicare Part D introduces a $2,000 annual cap on out-of-pocket prescription drug spending. This is significant, but doesn’t eliminate coinsurance in the initial or coverage phases.

Until you hit the $2,000 limit, you may still pay coinsurance based on your PSHB plan’s prescription drug rules, especially for brand-name or specialty medications. Once the cap is reached, your plan pays 100% of covered drug costs for the rest of the year. This helps limit runaway drug expenses but doesn’t change coinsurance on medical services.

Medicare Assignment and Network Matters

Your coinsurance costs can be higher when you see providers who:

• Don’t accept Medicare assignment: They can charge more than the Medicare-approved amount. Your PSHB plan may not cover the excess.

• Are out-of-network for your PSHB plan: You may face higher coinsurance, especially if the plan uses tiered networks or charges more for non-preferred providers.

You should verify that your providers accept Medicare and are within your PSHB plan’s network. Otherwise, coinsurance could be far more than expected.

Estimating Your Costs Isn’t Always Straightforward

Coinsurance creates variability. Even if you know the percentage, the base amount used to calculate it depends on what Medicare and your PSHB plan consider an “allowable charge.” That figure can change based on:

• Location of service (hospital vs. ambulatory center)

• Whether the provider is in-network

• The provider’s billing practices

What feels like a small percentage can still translate into hundreds of dollars if the underlying service is expensive. And since PSHB coinsurance is often stated as a range (10% to 30%), you may not be able to predict your cost without preauthorization or cost estimate tools.

Why Retirees Feel the Impact Most

For many retirees, income is fixed and often limited to annuities, Social Security, or TSP withdrawals. Coinsurance is unpredictable, and unexpected costs from surgeries, hospital stays, or long-term treatment can strain your monthly budget.

Even if you’ve planned carefully, coinsurance can result in:

• Deferred care because of cost uncertainty

• Greater reliance on savings to cover bills

• Difficulty comparing plan options during Open Season

In 2025, with healthcare costs still rising, coinsurance can become one of the more burdensome elements of your out-of-pocket responsibility, especially if you assumed Medicare would eliminate your share entirely.

What You Can Do to Stay Ahead of Coinsurance

To reduce surprises and prepare for coinsurance effectively:

• Use in-network providers whenever possible to access lower negotiated rates.

• Enroll in Medicare Part B if required by your PSHB plan to access full coordination benefits.

• Check for plans that offer lower coinsurance when combined with Medicare.

• Request cost estimates for planned procedures ahead of time.

• Understand the order of payment between Medicare and your PSHB plan.

• Review your Explanation of Benefits (EOBs) regularly to catch billing issues early.

• Consult with a licensed agent listed on this website during Open Season or when your situation changes.

Knowing Your Share Helps You Plan Wisely

Coinsurance isn’t going away, and when you combine PSHB with Medicare, it doesn’t always disappear either. While the two programs together can greatly reduce your financial burden, coinsurance still finds a way to show up in key services, particularly those with high costs.

Don’t assume your share will be zero. Understand how coinsurance is calculated, review your plan annually, and explore whether you’re using your benefits in the most cost-effective way.

For help choosing a PSHB plan that works better with Medicare or to review your coinsurance obligations more clearly, reach out to a licensed agent listed on this website. Personalized guidance can make a measurable difference in how well your health benefits serve you.