Key Takeaways

• Medicare Part A does not cover everything that happens in a hospital setting. Important gaps, such as observation stays, extended skilled nursing, and deductibles, often catch retirees off guard.

• Postal retirees enrolled in the PSHB program must carefully review how Medicare and PSHB coordinate to avoid unexpected out-of-pocket costs during hospital stays.

Hospital Coverage Starts with Part A—but It Doesn’t End There

If you’re relying solely on Medicare Part A to take care of your hospital expenses in retirement, you’re not alone. Many Postal Service retirees assume that once they enroll in Part A, they’re fully covered for any inpatient care. But in 2025, this assumption often leads to unexpected bills and serious coverage gaps that could easily be avoided with better planning.

Part A only covers specific types of hospital care under particular conditions. Even then, it leaves you responsible for a significant portion of the cost unless you have additional coverage in place through a PSHB plan or Medicare Part B.

What Medicare Part A Covers—and What It Doesn’t

Medicare Part A generally covers:

• Inpatient hospital stays

• Skilled nursing facility care (short-term)

• Hospice care

• Some home health care

But there are limits.

Inpatient Hospital Stay Limitations

In 2025, the Part A deductible per benefit period is $1,676. This means before Medicare pays anything, you’re responsible for that full amount. But it doesn’t stop there:

• Days 1–60: You pay $0 after meeting the deductible.

• Days 61–90: You pay $419 per day.

• Days 91–150 (lifetime reserve days): You pay $838 per day.

• Beyond 150 days: You’re responsible for all costs.

Medicare counts a benefit period as starting the day you’re admitted and ending 60 days after you’ve been discharged. So multiple hospitalizations in a year can result in paying the deductible more than once.

Observation vs. Inpatient Status

One of the most misunderstood gaps in Part A is the distinction between being admitted as an inpatient and being kept under “observation” status. If the hospital classifies your stay as observation—even if you’re in a hospital bed overnight—it’s not covered under Part A. Instead, it’s billed under Part B, which can mean more out-of-pocket costs unless you’re also enrolled in Part B and have a coordinated PSHB plan.

Many retirees discover too late that observation status prevents them from qualifying for skilled nursing care coverage later.

The Skilled Nursing Facility Catch

To qualify for Medicare Part A coverage of skilled nursing facility (SNF) care, you must:

• Have a qualifying inpatient hospital stay of at least 3 consecutive days (observation status doesn’t count).

• Be admitted to the SNF within 30 days of your hospital discharge.

Even when these conditions are met, coverage is limited:

• Days 1–20: $0

• Days 21–100: $209.50 per day

• Beyond 100 days: You pay all costs

Without supplemental coverage through a PSHB plan or long-term care policy, you could be facing thousands in uncovered charges.

Out-of-Pocket Costs Add Up Quickly

In addition to deductibles and coinsurance, Medicare Part A does not cover:

• Private hospital rooms (unless medically necessary)

• Personal items such as toiletries and television rental

• Custodial care (help with bathing, dressing, eating)

• Emergency room visits not resulting in inpatient admission

These costs can escalate quickly, especially for longer hospital stays. Having a PSHB plan that works with Medicare can help offset some of these expenses, but you need to be enrolled in both Parts A and B to take full advantage of those benefits.

Timing Is Everything: How Enrollment Affects Your Coverage

If you’re a Medicare-eligible annuitant in the PSHB program, enrolling in Part B is not always optional. As of 2025, Medicare Part B enrollment is mandatory for most annuitants and their family members unless they qualify for a specific exemption, such as being retired on or before January 1, 2025.

Without Part B, your PSHB plan may deny coverage for services typically handled by Medicare. That includes outpatient observation stays, diagnostic tests, ER services, and even some follow-up care after hospitalization.

Why Pairing PSHB with Medicare Matters

When you combine Medicare Part A, Part B, and your PSHB plan, the coordination of benefits can significantly reduce your share of the cost. Here’s how it generally works:

• Medicare pays first.

• Your PSHB plan pays second, picking up most or all of the remaining out-of-pocket costs.

This combined setup often results in little to no cost for covered hospital services, depending on your plan.

But that only happens if you’re properly enrolled. Missing Medicare Part B enrollment deadlines, or assuming Part A alone is enough, can leave you responsible for all secondary charges your PSHB plan would’ve otherwise paid.

What Happens Without Part B?

If you only have Medicare Part A and skip Part B, here’s what may happen:

• Observation stays are not covered adequately

• Outpatient surgery, diagnostic scans, and ER visits are billed entirely to you

• Your PSHB plan may not pay its share of these services

You also become ineligible for many of the cost-sharing reductions that PSHB plans offer to Medicare-integrated members, such as waived deductibles or lower copayments.

The Drug Coverage Disconnect

Medicare Part A does not cover outpatient prescription drugs. However, in 2025, PSHB plans automatically include prescription coverage for Medicare-eligible annuitants through a Medicare Part D EGWP (Employer Group Waiver Plan).

This means you’ll have:

• A $2,000 annual cap on out-of-pocket drug costs

• Access to an expanded pharmacy network

• Insulin capped at $35 per month

But this only applies if you maintain Medicare Part B enrollment. Opting out of Part B can mean losing access to integrated drug benefits.

Do You Really Need Part A and PSHB Together?

Yes. Even though Part A provides a foundational layer of hospital coverage, it was never intended to be a standalone solution. PSHB offers broader coverage, more predictable cost-sharing, and a safety net for services Medicare doesn’t handle. But the real strength comes from integration.

When Medicare and PSHB plans coordinate, you can get:

• Lower or waived hospital deductibles

• Reduced or eliminated coinsurance

• Better protection from observation status gaps

• More complete coverage of follow-up care

Trying to rely on Part A alone in 2025 is increasingly risky for annuitants.

Reviewing Your Options During Open Season

The PSHB Open Season runs from November to December each year. This is your chance to:

• Confirm that your plan is Medicare-coordinated

• Review whether your current plan offers Part B premium reimbursement

• Adjust your enrollment type (Self Only, Self Plus One, or Self & Family)

• Evaluate out-of-pocket maximums, coinsurance levels, and SNF coverage

Make sure you receive your plan brochure and use OPM resources or consult a licensed agent listed on this website to make informed decisions.

Your Next Hospital Stay Shouldn’t Surprise You

Hospital stays in retirement are stressful enough without having to worry about surprise bills, classification errors, or unmet coverage rules. With the proper alignment of Medicare Part A, Part B, and your PSHB plan, you can approach hospital visits with greater financial security.

Take time now to:

• Understand how Medicare defines inpatient vs. observation care

• Know what Part A covers and where it stops

• Verify that your PSHB plan works with Medicare

• Maintain your Medicare Part B enrollment if required

Failing to address these points could result in thousands in unexpected expenses.

Preparing for the Gaps in Part A Means Protecting Your Retirement Budget

Medicare Part A may look like a comprehensive hospital solution, but it’s not. PSHB fills in many of the gaps, but only if you use it as part of a larger coordinated strategy. As a Postal Service retiree or eligible family member, now is the time to double-check your enrollment choices and coverage alignment.

To make sure you’re covered the way you expect, speak with a licensed agent listed on this website for personalized guidance.