Key Takeaways

• Focusing only on your monthly PSHB premium can leave you blind to other major health-related costs that add up over the year, like copayments, coinsurance, and deductibles.

• By understanding the full structure of your PSHB plan, including cost-sharing requirements and medicare coordination, you can avoid unexpected expenses in retirement.

Why Premiums Only Tell Half the Story

It’s easy to look at your monthly Postal Service Health Benefits (PSHB) premium and assume that number reflects the full cost of your health care coverage. But the reality is more complex. Your premium is only one part of a much larger financial equation. If you’re not considering coinsurance, copayments, deductibles, and out-of-pocket maximums, you might not be getting the full picture of your true health care costs.

Understanding how these pieces work together in 2025 is essential, especially now that PSHB plans have transitioned away from the older FEHB system. While premiums may appear stable or even slightly lower than expected, that doesn’t necessarily mean your plan is more affordable overall.

What Your Premiums Actually Cover

Your monthly premium helps fund:

• Access to a broad network of doctors, specialists, and hospitals

• Preventive care such as annual checkups, screenings, and vaccines

• Administrative costs for plan management and claims processing

• A portion of your prescription drug coverage, especially if you’re Medicare-eligible

• Your share of PSHB plan costs, with the government typically covering about 70% of the total premium

But premiums do not cover every service in full. And they rarely reflect what you’ll pay when you actually use care.

The Real Impact of Deductibles

In 2025, PSHB plans generally feature annual in-network deductibles ranging from $350 to $500 for low-deductible plans and $1,500 to $2,000 for high-deductible plans. This means you’re responsible for paying 100% of your health care costs until you hit that threshold.

If you only visit your doctor once or twice a year, this might not feel burdensome. But if you require surgery, advanced imaging, or chronic care management, your deductible can quickly become a key factor in how much your care actually costs.

Understanding Coinsurance and Copayments

Many PSHB enrollees overlook coinsurance and copayments when evaluating a plan. These are the shared costs that kick in after you’ve met your deductible:

• Coinsurance typically ranges from 10% to 30% for in-network care

• Copayments may range from $20 to $40 for a primary care visit, and higher for specialists or urgent care

These charges may seem minor at first, but they add up over multiple visits or ongoing treatment.

Medicare Integration: Cost Sharing Shifts

If you’re Medicare-eligible and enrolled in both PSHB and Medicare Part B in 2025, you likely benefit from reduced out-of-pocket costs, such as:

• Waived deductibles for in-network services

• Lower coinsurance or copayments for many procedures

• Part B premium reimbursements from some PSHB plans

However, if you choose not to enroll in Part B when required, you may lose those cost-sharing advantages. And keep in mind: PSHB prescription drug benefits are now coordinated with Medicare Part D through an Employer Group Waiver Plan (EGWP). If you opt out of this, your drug costs could increase significantly.

Hidden Costs That Can Catch You Off Guard

Beyond the obvious, there are less visible costs that could affect your total spending:

• Out-of-network charges: These can be up to 50% coinsurance, with higher deductibles

• Emergency room fees: Typically $100 to $150 per visit, regardless of network

• Prescription drug tiers: Higher-tier medications may require significant out-of-pocket payments even after meeting your deductible

• Skilled nursing and rehab: After a hospitalization, extended care can become expensive, particularly if you exceed coverage limits

The Role of the Out-of-Pocket Maximum

Every PSHB plan in 2025 includes an annual out-of-pocket maximum. This cap protects you from unlimited spending, but it’s often misunderstood. Here’s what it does not include:

• Monthly premiums

• Services not covered by the plan

• Charges for out-of-network care beyond allowable amounts

Most plans set this maximum at $7,500 for Self Only and $15,000 for Self Plus One or Self and Family. Once you hit this limit with in-network covered services, your plan pays 100% of additional eligible costs for the remainder of the year.

Why You Should Compare Total Annual Costs

When evaluating your plan options during Open Season or after a qualifying life event, ask yourself:

• What’s my annual premium total? (Multiply monthly premium by 12)

• How much is my deductible?

• What are the typical copays or coinsurance for the services I use most?

• What’s my worst-case scenario with the out-of-pocket maximum?

Adding these components together provides a more accurate view of your financial responsibility over the course of the year.

How High Usage Changes Everything

The value of your PSHB plan changes depending on your health care needs. If you only use preventive services, you might focus on keeping premiums low. But if you anticipate multiple provider visits, physical therapy, or surgeries, a plan with a higher premium but lower cost-sharing may be the more affordable option overall.

Plans that appear cheaper on paper may cost you more in practice. Understanding the relationship between usage and plan design is critical to choosing wisely.

Medicare Part B Decisions Carry Financial Weight

The 2025 PSHB rules require most Medicare-eligible annuitants to enroll in Part B unless they meet certain exceptions. While Part B adds an extra monthly premium, skipping it may increase your PSHB costs due to:

• Higher deductibles

• Higher coinsurance

• Loss of premium reimbursement options from PSHB plans

If you retired on or before January 1, 2025, or were at least 64 years old as of that date, you’re exempt from the mandate. But even if you’re exempt, enrolling in Part B could still save you money over time when paired with a PSHB plan that offers cost-sharing benefits.

Prescription Drug Costs: Tiered and Capped

All Medicare-eligible PSHB enrollees are now automatically enrolled in a Medicare Part D EGWP unless they opt out. For 2025, this includes:

• An annual $2,000 out-of-pocket cap on prescription drugs

• A $35 per month insulin copayment cap

Without this protection, drug costs can balloon quickly, especially if you need specialty medications.

If you’re not eligible for Medicare yet, your PSHB drug coverage still applies, but you’ll need to watch out for higher coinsurance on brand-name or specialty drugs in higher tiers.

How to Assess Value Beyond the Premium

To make the most informed decision, you should consider:

• Your current health status: Chronic conditions, planned procedures, or regular medications can make coinsurance and deductibles more important than premiums

• Your provider preferences: Out-of-network care may be more expensive, even if premiums seem attractive

• Medicare enrollment status: Being on Part B opens the door to enhanced coordination with PSHB that could reduce your total cost

• Out-of-pocket protections: Understand the true scope of your plan’s maximum limits and what they do or do not cover

Preparing for Open Season and Beyond

Each November through December, you have the chance to evaluate and change your PSHB plan. Leading up to that window, take time to:

• Read your Annual Notice of Change (ANOC) from your current plan

• Compare your current spending to other plan designs

• Review your Medicare status if you’re 65 or approaching that age

• Talk to a licensed agent listed on this website if you’re unsure which option fits your situation

It’s not just about finding a plan with a comfortable monthly deduction. It’s about anticipating your needs and minimizing your risk of unexpected costs throughout the year.

Premiums Are Just the Starting Point

Your PSHB monthly deduction is an important number, but it’s far from the only number that matters. Once you add in deductibles, copayments, coinsurance, and drug costs, your real annual cost can look very different. And when you add Medicare into the mix, those figures shift again.

If you want real peace of mind about your health expenses in retirement, you need to go beyond the premium. Look at the full picture, especially as plan designs evolve under the PSHB system.

Get in touch with a licensed agent listed on this website to talk through the numbers and see what’s best for your personal situation.