Key Takeaways

• A coinsurance clause in your PSHB plan could expose you to significant out-of-pocket costs, far exceeding your monthly premium, especially for high-cost care or services outside the plan’s network.

• In 2025, understanding coinsurance thresholds, cost-sharing tiers, and out-of-pocket limits is essential if you’re retired or planning to retire soon under the PSHB Program.

What Coinsurance Really Means Under PSHB

If you’re preparing for retirement or already retired from the Postal Service, you’re likely familiar with premiums. You pay them every month and plan for them in your budget. But coinsurance? That’s where many retirees discover the real financial impact—often too late. Under the Postal Service Health Benefits (PSHB) Program in 2025, coinsurance works differently depending on your plan design, your provider’s network status, and whether or not you’re enrolled in Medicare.

Coinsurance is the percentage of costs you share after meeting your deductible. For example, if your plan has a 20% coinsurance for specialist visits, you pay 20% of the plan-approved cost after your deductible is met. Unlike copayments, which are fixed, coinsurance amounts scale with the service’s price—and this is where things get expensive.

Why This One Clause Deserves More Attention Than Your Premium

Premiums are predictable. You see them every month. They’re often deducted from your annuity or paycheck and rarely surprise you. But coinsurance is variable and based on the actual cost of services. That makes it less visible but potentially much more impactful.

A single hospital stay, outpatient surgery, or diagnostic procedure could cost thousands. Even if your coinsurance is “only” 20%, the amount you pay could be far higher than a year’s worth of premiums. This is especially true if:

• You use out-of-network providers

• You aren’t enrolled in Medicare Part B (which coordinates with PSHB)

• Your plan has high coinsurance rates for certain tiers of services

Understanding Coinsurance by Network Status

The PSHB Program has multiple plan options, each with different rules for in-network and out-of-network care. Here’s how that affects your coinsurance:

In-Network Services

• Generally, you pay 10% to 30% coinsurance after meeting your in-network deductible.

• Most plans offer a lower out-of-pocket maximum for in-network care.

• These services are usually billed at pre-negotiated rates, making your share more predictable.

Out-of-Network Services

• Coinsurance rates can climb as high as 40% to 50%.

• Deductibles for out-of-network care are often higher.

• You may be billed for the difference between the provider’s charge and the plan’s allowable amount—a practice called balance billing.

Choosing providers carefully and staying within your plan’s network can make a dramatic difference in your costs.

How Medicare Affects Your Coinsurance Burden

If you’re eligible for Medicare and enrolled in Part B, you’ll notice that coinsurance under PSHB often becomes more manageable. Many PSHB plans integrate with Medicare by:

• Waiving deductibles and reducing coinsurance for services covered by both

• Offering reimbursement of Part B premiums or sharing the cost

• Providing enhanced benefits such as reduced copays for prescription drugs

As of 2025, most Medicare-eligible Postal Service annuitants must enroll in Part B to maintain their PSHB coverage, unless they qualify for an exemption. If you don’t enroll in Part B when required, your PSHB plan may reduce your benefits or terminate certain coverages.

The Real Impact: Annual Out-of-Pocket Limits

Every PSHB plan has a defined annual out-of-pocket maximum. Once you hit that limit, the plan covers 100% of your eligible in-network costs for the rest of the year. But here’s where it gets tricky:

• These limits can be as high as $7,500 for Self Only coverage and $15,000 for Self Plus One or Self & Family.

• Out-of-network expenses may have separate and higher out-of-pocket caps—or may not count toward your limit at all.

• Prescription drug costs may fall under a separate cap, especially if you’re enrolled in Medicare and your plan includes Part D coverage.

Without Medicare Part B, you may find yourself hitting your limit more quickly—and paying more in total.

High-Cost Services That Trigger Coinsurance Surprises

Coinsurance may feel manageable for routine services. But what about more expensive ones? Common high-cost services that could quickly trigger large coinsurance bills include:

• Inpatient hospitalizations

• Emergency room visits

• Imaging procedures (MRI, CT, PET scans)

• Chemotherapy or other specialty drug infusions

• Complex outpatient surgeries

The bill for a single outpatient surgery could reach $10,000 or more, meaning a 20% coinsurance leaves you with $2,000 out-of-pocket—not including any facility fees or physician charges.

Why PSHB Coinsurance May Feel Higher in Retirement

In 2025, retirees under the PSHB Program often feel the burden of coinsurance more than active employees. Here’s why:

• Your income is typically fixed

• You may use healthcare services more often

• You’re no longer shielded by a workplace health center or subsidized care

If you retired before enrolling in Medicare, or if you delay Part B, your exposure to coinsurance may be even greater.

Coinsurance Clauses You Should Read Carefully

Each PSHB plan’s brochure includes fine print about coinsurance clauses. These are often hidden in sections labeled “Cost Sharing” or “How Benefits Are Paid.”

Important elements to look for:

• Percentage split after the deductible

• Service tiers that categorize care into primary, specialist, or specialty

• In-network vs. out-of-network rates

• Prescription drug cost-sharing levels

• Out-of-pocket maximum exclusions (some services may not apply toward the limit)

Failing to review these clauses can leave you financially exposed in retirement.

Budgeting for Coinsurance: Beyond Premiums and Copays

Retirement budgets often account for fixed costs—like premiums—but overlook the variable costs coinsurance creates. To prepare realistically:

• Estimate your average annual healthcare use

• Understand what your plan charges for higher-cost care

• Review your coinsurance rates for your most-used services

• Confirm whether your providers are in-network

• Evaluate how enrolling in Medicare Part B could reduce your exposure

Having a “coinsurance cushion” in your savings could make the difference between financial stress and peace of mind.

How PSHB Plans Try to Offset Coinsurance Costs

Some PSHB plans offer options that may help mitigate coinsurance, particularly if you’re enrolled in Medicare. These may include:

• Reduced coinsurance for hospital stays

• Waived deductibles for Medicare-covered services

• Lower out-of-pocket maximums

• Access to a Medicare Part D Employer Group Waiver Plan (EGWP) with a $2,000 prescription cap in 2025

Reviewing these details during Open Season each year—usually held from November to December—is critical to keeping your healthcare expenses manageable.

Why You Shouldn’t Rely on Coinsurance Staying Static

Coinsurance isn’t locked in forever. Plans adjust benefits each year, and what seems manageable now could change later. Key points to remember:

• Coinsurance rates can increase during Open Season updates

• Your healthcare needs may grow with age

• A single plan year with multiple claims could exceed your expectations

Don’t assume last year’s plan will work this year—especially if you’ve had new health diagnoses, changed medications, or lost a provider.

Read the Fine Print, Then Talk to a Professional

The details that affect coinsurance are rarely front and center in a plan brochure. They’re in the footnotes, the side-by-side comparisons, and the Medicare integration section. The only way to be sure you’re protected is to:

• Compare all PSHB plans available to you annually

• Understand how coinsurance will affect your most likely healthcare needs

• Know how enrolling in or deferring Medicare Part B will impact your bottom line

Budget Clarity Starts With Understanding Your Plan

Coinsurance can have a more significant effect on your retirement budget than your monthly premium—especially under the Postal Service Health Benefits Program in 2025. If you’re unsure how your current or future plan handles coinsurance, it’s time to get clarity.

Speak with a licensed agent listed on this website for personalized assistance and guidance that fits your retirement goals.