Key Takeaways

• Even with Medicare, you may still be responsible for significant out-of-pocket costs like deductibles, copayments, and coinsurance. PSHB plans can help fill some, but not all, of those gaps.

• As a Postal Service annuitant, understanding how Medicare integrates with your PSHB plan in 2025 is crucial to avoid surprise expenses, especially for prescription drugs, specialist care, and hospital stays.

Why Medicare Alone Is Not Enough

Medicare often appears to be a complete solution when you first become eligible at age 65. But if you’re relying on Medicare alone, you may quickly discover that many expenses fall outside its coverage. Original Medicare, which includes Part A (Hospital Insurance) and Part B (Medical Insurance), has significant cost-sharing requirements. These include deductibles, copayments, and coinsurance amounts that you must pay directly.

For example, the 2025 Medicare Part A deductible is $1,676 per benefit period. If you’re hospitalized multiple times in a year, you may pay this more than once. Likewise, Part B comes with a $257 annual deductible, and you typically pay 20% of the Medicare-approved amount for most outpatient services after that deductible is met.

This is where your Postal Service Health Benefits (PSHB) plan enters the picture. Many PSHB plans help reduce these out-of-pocket costs, but the degree to which they do so varies depending on your plan and whether you’ve enrolled in Medicare Part B.

What PSHB Plans Actually Cover When You Have Medicare

In 2025, PSHB plans are designed to coordinate with Medicare. If you are eligible and enrolled in both Medicare Part A and Part B, many PSHB plans offer cost-sharing reductions that can significantly lower your out-of-pocket expenses.

Here’s what many PSHB enrollees with Medicare Part B might receive:

• Waived or reduced deductibles for hospital and outpatient care

• Lower copayments for specialist visits or surgeries

• Limited or no coinsurance for Medicare-covered services

• Access to additional provider networks

However, it’s important to note that these cost reductions are usually tied to active enrollment in both Medicare Part A and Part B. If you delay or decline Part B (unless you qualify for one of the exceptions), you may face higher costs under your PSHB plan.

What Falls Through the Gaps

Despite the combination of Medicare and PSHB coverage, some health care costs remain your responsibility. Here are several categories where costs often slip through the safety net:

1. Services Not Covered by Medicare

Medicare does not cover everything. Some of the most commonly excluded services include:

• Long-term custodial care (like nursing home stays not tied to medical treatment)

• Routine dental care and dentures

• Hearing aids and related exams

• Most vision services and eyeglasses

While certain PSHB plans offer limited coverage for these services, you may still face significant out-of-pocket costs or need to purchase standalone supplemental coverage.

2. Prescription Drug Coverage Gaps

In 2025, Medicare Part D now includes a $2,000 annual out-of-pocket maximum for covered prescription drugs. This is a helpful reform that offers better protection than in past years. Still, until you reach that threshold, you may pay copayments or coinsurance for each medication.

If you’re a Medicare-eligible Postal Service annuitant, your PSHB plan will include prescription drug coverage through a Medicare Part D Employer Group Waiver Plan (EGWP). While this often reduces costs, it still comes with its own structure of deductibles, tiers, and formularies.

Importantly, if you opt out of this Medicare Part D coverage, your PSHB prescription benefits may be significantly limited, and re-enrollment is restricted.

3. High-Cost Specialty Care

Even with Medicare and a PSHB plan, certain forms of specialty care may involve out-of-pocket costs:

• Physical or occupational therapy beyond Medicare’s limits

• High-cost imaging or diagnostic testing

• Infusion treatments or specialty medications

These services can result in coinsurance payments or higher copayments, especially if you haven’t reached your PSHB plan’s annual out-of-pocket limit.

4. Out-of-Network or Non-Participating Providers

If you choose a provider who does not accept Medicare or is out-of-network under your PSHB plan, you may face much higher bills. While many PSHB plans have broad networks, they don’t cover all providers. You could be responsible for excess charges or the full cost of care if you receive services from non-participating providers.

How Enrollment Timing Affects Your Costs

Timing matters. If you’re a Postal Service annuitant and newly eligible for Medicare, enrolling in Part B when you’re first eligible is often critical. Here’s why:

• If you don’t enroll during your Initial Enrollment Period and don’t qualify for an exception, you may pay a permanent late enrollment penalty.

• Your PSHB plan may not offer reduced cost-sharing unless you have both Parts A and B.

The penalty for delayed enrollment in Part B is 10% for each full 12-month period you could have had Part B but didn’t sign up. This penalty applies to your Part B premium for as long as you have coverage.

In 2025, exceptions to the Medicare Part B enrollment requirement exist for some PSHB enrollees, including those who retired on or before January 1, 2025, or those aged 64 or older as of that date. If you fall into one of these categories, you are not required to enroll in Part B, though it may still be beneficial.

Coordination of Benefits: How PSHB and Medicare Work Together

When you have both Medicare and a PSHB plan, Medicare typically pays first, and your PSHB plan pays second. This coordination helps reduce your out-of-pocket liability.

• Medicare pays: Medicare covers its share of the bill (typically 80% for most services after deductibles).

• PSHB pays: Your PSHB plan pays some or all of the remaining 20%, depending on the plan design.

• You pay: You cover any remaining copayments, coinsurance, or non-covered services.

For prescription drugs, your plan will process claims under Medicare Part D through the EGWP. This means your cost-sharing is calculated under the Part D rules, not the Original Medicare framework.

Annual Out-of-Pocket Maximums Still Apply

PSHB plans in 2025 include annual out-of-pocket maximums. These caps protect you from unlimited cost exposure, but only for covered services within the plan’s network.

• For Self Only enrollment: $7,500 maximum

• For Self Plus One and Self & Family: $15,000 maximum

These limits include most medical services but may exclude certain prescription costs or out-of-network care. Once you reach the cap, the plan pays 100% of covered services for the rest of the year.

Other Potential Costs to Be Aware Of

Beyond deductibles and copays, you may also encounter other expenses that aren’t always obvious:

• Travel for care: Not all PSHB plans offer nationwide coverage. If you’re away from your primary residence, you could pay more for out-of-area services.

• Medical equipment: Medicare covers durable medical equipment (DME), but often with 20% coinsurance. Your PSHB plan may or may not reduce this.

• Rehabilitation stays: After a hospital stay, Medicare may cover skilled nursing care for a limited time. After day 20, coinsurance applies.

What You Can Do to Stay Ahead

Understanding your Medicare and PSHB benefits in 2025 isn’t just about avoiding bills—it’s about planning confidently for your healthcare future. Here are key actions to take:

• Review your PSHB plan documents carefully: Know your deductible, copay, coinsurance, and out-of-pocket limits.

• Confirm Medicare enrollment: Especially Part B, unless you qualify for an exception.

• Know your drug formulary: Check whether your prescriptions are covered under your plan’s Part D structure.

• Ask about network limitations: Make sure your providers accept both Medicare and your PSHB plan.

• Track your out-of-pocket spending: Be aware of how close you are to your plan’s annual maximum.

The Real Cost of Assuming You’re Fully Covered

It’s easy to believe that Medicare, combined with a PSHB plan, means all your health expenses are taken care of. But assuming you’re fully covered without understanding the fine print can lead to surprise costs.

The reality is that while the combination of Medicare and PSHB offers strong protection, it doesn’t eliminate your financial responsibility. Gaps exist, especially if you:

• Miss Medicare enrollment deadlines

• Use non-network providers

• Require non-covered services like dental or hearing aids

• Take high-cost medications not included in your plan’s formulary

Knowing what falls through the cracks allows you to plan better, make informed decisions, and avoid avoidable costs.

Don’t Wait Until You Get the Bill

Medicare in 2025 provides essential coverage, but it’s not an all-inclusive solution. As a Postal Service annuitant, your PSHB plan adds an important layer of financial protection—but only if you understand how the pieces fit together.

If you’re unsure how Medicare works with your PSHB plan, or if you want help reviewing your options during the next Open Season (November to December), now is the time to act.

Speak with a licensed agent listed on this website to get tailored guidance. They can help clarify your Medicare obligations, review your PSHB benefits, and ensure you’re not leaving yourself exposed to unnecessary costs.