Key Takeaways

• PSHB cost estimates shown during retirement planning often exclude important cost-sharing elements like deductibles, coinsurance, and Medicare coordination.

• Retirees frequently overlook hidden variables such as Medicare Part B premium requirements and the effect of out-of-network services on total cost.

Estimating PSHB Costs Isn’t as Simple as Monthly Premiums

When you begin reviewing your Postal Service Health Benefits (PSHB) options in retirement, your attention probably turns immediately to monthly premiums. These are easy to find, clearly displayed, and frequently used in financial planning worksheets. But if you stop there, you’re likely getting an incomplete picture.

The PSHB Program, introduced in 2025 as a replacement for FEHB for Postal Service retirees and employees, brings with it a few layers of cost complexity that weren’t as visible in past planning stages. These hidden costs can catch you off guard after retirement begins—when changes are more difficult to make.

Let’s break down what retirees tend to overlook and why a deeper analysis is not only helpful but necessary.

The Hidden Weight of Deductibles

Monthly premiums are only one part of the picture. Most PSHB plans include an annual deductible, and in 2025, these deductibles typically range from $350 to $2,000 depending on whether you choose a low-deductible or high-deductible plan.

What retirees often miss:

• Deductibles must be paid before the plan starts sharing costs.

• These costs reset every calendar year.

• Family coverage has higher deductibles than individual plans.

If you only look at the premium and ignore the deductible, your cost estimate could be off by hundreds or even thousands of dollars annually.

Coinsurance Adds Unpredictability

Many services under PSHB plans use coinsurance rather than fixed copays. This means you pay a percentage of the total cost of the service, not a flat fee.

Common areas where coinsurance applies:

• Hospital inpatient stays

• Outpatient surgeries

• Diagnostic tests and imaging

• Durable medical equipment (DME)

For in-network services, coinsurance typically ranges from 10% to 30%. Out-of-network services can be 40% or more. Without knowing in advance how much a procedure costs, estimating your share can become difficult.

In other words, even if you budget for premiums and deductibles, coinsurance can still introduce cost variability that throws off your calculations.

Medicare Part B: Required, But Not Included

Starting in 2025, most Medicare-eligible Postal retirees must enroll in Medicare Part B to maintain PSHB coverage. This requirement is often underestimated or misunderstood.

Important points to remember:

• The 2025 standard Medicare Part B premium is $185 per month.

• This is in addition to your PSHB premium.

• Higher-income enrollees may pay more due to the IRMAA surcharge.

• Some PSHB plans offer partial reimbursement, but this doesn’t eliminate the cost entirely.

When retirees plan for healthcare costs and forget to include the Medicare Part B premium, they leave out a major recurring expense. It’s not optional for most PSHB enrollees.

Out-of-Network Costs Can Spiral

Under PSHB, using providers outside your plan’s network means more than just a higher coinsurance rate. It often means you’ll face significantly higher out-of-pocket costs due to:

• Higher coinsurance percentages (often 40% or 50%)

• Separate deductibles that don’t count toward your in-network deductible

• Balance billing if the provider charges above the plan’s allowed rate

You may have chosen your plan based on your current providers, but if you move, travel frequently, or need a specialist not in-network, you could see a sharp rise in unexpected costs. Make sure to check whether your plan includes nationwide network access or offers special arrangements for traveling retirees.

The Annual Out-of-Pocket Maximum Isn’t Always Reassuring

Most PSHB plans include an annual out-of-pocket maximum—for 2025, this can be as high as $7,500 for Self Only and $15,000 for family coverage, in-network. This cap is supposed to offer financial protection. But retirees often overlook key details:

• Out-of-network expenses do not count toward the in-network limit.

• Prescription drug costs under Medicare Part D are subject to a separate cap ($2,000 in 2025).

• Some services (e.g., cosmetic procedures, non-covered treatments) don’t count toward the limit at all.

It’s crucial not to view the out-of-pocket maximum as a hard ceiling. It only applies under certain conditions, and many retirees reach it faster than expected due to a single hospital stay or ongoing specialist care.

Copayments Still Add Up Fast

While coinsurance applies to many services, copayments are common for routine care like:

• Primary care visits ($20–$40)

• Specialist visits ($30–$60)

• Urgent care or emergency room visits ($50–$150)

These amounts may seem small individually, but over the course of a year—especially if you have chronic health conditions or multiple household members on your plan—they can add up.

Some retirees believe that “Medicare will take care of most of it,” but the reality is that PSHB becomes the secondary payer after Medicare, and cost-sharing still applies.

Prescription Drug Costs Aren’t Always Predictable

PSHB plans integrate Medicare Part D drug coverage for those enrolled in Medicare. While this helps consolidate your benefits, drug costs vary greatly:

• You’ll pay up to the plan’s deductible ($590 max in 2025) before cost-sharing begins.

• Drugs are priced in tiers—generics cost less, but brand-name and specialty drugs can cost more.

• Even with a $2,000 cap on annual out-of-pocket costs, a few expensive prescriptions could push you there quickly.

Some plans also require prior authorizations or step therapy, delaying access to certain medications and potentially increasing out-of-pocket costs in the interim.

Timing Matters When Estimating Costs

Another commonly overlooked issue is timing. If you retire mid-year, your cost-sharing responsibilities are not pro-rated:

• Your deductible resets every January 1.

• The out-of-pocket maximum also resets with the calendar year.

• Medicare Part B premiums continue monthly, regardless of when you enroll.

So if you retire in July, you could still be responsible for the full-year deductible and coinsurance on top of premiums.

This can affect:

• Your first-year budgeting

• Whether you delay elective care until after a reset

• Your decision to choose a plan with lower upfront cost-sharing

Comparing Plans Only by Premiums Leads to Underestimates

It’s tempting to use monthly premiums as a shorthand for plan affordability. But this leads many retirees to choose a plan that looks cheaper, only to find out later that it’s more expensive when care is actually needed.

Instead, you should compare plans based on:

• Total annual premium + Medicare Part B cost

• Deductible + expected copayments

• Coinsurance for likely services

• Maximum out-of-pocket cost

Tools and plan comparison worksheets can help you map these totals for multiple scenarios—routine care, emergency hospitalization, high medication use. Don’t default to what appears to be the lowest price tag.

Benefits Like Reimbursement Aren’t Automatic

Several PSHB plans offer incentives or reimbursements—for example, helping cover the Medicare Part B premium or rewarding healthy behaviors. But these benefits:

• Require active enrollment or opt-in

• May involve forms, proof of Medicare enrollment, or participation in wellness programs

• Are typically paid after you’ve already incurred the cost

Assuming these benefits are automatic or guaranteed in full can leave you financially short.

What You Should Do Before Relying on Any Estimate

As a Postal retiree, you’re already navigating a major shift in your health benefits landscape. Cost-sharing under PSHB isn’t just more complex—it’s also more variable from person to person.

Before you rely on any estimate:

• Review the plan brochure in detail, not just the summary

• Check whether your doctors and facilities are in-network

• Confirm if your medications are on the formulary and at what tier

• Add Medicare Part B costs into your budget automatically

• Consider worst-case scenarios, not just average ones

This process may take time, but it is far less expensive than finding out later that your healthcare costs are double what you anticipated.

Your Planning Should Include Real Numbers, Not Just Hopes

Even though PSHB premiums and Medicare integration are meant to help control costs, they do not eliminate your share of expenses. That share is shaped by many moving parts: deductibles, coinsurance, timing, medication tiers, provider networks, and Medicare enrollment.

If you’re unsure about how to approach this or if your situation involves complex care needs, reach out for help. A licensed agent listed on this website can walk you through these details and help you understand what your real annual costs might look like under various plan options.