Key Takeaways

• Even with both Medicare and a PSHB plan, you may still face coinsurance for certain medical services. This can be a surprise for those expecting complete coverage.

• Understanding how your PSHB plan coordinates with Medicare Part A and Part B helps you avoid unexpected out-of-pocket costs, especially for outpatient care and specialty services.

Why You Might Still Pay Coinsurance

If you’ve enrolled in both Medicare and a Postal Service Health Benefits (PSHB) plan, you might assume your healthcare costs are fully covered. After all, Medicare pays first and your PSHB plan acts as secondary coverage. But in reality, many retirees are surprised to find they’re still responsible for coinsurance. That’s because the way these plans coordinate doesn’t always eliminate your share of the costs.

Coinsurance is a percentage of the cost of a covered healthcare service that you’re responsible for after any deductibles are met. Under PSHB, coinsurance typically ranges from 10% to 30% for in-network services and up to 50% for out-of-network care. When Medicare is your primary coverage, your PSHB plan only covers what Medicare does not pay, subject to the rules and cost-sharing of your PSHB plan.

Medicare Part A and Part B: What They Cover First

Medicare Part A and Part B cover different aspects of your care, and both come with their own cost-sharing:

• Medicare Part A covers inpatient hospital care, skilled nursing facility stays, hospice, and some home health care. You are responsible for a deductible ($1,676 in 2025) and potential coinsurance starting on day 61 of a hospital stay.

• Medicare Part B covers outpatient services, doctor visits, diagnostic tests, preventive care, and durable medical equipment. You pay a monthly premium ($185 in 2025), an annual deductible ($257 in 2025), and 20% coinsurance for most services.

When Medicare pays first, your PSHB plan may help cover those deductibles and coinsurance amounts. But the coverage depends on your specific PSHB plan, and not all secondary plans pick up the full remainder.

How PSHB Coordinates with Medicare

Once you’re enrolled in Medicare, your PSHB plan becomes secondary payer. This means Medicare pays its approved share of a bill first. The PSHB plan is then billed for some or all of the balance. However, PSHB coverage still follows its own coinsurance rules.

If your PSHB plan doesn’t waive coinsurance for services already partially covered by Medicare, you may be left to pay part of the bill. For example:

• For outpatient surgeries or procedures, Medicare covers 80%. Your PSHB plan might cover part of the remaining 20%, or it might apply its standard 15%–30% coinsurance to that balance.

• For durable medical equipment, if Medicare pays 80%, your PSHB plan may or may not absorb the rest, depending on plan design.

Even if your PSHB plan offers generous benefits, it still adheres to cost-sharing formulas that may leave you with some portion to pay.

Where Coinsurance Is Most Common After Medicare

Here are several areas where retirees are most likely to encounter coinsurance, even after both Medicare and PSHB coverage apply:

1. Outpatient Services

Outpatient procedures, such as colonoscopies, cataract surgery, or diagnostic imaging, are typically billed under Medicare Part B. After Medicare pays 80%, your PSHB plan may only partially cover the remaining 20%. If it applies a 15% coinsurance to the balance, you will pay a share.

2. Emergency Room Visits

While Medicare covers emergency services, many PSHB plans still apply coinsurance or copays for ER visits, especially if the ER visit doesn’t lead to a hospital admission. Your out-of-pocket costs can range from $100 to over $150 depending on plan details.

3. Durable Medical Equipment (DME)

Items like walkers, wheelchairs, and oxygen equipment fall under Part B. After Medicare’s 80% share, PSHB plans may or may not fully pick up the rest. A 10%–30% coinsurance can apply here, which is often unexpected.

4. Specialty Care and Referrals

Seeing a specialist typically comes with a higher coinsurance under PSHB, sometimes as much as 30% out-of-pocket if the provider is not in-network. Even with Medicare paying first, PSHB may apply this higher rate if any balance remains.

5. Mental Health and Substance Use Services

Although Medicare covers many mental health services, some require coinsurance. PSHB plans may pass through a portion of the cost, especially for outpatient counseling, psychiatry, or substance use disorder treatment.

6. Skilled Nursing Facility Stays

Medicare Part A covers the first 20 days of skilled nursing care in full, but coinsurance begins on day 21. Your PSHB plan may or may not cover that coinsurance, depending on the plan’s design. If not fully covered, daily coinsurance of $209.50 in 2025 applies.

Understanding Your PSHB Summary of Benefits

The key to avoiding surprises is to review your PSHB plan’s Summary of Benefits or Evidence of Coverage. This document outlines how coinsurance applies in different care settings. Pay special attention to the following sections:

• In-network vs. out-of-network coinsurance rates

• Whether coinsurance is waived when Medicare is primary

• Copayment and coinsurance rules for specialist visits, ER, and hospital services

• Annual out-of-pocket maximums, which cap your total coinsurance for the year

Some PSHB plans offer benefits like lower coinsurance for Medicare enrollees, but not all do. The differences between plans can be significant.

Medicare Part B Enrollment Still Matters

If you’re eligible for Medicare and retired, enrolling in Part B is essential to keep your PSHB plan functioning as secondary coverage. Without Part B, PSHB will act as the primary insurer, and you will be subject to higher coinsurance and deductibles.

For 2025, Medicare Part B enrollment is mandatory for many Postal retirees unless you qualify for a narrow exemption. Those who retired on or before January 1, 2025, or are aged 64 or older as of that date, may be exempt. But if you skip Part B and aren’t exempt, your PSHB plan may not pay for any costs Medicare would have covered.

This coordination matters. When Medicare is primary and Part B is active, your PSHB coinsurance responsibilities are significantly reduced, though not always eliminated.

Out-of-Pocket Maximums Still Offer Protection

Even when coinsurance applies, PSHB plans must set annual out-of-pocket maximums. In 2025, these limits are:

• $7,500 for Self Only enrollment

• $15,000 for Self Plus One and Self & Family coverage

Once you hit the annual limit through a combination of coinsurance, copayments, and deductibles, your PSHB plan pays 100% of covered services for the rest of the calendar year. However, not all costs count toward this cap. Services not covered by your plan, or out-of-network expenses beyond plan limits, may not apply.

Can You Avoid Coinsurance Altogether?

In some cases, yes. Some PSHB plans reduce or eliminate coinsurance for retirees who are enrolled in both Medicare Part A and Part B. These benefits may include:

• Waived deductibles

• Reduced or $0 coinsurance for inpatient and outpatient services

• Reimbursement of Medicare Part B premiums

• Lower copayments for prescriptions

However, these benefits vary by plan, and you’ll need to compare options carefully during the November to December Open Season. Simply assuming your plan covers all your costs because you have Medicare is risky.

When It Might Be Worth Switching Plans

If you’re consistently paying high coinsurance amounts even with both Medicare and PSHB, it may be time to consider changing plans. During Open Season, you have the right to:

• Move to a plan with lower coinsurance rates for Medicare enrollees

• Select a plan with out-of-pocket caps that better protect you from large expenses

• Choose a plan offering premium reimbursement for Medicare Part B

Again, this depends on your eligibility and needs. You should assess your usage history, projected medical needs, and financial situation before making a change.

Why This Surprises So Many Retirees

Coinsurance is easy to overlook during Open Season when you’re focused on premiums, prescription drug coverage, and provider networks. But it’s often one of the most expensive elements of healthcare if you need frequent care or specialized services.

Many retirees assume that once Medicare is in play, the secondary PSHB plan takes care of everything. But because of how secondary coordination works and the PSHB’s own cost-sharing structures, that’s not always true. If you don’t actively review your plan details, it’s easy to fall into the assumption that you’ll never have to pay coinsurance. Then the bills come.

Final Thoughts on Being Prepared for Coinsurance

Being covered under both Medicare and PSHB gives you excellent protection, but not absolute coverage. Coinsurance can still apply in important areas like outpatient care, DME, ER visits, and mental health. It’s not always obvious, and that’s where it can be financially frustrating.

The key is to fully understand your PSHB plan’s benefit structure and how it coordinates with Medicare. If you’re unsure, Open Season is your chance to ask questions, review alternatives, and make changes that align better with your healthcare usage and budget.

For personalized help, reach out to a licensed agent listed on this website. They can help you understand your coinsurance exposure and assist with choosing a PSHB plan that better suits your retirement needs.