Key Takeaways

• PSHB coinsurance might look manageable on paper, but if you require ongoing care, surgery, or expensive diagnostics, your out-of-pocket costs can rise quickly.

• Understanding when coinsurance applies, and how Medicare enrollment interacts with it, can protect you from unexpected financial exposure.

What Coinsurance Really Means Under PSHB

Coinsurance is a type of cost-sharing where you pay a percentage of the allowed charge for a covered healthcare service. Under the Postal Service Health Benefits (PSHB) Program, this applies once you meet your deductible. For example, you may be responsible for 20% to 30% of the costs for in-network services, and 40% to 50% for out-of-network services.

At first glance, that might sound like a minor detail. After all, coinsurance is just a portion, and the plan still covers most of the cost, right? But in practice, this seemingly small percentage can translate into significant expenses, especially if you face hospitalization, outpatient procedures, or frequent visits to specialists.

How PSHB Sets Coinsurance Rates

In 2025, most PSHB plans apply the following ranges:

• In-network coinsurance: Typically 10% to 30% depending on the service category

• Out-of-network coinsurance: Generally 40% to 50%

• Prescription drugs: Tiered cost-sharing that may include both copayments and coinsurance

These percentages apply after your deductible is met. And while some services have fixed copayments (like primary care visits or urgent care), many major healthcare needs fall into the coinsurance bucket.

When Coinsurance Kicks In

Coinsurance doesn’t apply to all services, but when it does, the timing and conditions matter. You usually start paying coinsurance after your plan’s annual deductible is met. Here’s how that breaks down:

• Low-deductible plans: Deductibles typically range from $350 to $500 in-network

• High-deductible plans: Deductibles often start around $1,500 and can exceed $2,000

Once you pay that deductible, coinsurance applies to eligible services like:

• Hospital admissions

• Outpatient surgery

• Specialist care

• Durable medical equipment

• Imaging (MRIs, CT scans)

Even preventive care, while usually exempt, can become costly if a diagnostic element is added during the same visit.

What That Means for Retirees on Fixed Incomes

If you’re retired and living on a fixed income, coinsurance can quickly become a financial strain. Say your specialist visit is billed at $500 and your coinsurance is 30%. That’s $150 out of your pocket for just one visit. Now imagine needing multiple specialists, monthly imaging, or ongoing treatment like physical therapy.

Even with a maximum out-of-pocket (MOOP) limit, which caps your total expenses for the year, the journey to that cap can be expensive. In 2025, in-network MOOP under PSHB plans can go as high as:

• $7,500 for Self Only

• $15,000 for Self Plus One or Self and Family

These caps reset annually. So if you hit your limit in 2025, it starts over on January 1, 2026. That cycle repeats every year.

Medicare Part B Can Reduce or Eliminate Coinsurance

If you’re eligible for Medicare, enrolling in Part B often reduces or eliminates many PSHB coinsurance costs. Why? Because many PSHB plans in 2025 coordinate benefits with Medicare. Here’s what that typically means:

• You use Medicare as your primary coverage

• Your PSHB plan becomes secondary and may cover most or all of your remaining costs

With this setup:

• You may owe nothing for covered services where Medicare pays 80% and PSHB pays the remaining 20%

• You often skip the PSHB deductible altogether for Medicare-covered services

But this only works if you actually enroll in Medicare Part B. If you skip Part B, the PSHB plan becomes primary, and you absorb full deductibles and coinsurance.

Many Miss the Warning Signs

Coinsurance is one of those details that people often overlook when enrolling in a plan. Here’s what many miss:

• Out-of-network care gets very expensive: Coinsurance can hit 50%, and out-of-pocket limits are usually higher or may not apply

• Facility-based billing adds complexity: Even if your doctor is in-network, the hospital or lab might not be

• Chronic illness escalates exposure: A single surgery or chronic diagnosis could mean thousands in coinsurance in a short period

If you haven’t enrolled in Medicare and rely solely on PSHB, you’re exposed to these risks directly. Even if you’re healthy today, your costs can change overnight after a diagnosis.

PSHB Does Offer Protections, But There Are Limits

Yes, PSHB plans have annual out-of-pocket caps, and yes, you have protection from catastrophic financial ruin. But here’s the catch:

• The MOOP is high: $7,500 or $15,000 in a single year is still a burden

• Not all services count toward MOOP: Some out-of-network charges, balance billing, or excluded services may fall outside your cap

• Prescription drug coinsurance adds to the load: Even if you reach your medical MOOP, drug spending may have separate limits

For example, the integrated Medicare Part D plan available through PSHB caps prescription out-of-pocket costs at $2,000 in 2025. But again, this relief only applies if you’re enrolled in Medicare.

How to Avoid Surprise Expenses

Coinsurance surprises often stem from incomplete planning. Here’s how to prevent them:

• Review your Explanation of Benefits (EOBs) after every service to confirm how much you owe

• Double-check network participation: Confirm both the provider and facility are in-network

• Compare plan summaries during Open Season, paying close attention to coinsurance rates and MOOP

• Consider Medicare enrollment if you’re eligible, especially for Part B, to reduce your exposure

• Call the PSHB Navigator line or speak with a licensed agent before scheduling expensive procedures

Taking proactive steps can help you control coinsurance costs before they spiral out of hand.

The Danger of Choosing a Plan Based on Premiums Alone

Premiums are the monthly cost of keeping your coverage active, but they don’t reflect the total cost of care. Some plans with lower premiums offset that cost with higher deductibles and coinsurance. If you’re not looking closely, you might assume you’re saving money while leaving yourself financially vulnerable.

Instead of comparing only premiums, evaluate:

• Total potential out-of-pocket costs for high-usage scenarios

• How the plan works with Medicare if you’re eligible

• Specialist and hospital access in-network

• Coinsurance structure for surgeries, ER visits, and major diagnostics

A cheaper monthly premium means little if you end up paying more over the year due to frequent care and higher coinsurance.

High-Cost Services That Often Trigger Coinsurance

Not all services are created equal when it comes to out-of-pocket costs. Under PSHB, some of the most coinsurance-heavy services include:

• Hospital stays and surgeries: Even one inpatient stay can reach tens of thousands of dollars

• Emergency room visits: These often involve separate facility and physician charges

• Advanced imaging: MRIs and CT scans can involve significant coinsurance if not bundled

• Specialist consultations: Especially if you’re seeing multiple providers for a condition

• Outpatient therapy: Physical, occupational, or behavioral therapy can become recurring expenses

Each of these areas is where coinsurance becomes most visible. Without secondary coverage like Medicare Part B, you may feel the full financial impact.

When You Should Reevaluate Your PSHB Strategy

You should reassess your coverage and cost-sharing at key milestones:

• Turning 65: Medicare eligibility opens the door to lower cost-sharing under PSHB

• Retiring or changing work status: Your usage of healthcare services may increase

• Receiving a new diagnosis: A chronic or acute condition may increase your reliance on high-cost services

• Annual Open Season (November to December): This is the best time to switch plans or adjust coverage

Don’t assume your needs remain static from year to year. Use Open Season as a moment to ask hard questions about coinsurance and affordability.

The PSHB and Medicare Advantage Conflict

One final caution: If you switch to a Medicare Advantage plan (Part C), your PSHB benefits may be suspended. This could leave you without your PSHB coinsurance protections or prescription coverage integration.

This makes Medicare Part B with Original Medicare a more compatible choice if you want to retain your PSHB benefits fully and reduce coinsurance exposure.

Rethink Coinsurance Before It Hurts Your Wallet

Many PSHB enrollees focus on premiums, network size, or plan brand name. But coinsurance is the part that hits hardest when your health needs increase. What seems like a small percentage on paper can turn into thousands of dollars once you start actively using your plan.

If you’re Medicare-eligible, consider enrolling in Part B. If you’re not yet eligible, take time each Open Season to compare plans based on coinsurance and MOOP, not just monthly cost.

Need help sorting it out? Contact a licensed agent listed on this website for a personalized review of your options under PSHB.