Key Takeaways

• Coinsurance in the PSHB Program can significantly impact your out-of-pocket costs, especially if you’re not fully aware of how it applies to different types of care.

• Understanding the difference between in-network and out-of-network coinsurance rates and how they apply to services can help you avoid large, unexpected bills in retirement.

Why Coinsurance Deserves More of Your Attention

When you think about health insurance under the Postal Service Health Benefits (PSHB) Program, it’s easy to focus on monthly premiums or deductibles. But there’s another factor that may quietly become the most expensive part of your coverage: coinsurance.

Coinsurance is the percentage of medical costs you must pay after you’ve met your deductible. While it might look like a small number on paper—say 10% or 20%—those percentages can translate into hundreds or even thousands of dollars depending on the service. In 2025, with the full transition from FEHB to PSHB in effect, it’s essential to understand how coinsurance works and what you can do to keep it from draining your retirement income.

What Coinsurance Really Means in PSHB

Under the PSHB structure, coinsurance varies by plan, service type, and network status. Here’s what you’re likely to encounter:

• In-network coinsurance: Usually between 10% and 30% for most services.

• Out-of-network coinsurance: Often between 40% and 50%, and sometimes higher.

Coinsurance kicks in only after you meet your annual deductible. For example, if your in-network deductible is $500 and your coinsurance is 20%, you’ll still pay 20% of the cost of each eligible service after you’ve paid that initial $500.

The Role of the Out-of-Pocket Maximum

Fortunately, PSHB plans include out-of-pocket maximums. In 2025, these range up to $7,500 for Self Only coverage and $15,000 for Self Plus One or Self & Family. Once you hit this cap, the plan pays 100% of covered in-network services for the rest of the year.

However, out-of-network costs may not count toward this maximum—or may have a separate, higher threshold. This means that if you get care outside your plan’s network, you could be on the hook for a much larger amount even if you’ve reached your in-network limit.

3 Types of Services Where Coinsurance Hits Hard

1. Diagnostic and Imaging Services

MRI scans, CT scans, and other advanced diagnostics often cost thousands of dollars. With a 20% coinsurance rate, a $2,500 scan could leave you responsible for $500 out of pocket—even after meeting your deductible.

2. Outpatient Procedures

Same-day surgeries and outpatient procedures tend to have coinsurance charges rather than flat copayments. If your plan includes 30% coinsurance for outpatient surgery, you may be facing significant costs depending on the facility and complexity of the procedure.

3. Durable Medical Equipment (DME)

Items like wheelchairs, CPAP machines, or prosthetics often fall under coinsurance rather than copayment categories. With DME costs running into the thousands, your coinsurance can add up fast.

In-Network vs. Out-of-Network: Why It Matters More Than Ever

Many retirees mistakenly assume they can visit any provider and still receive generous coverage. Under PSHB, using out-of-network providers can drastically change your financial responsibility.

• In-network services are negotiated with providers, meaning you’re charged lower rates, and your coinsurance applies to those discounted prices.

• Out-of-network services are billed at full provider rates, and coinsurance percentages are much higher.

Even worse, some plans do not count out-of-network spending toward your in-network out-of-pocket maximum. That means higher exposure without a clear limit.

Medicare Makes a Difference—But Only If You’re Enrolled

For Medicare-eligible annuitants, enrolling in Medicare Part B can help reduce or eliminate coinsurance for many services. That’s because most PSHB plans coordinate benefits with Medicare. In 2025:

• Many PSHB plans waive coinsurance and deductibles when you have Medicare Parts A and B.

• If you don’t enroll in Part B, your PSHB plan becomes your primary insurance and you pay standard coinsurance.

Choosing not to enroll in Medicare Part B means you may face coinsurance on every medical visit, test, or procedure—making your total yearly costs much higher.

High-Cost Scenarios You Might Not Expect

Coinsurance doesn’t just apply to surgeries or hospital stays. You might also face it in everyday medical scenarios, such as:

• Emergency Room Visits: If your plan has coinsurance for ER services, and you’re taken to a non-network hospital, your portion could spike.

• Specialist Referrals: Seeing a specialist out of network—by mistake or due to availability—can result in steep bills.

• Mental Health or Physical Therapy Sessions: Frequent visits can lead to accumulated coinsurance costs quickly.

Avoiding Hidden Surprises in 2025

With the PSHB program still new in 2025, it’s important to stay ahead of the learning curve. Here’s what you can do:

• Review your plan brochure carefully to understand what services are subject to coinsurance.

• Stay in-network whenever possible to keep coinsurance percentages low.

• Track your out-of-pocket spending to know how close you are to your limit.

• Ask your provider before services are rendered about estimated costs and network status.

• Consider enrolling in Medicare Part B if you’re eligible and want to reduce cost exposure.

How Coinsurance Affects Your Retirement Budget

Many retirees set aside money each year to cover medical costs, but coinsurance can throw off your estimates if you’re not careful. A few costly procedures could push your out-of-pocket spending beyond your budgeted amount.

Your retirement income—whether it’s from FERS, Social Security, or TSP withdrawals—might not stretch as far if a single year of high medical needs arises. That’s why understanding how coinsurance works and how to plan for it is crucial.

You can reduce uncertainty by:

• Factoring in the maximum out-of-pocket amount into your retirement expense planning.

• Selecting a plan with lower coinsurance if you expect higher medical usage.

• Enrolling in both PSHB and Medicare Part B, if you’re eligible.

Getting Support and Clarity Before You Commit

Because PSHB is still relatively new and evolving, it’s easy to miss crucial details that affect your future. Coinsurance might seem like a background detail compared to premiums and copayments, but it can end up being the most expensive.

If you’re unsure about how your plan’s coinsurance works—or whether Medicare enrollment would reduce your costs—it’s wise to speak with someone who understands the system in detail.

Don’t Let Coinsurance Take You by Surprise

Now that PSHB is fully in place for 2025, understanding the true costs of healthcare has never been more critical for Postal retirees and employees. Coinsurance might look like a footnote in your plan brochure, but it could be one of the biggest line items in your annual budget.

Take time to review your plan’s coinsurance terms. Ask questions. Get help. And make sure your retirement income is protected from avoidable healthcare shocks.

For help reviewing your PSHB coinsurance structure or Medicare coordination options, get in touch with a licensed agent listed on this website.