Key Takeaways

• While Medicare Part A provides essential hospital coverage, it does not cover every cost associated with inpatient or post-acute care, which means PSHB alone may not fully bridge the gap.

• You must understand the coordination between Medicare and PSHB to avoid unexpected out-of-pocket expenses, especially when it comes to deductibles, coinsurance, and limitations of each program.

Medicare Part A Isn’t a Safety Net for All Hospital Costs

Medicare Part A plays a foundational role in your healthcare coverage when you turn 65 or become eligible through disability. It covers hospital stays, skilled nursing facility care, hospice, and some home health services. However, this coverage is not without boundaries. In 2025, the inpatient hospital deductible under Part A is $1,676 per benefit period, and the coinsurance costs increase the longer you remain hospitalized.

If you’re hospitalized for more than 60 days, you start incurring daily coinsurance charges. By day 91, you’re dipping into your lifetime reserve days, which are limited to just 60 days for your entire life. After those are used, you’re responsible for all costs. Medicare Part A also does not cover routine physician services during a hospital stay, unless they are directly billed under inpatient hospital services.

This is where you might assume your PSHB plan steps in to seamlessly cover these costs. But that assumption can lead to costly surprises.

How PSHB Complements—but Doesn’t Replace—Medicare Part A

The Postal Service Health Benefits (PSHB) program is designed to work with Medicare, especially for retirees who are 65 or older. For those who meet the mandatory Medicare Part B enrollment rules (required unless exempted), the expectation is that PSHB and Medicare will coordinate effectively to reduce your overall out-of-pocket burden.

However, PSHB is not a Medicare supplement policy. It’s a full-service health plan, and it has its own:

• Deductibles

• Coinsurance requirements

• Out-of-pocket limits

• Rules for coordination of benefits (COB)

If Medicare Part A doesn’t pay a claim because it deems the service non-covered or if you’ve exceeded the covered benefit limit, your PSHB plan may not automatically pay the balance. Coverage decisions are made based on what your PSHB plan considers medically necessary and allowable within its own terms.

Gaps That Can Surprise You If You Don’t Plan

1. Extended Hospital Stays

If you’re hospitalized for more than 90 days, Medicare Part A only pays if you have remaining lifetime reserve days. Once those are exhausted, Medicare coverage ends entirely for that episode. Your PSHB plan may apply its own inpatient coverage limits after Medicare stops paying. If you’re expecting PSHB to pick up 100% of the remaining bill, you could face a denial.

2. Skilled Nursing Facility Care

Medicare Part A covers up to 100 days in a skilled nursing facility—but only after a 3-day hospital stay and only if you require rehabilitative care. The first 20 days are fully covered, but from days 21 to 100, you are responsible for coinsurance ($209.50 per day in 2025). After day 100, Medicare pays nothing.

PSHB plans may help with these coinsurance costs, but coverage can vary. Some plans limit skilled nursing benefits or may not cover extended custodial care. And if Medicare denies the skilled nursing claim because the 3-day inpatient requirement isn’t met, PSHB may not step in at all.

3. Hospice and Home Health Limitations

While Medicare Part A covers hospice care, it does so under strict eligibility and provider criteria. If services fall outside the defined scope, you may be responsible for costs. Similarly, Part A’s home health coverage is narrow, focused on medically necessary intermittent skilled care. PSHB may not duplicate these benefits or provide a broader safety net, especially if the services are custodial in nature.

4. Inpatient vs. Observation Status

Medicare does not consider observation status the same as inpatient admission. If you’re placed under observation in a hospital, you may still pay outpatient cost-sharing under Part B, not Part A. This distinction can affect your access to skilled nursing benefits and what your PSHB plan is willing to reimburse.

Even with PSHB, costs can stack up if the plan defers to Medicare’s billing status and limits reimbursement accordingly.

Medicare and PSHB Work Best When Both Are Active

You’ll get the most seamless coverage experience when you’re enrolled in both Medicare Parts A and B. For most annuitants who are Medicare-eligible in 2025, enrollment in Part B is required to keep PSHB benefits unless you qualify for an exception.

When both Medicare and PSHB are active, Medicare pays first, and your PSHB plan may cover the balance depending on:

• Whether the service is covered by both

• Coordination of benefits agreements

• Whether you’ve met deductibles in either plan

Plans often reduce or eliminate cost-sharing if Medicare paid its share. Some PSHB plans even waive their deductibles when paired with Medicare. But if you haven’t enrolled in Medicare, or only have Part A, you may not be protected from higher out-of-pocket exposure.

The Role of Prior Authorization and PSHB Review

Even if Medicare approves a service, your PSHB plan may still require:

• Prior authorization

• Network restrictions

• Medical necessity documentation

Your provider may need to submit information separately to the PSHB plan, especially if the claim is being reviewed after Medicare pays. This can delay or limit payment, and you may end up responsible for costs that fall outside the plan’s parameters.

It’s essential that you and your provider understand how both systems work together and that you meet the plan’s administrative requirements—Medicare approval does not automatically translate to PSHB approval.

Know the 2025 Out-of-Pocket Landscape

Here’s a general look at 2025 costs you could encounter if you rely only on Medicare Part A:

• Hospital Deductible: $1,676 per benefit period

• Days 61–90 Hospital Coinsurance: $419/day

• Lifetime Reserve Day Coinsurance: $838/day

• Skilled Nursing Facility Coinsurance (Days 21–100): $209.50/day

PSHB plans may offer cost-sharing protection, but limits exist. In 2025, PSHB in-network out-of-pocket maximums are $7,500 for Self Only and $15,000 for Self Plus One or Self & Family. These limits don’t include premiums or services Medicare doesn’t cover.

You must also factor in PSHB deductibles, which vary by plan type—low-deductible or high-deductible options—and range from $350 to over $2,000 annually.

When Coverage Doesn’t Overlap, You’re Left Exposed

One of the most misunderstood aspects of combining Medicare with PSHB is the belief that one automatically fills the other’s coverage gaps. This simply isn’t the case. Each plan covers what it’s designed to, and the overlap only works when benefits align.

• If Medicare rejects a service, PSHB might too.

• If you fail to follow PSHB requirements, like prior authorization, your plan may deny coverage.

• If you are not enrolled in Medicare Part B when required, your PSHB coverage may be reduced or terminated.

Careful alignment is necessary to avoid surprise costs.

What You Should Do Before You Need Care

• Confirm your Medicare enrollment status – Know if you’re required to enroll in Part B to maintain PSHB eligibility.

• Compare your PSHB plan’s coordination policies – Some plans waive cost-sharing with Medicare, others don’t.

• Speak with your healthcare providers – Ensure they understand how to bill Medicare and PSHB correctly.

• Review your Explanation of Benefits (EOBs) – Always check that your claims are being processed as expected by both Medicare and your PSHB plan.

Being Proactive Protects You Financially

You can’t assume that PSHB will act as a buffer for every Medicare shortfall. Take time to:

• Review PSHB brochures and Summary of Benefits

• Look into whether your plan reduces your costs when paired with Medicare

• Keep track of lifetime limits under Medicare

You’re responsible for staying within the coverage rules of both systems.

Staying Aligned Helps You Avoid Gaps

If you’re a Postal retiree or annuitant navigating Medicare and PSHB in 2025, your best strategy is to fully understand where the coverage from each plan begins and ends. They’re designed to work together, but only when you’re actively managing both.

Get ahead of the game by learning your plan’s fine print and how Medicare influences its decisions. Mistakes in timing, enrollment, or expectations can leave you paying far more than necessary.

Make Sure Your Plan Works for You—Not Against You

When you assume PSHB automatically fills in Medicare Part A’s coverage gaps, you risk costly missteps. Instead, take charge of your benefits by confirming Medicare enrollment, reviewing PSHB plan coordination rules, and ensuring your care is billed appropriately.

If you’re uncertain about how your plan interacts with Medicare, don’t guess—get help. Speak with a licensed agent listed on this website to walk through your situation and make sure you’re protected.