Key Takeaways

• PSHB coinsurance percentages may appear modest, but they apply to the full cost of services—which can mean significant out-of-pocket spending without the right planning.

• Pairing PSHB with Medicare Part B could reduce your coinsurance burden, but understanding how both plans coordinate is essential to protect your retirement budget.

Why Coinsurance Isn’t Just a Tiny Slice of the Bill

When you hear that your Postal Service Health Benefits (PSHB) plan includes 10% or 20% coinsurance for medical services, it may sound manageable. After all, how much could 10% really cost?

In 2025, the truth is this: coinsurance applies after your deductible is met, and it’s calculated as a percentage of the total cost of care. That means a 20% coinsurance on a $2,000 MRI equals $400 from your own pocket. And that’s just for one test. Over time—or in the case of a health issue—these costs can quietly compound.

Coinsurance isn’t a fixed copay. It’s a moving target. The more healthcare you use, the higher your share becomes. And if you’re retired or on a fixed income, those rising out-of-pocket costs can quietly undermine your budget.

Understanding Your PSHB Coinsurance Structure

Your PSHB plan has its own structure for how much you pay for different services. In 2025, the structure generally looks like this:

• Primary care and specialist visits: You might pay a flat copay, but for certain procedures or visits not covered under a copay, coinsurance kicks in.

• Lab work and diagnostic testing: Typically involves 10% to 30% coinsurance.

• Outpatient surgery or hospital stays: Usually includes 20% or more coinsurance once your deductible is met.

• Emergency room visits: May involve both a copay and a coinsurance component, depending on your plan.

Also, coinsurance varies based on whether the provider is in-network or out-of-network. In-network coinsurance may be 20%, but out-of-network coinsurance can double or even triple that rate.

What Happens When Medicare Enters the Picture

Once you reach age 65 and enroll in Medicare, your PSHB plan doesn’t disappear—it changes roles. Medicare becomes the primary payer, and PSHB becomes secondary. Here’s where many postal retirees stumble: they assume Medicare takes care of everything, and they stop analyzing the cost-sharing details.

If you have Medicare Part A and B and you keep your PSHB plan, you may no longer have to pay full coinsurance amounts. In fact, many PSHB plans waive some deductibles and coinsurance when Medicare Part B is active.

But here’s the catch: this benefit only works if you are enrolled in both Medicare Parts A and B. If you skip Part B to avoid the monthly premium, your PSHB plan becomes your primary payer—and those coinsurance amounts remain fully your responsibility.

Coinsurance Without Medicare Part B: The Silent Budget Buster

Skipping Medicare Part B to save on premiums can backfire. Without it, your PSHB plan assumes the primary role for outpatient care. That means:

• You’re responsible for the full PSHB deductible.

• You’ll pay coinsurance on all covered outpatient care, potentially 20% or more.

• You could hit your out-of-pocket maximum sooner than you expect.

Let’s say your deductible is $500 and your in-network coinsurance is 20%. If you undergo outpatient surgery that costs $8,000, you’re on the hook for $500 plus 20% of the remaining $7,500, or $2,000.

That’s $2,500 out of pocket for one service. And it doesn’t count the costs of prescriptions, follow-up visits, or physical therapy that often follows surgery.

Why These Costs Add Up Faster Than You Think

It’s easy to underestimate how coinsurance adds up across the year. You may start January healthy, but by July, a sudden health event—like a fall, heart issue, or needed scan—could shift your medical costs into high gear.

Here’s how quickly the math can shift in 2025:

• MRI ($2,500): 20% coinsurance = $500

• Outpatient surgery ($6,000): 20% coinsurance = $1,200

• Specialist follow-ups ($1,200 total): 20% = $240

• Diagnostic labs and imaging ($1,000): 20% = $200

That’s $2,140 in coinsurance alone—and doesn’t include your deductible. If your out-of-pocket maximum is $7,500, these bills can push you closer to it much faster than expected.

The Medicare Part B Trade-Off You Need to Consider

It’s true—Medicare Part B comes with a monthly premium. In 2025, the standard premium is $185 per month. But many PSHB plans are designed to work with Medicare, offering waived deductibles and reduced coinsurance when you’re enrolled in both.

In other words, by paying a Part B premium, you may reduce how much you pay per service. You might even avoid thousands in coinsurance by:

• Paying $185/month for Medicare Part B

• Receiving reduced or waived coinsurance from your PSHB plan

• Hitting your out-of-pocket max more slowly

Think of it as predictable premiums versus unpredictable coinsurance.

In-Network vs. Out-of-Network Coinsurance: A Critical Distinction

Whether or not you’re enrolled in Medicare, using out-of-network providers under PSHB plans can make coinsurance dramatically worse. In-network coinsurance might be 20%, but out-of-network could range from 40% to 50%.

For example:

• In-network hospital stay ($10,000): 20% coinsurance = $2,000

• Out-of-network hospital stay ($10,000): 50% coinsurance = $5,000

The same service costs you $3,000 more just because of provider network status. When you’re retired and trying to protect limited savings, that difference matters more than ever.

PSHB plans in 2025 provide tools to help you locate in-network providers, and using them strategically is a key defense against coinsurance creep.

What Your PSHB Out-of-Pocket Maximum Really Protects You From

Every PSHB plan includes an annual out-of-pocket maximum, which is your cap on total spending for covered services in-network. For 2025, this might range from $7,500 (Self Only) to $15,000 (Self Plus One or Family).

But this limit doesn’t mean you won’t spend a lot—it just stops further coinsurance after you reach the threshold.

You’re still responsible for:

• Premiums

• Any non-covered services

• Out-of-network coinsurance (which may have its own max)

And if you don’t have Medicare Part B, your chances of reaching this max increase, especially with multiple doctor visits, diagnostic procedures, or unplanned events like hospital admissions.

Your Retirement Budget vs. Variable Healthcare Costs

If you’re living on a fixed annuity, Social Security, or TSP withdrawals, healthcare costs like coinsurance can eat into your budget more than anticipated. Even if you’ve built a solid financial plan, coinsurance is one of those variables that doesn’t show up until it’s already happening.

Planning ahead for:

• Annual medical usage trends

• Provider network alignment

• Medicare coordination opportunities

…can mean the difference between a stable retirement and ongoing financial stress.

How to Strategically Reduce Your Coinsurance Burden

You can’t eliminate coinsurance, but you can reduce its impact:

• Enroll in Medicare Part B when eligible to trigger secondary coverage benefits.

• Stay in-network to avoid higher coinsurance rates.

• Review your plan brochure to understand which services apply coinsurance and how much.

• Consider switching plans during Open Season if your current one doesn’t coordinate well with Medicare.

• Keep a healthcare expense tracker to anticipate when you might be approaching your deductible or out-of-pocket maximum.

Every dollar saved in coinsurance is a dollar retained in your retirement fund.

A Smart Health Plan Strategy Starts with Knowing the Numbers

Coinsurance is a subtle but powerful factor in your PSHB plan. In 2025, its financial impact depends not just on how often you visit the doctor, but on your enrollment choices, provider decisions, and coordination with Medicare.

Before the next health issue—or the next Open Season—take time to revisit your plan’s cost-sharing structure. Ask yourself:

• Are you enrolled in Medicare Part B?

• Do you know your coinsurance percentages for common services?

• Are your doctors in-network?

• How close are you to hitting your deductible and out-of-pocket max?

If you’re unsure how to answer, or if you just want help walking through the math, reach out to a licensed agent listed on this website. A conversation today can save you from surprise expenses tomorrow.