Key Takeaways

• Medicare Part A is often described as “free,” but that coverage comes with strict limits that can lead to significant out-of-pocket costs if you need extended hospital care.

• Understanding how Medicare Part A works with your Postal Service Health Benefits (PSHB) plan is essential to avoid surprise costs during a lengthy hospital stay or skilled nursing facility admission.

The Truth Behind “Free” Medicare Part A

As a Postal Service retiree or employee nearing retirement, you’ve likely heard that Medicare Part A is free. And in most cases, that’s true—you don’t pay a monthly premium if you’ve worked at least 40 quarters (10 years) in Medicare-covered employment. However, this benefit comes with crucial limitations that can expose you to high out-of-pocket costs after certain thresholds.

Medicare Part A covers inpatient hospital care, skilled nursing facility care, hospice, and some home health services. But it does not offer unlimited coverage. Once you pass certain day limits or benefit periods, the cost-sharing increases sharply—and your PSHB plan may or may not cover the gaps.

How Inpatient Hospital Coverage Works

Medicare Part A starts by covering inpatient hospital care with a deductible and a series of time-based limits. In 2025, the structure is as follows:

• Inpatient deductible: $1,676 per benefit period

• Days 1–60: You pay $0 per day (after meeting the deductible)

• Days 61–90: You pay $419 per day

• Days 91–150: You pay $838 per day (these are lifetime reserve days)

• After Day 150: You pay all costs

The moment your hospital stay crosses Day 60, your “free” coverage starts to fade quickly.

What Is a Benefit Period?

A benefit period begins the day you’re admitted as an inpatient and ends when you haven’t received inpatient hospital or skilled nursing care for 60 days in a row. If you return to the hospital after that, a new benefit period begins, and the deductible resets—meaning you owe the full inpatient deductible again.

This cycle can repeat multiple times in a year, potentially multiplying your out-of-pocket responsibilities.

Skilled Nursing Facility Coverage Isn’t Unlimited Either

If you’re transferred to a skilled nursing facility (SNF) after a hospital stay, Medicare Part A also covers this—but again, with strict limits:

• Days 1–20: $0 per day

• Days 21–100: $209.50 per day

• After Day 100: You pay all costs

To qualify, you must have had a qualifying 3-day hospital stay and need daily skilled care. If those conditions aren’t met, Medicare Part A won’t pay anything for the SNF stay, leaving your PSHB plan to cover the costs—or leaving you responsible.

Hospice Coverage Under Part A

Hospice care is covered by Medicare Part A for terminally ill patients certified by a doctor. There are no day limits, but:

• You may have copayments for medications related to pain or symptom management.

• You may need to pay 5% of the Medicare-approved amount for inpatient respite care.

While hospice care tends to be more predictable in coverage, it’s still important to verify how your PSHB plan complements these services, especially if hospice care begins in a facility.

PSHB and Part A: What You Need to Know

If you are enrolled in both Medicare Part A and a PSHB plan, your PSHB plan becomes secondary when Medicare is primary. This means:

• Medicare pays first.

• Your PSHB plan may pick up remaining eligible costs, depending on your plan.

However, there are critical considerations:

• Not all PSHB plans waive deductibles or copayments after Medicare pays.

• Your PSHB plan might cover extended hospital stays after Day 90, but it depends on your specific benefits.

• If you don’t have Medicare Part B, your PSHB plan may reduce or deny certain payments.

Understanding this coordination is vital—especially if you’re approaching age 65 or planning to retire soon.

When You’re Admitted vs. When You’re Not

It’s also important to understand that Medicare Part A only pays for inpatient hospital stays. If you’re in a hospital under “observation status,” even if you stay overnight, it may be billed under Medicare Part B instead, not Part A. This technicality can:

• Disqualify you from skilled nursing facility coverage.

• Lead to unexpected costs if your PSHB plan only covers inpatient services after Medicare pays.

Always ask your hospital care team if you’re officially admitted as an inpatient or under observation.

What Happens If You Reach the Limits?

If you exceed 90 days of hospitalization and exhaust your 60 lifetime reserve days, you become responsible for 100% of the hospital costs moving forward in that benefit period. This can be financially devastating if you:

• Require prolonged treatment,

• Have multiple benefit periods within a year,

• Or do not have strong secondary coverage from your PSHB plan.

Planning for this situation means reviewing how your PSHB plan works with extended hospital care and whether you should consider additional coverage (without naming specific products).

What to Watch for If You’re Retiring Soon

As you approach retirement, your transition into Medicare and PSHB coordination becomes more important than ever. Some of the timing-based considerations include:

• At age 65: You become eligible for Medicare. If you are retired, Medicare becomes primary.

• If still working: Your PSHB plan remains primary until you retire.

• Once you retire: Medicare Part A and Part B typically become your primary coverage, and your PSHB plan becomes secondary.

You need to proactively enroll in Medicare Part B during your Initial Enrollment Period or a Special Enrollment Period to avoid penalties and ensure seamless PSHB coordination.

Misunderstandings That Lead to Costly Surprises

It’s easy to assume that your PSHB plan will automatically step in to cover what Medicare doesn’t. But if you:

• Skip Medicare Part B,

• Are admitted under observation status,

• Or stay beyond 150 hospital days in a benefit period,

…your financial exposure could rise significantly.

Postal retirees and workers should regularly review their plan brochures to understand:

• How the plan coordinates with Medicare Part A,

• Whether additional coverage is needed,

• And what out-of-pocket maximums apply.

Avoiding Coverage Gaps Takes Planning

To avoid being caught off guard, here’s what you can do now:

• Confirm enrollment in both Part A and Part B when eligible.

• Understand the benefit period structure and the limits tied to hospital and SNF stays.

• Review your PSHB plan brochure for extended hospital coverage.

• Track your days in the hospital carefully to know when cost-sharing increases.

• Discuss options with a licensed agent listed on this website if you’re unsure what your plan covers beyond Medicare.

Being proactive, not reactive, is key to protecting your health and finances.

Long Stays Can Drain More Than Energy

Even though Medicare Part A provides essential support, it isn’t bottomless. By Day 61 in a hospital stay, you’re no longer fully covered. By Day 151, you’re completely exposed. Combine this with gaps in SNF coverage or observation status issues, and the so-called “free coverage” can evaporate fast.

Your PSHB plan might help, but you need to understand where it starts, where it stops, and where Medicare leaves off.

Be Prepared Before the Clock Starts Ticking

Don’t wait until you’re already in a hospital bed to find out how your coverage works. The rules around Medicare Part A aren’t always intuitive, and PSHB plans vary in how they step in.

Talk with a licensed agent listed on this website today to get help reviewing your PSHB coverage alongside Medicare Part A. It’s the best way to prevent budget-shaking surprises during an already difficult time.