Key Takeaways

• Even though Medicare Part A is premium-free for most eligible individuals, you may still face significant out-of-pocket costs like deductibles, coinsurance, and hospital fees.

• As a Postal Service Health Benefits (PSHB) enrollee, coordinating your PSHB plan with Medicare Part A can reduce your costs, but only if you understand what each covers and where the gaps remain.

What ‘Free’ Actually Means When It Comes to Medicare Part A

Medicare Part A is often described as “free” hospital insurance. That phrase can be misleading. In 2025, you qualify for premium-free Part A if you or your spouse paid Medicare taxes for at least 10 years (40 quarters). That only means you don’t pay a monthly premium. It doesn’t mean you won’t face other costs.

Here’s what Medicare Part A covers:

• Inpatient hospital stays

• Skilled nursing facility care (short-term)

• Hospice care

• Some home health services

And here’s what it does not cover:

• Long-term custodial care

• Doctor services during inpatient stays (that’s Part B)

• Outpatient care, including ER visits not resulting in admission

• Personal care items and non-medical assistance

The truth is, even with Part A coverage, you are still responsible for other out-of-pocket costs unless you have additional coverage through your PSHB plan or Medicare Part B.

The 2025 Part A Deductible: Your First Expense

Each time you are admitted to the hospital, you begin a new benefit period. For every benefit period in 2025, you must pay a $1,676 deductible before Medicare Part A begins to cover your hospital stay.

A benefit period begins the day you are admitted and ends when you have not received inpatient hospital or skilled nursing facility care for 60 days in a row. This means you could be responsible for paying that $1,676 multiple times in a single year.

Your PSHB plan may help cover this cost if it acts as secondary insurance, but only if you are also enrolled in Medicare Part B and eligible for full coordination of benefits.

Hospital Costs After the Deductible

Once you meet your deductible, Medicare Part A will pay most of your inpatient costs, but only up to a certain number of days:

• Days 1–60: You pay $0 per day (after deductible)

• Days 61–90: You pay $419 per day

• Days 91 and beyond: You pay $838 per day (using 60 lifetime reserve days)

• After 60 lifetime reserve days: You pay all costs

These figures make it clear that lengthy hospitalizations can become extremely expensive. Your PSHB plan can help reduce these expenses, but not automatically. You must understand your coordination rules.

Skilled Nursing Facility: Not What Most People Expect

After a qualified hospital stay of at least three consecutive days, Medicare Part A covers skilled nursing care:

• Days 1–20: You pay $0

• Days 21–100: You pay $209.50 per day

• After 100 days: You pay all costs

It’s important to know that this benefit is not long-term care. Skilled nursing is short-term rehabilitation, like physical therapy after surgery. If you need extended care, Medicare Part A offers no help after 100 days. This is a major gap in coverage.

Your PSHB plan may include extended nursing facility coverage, but it will typically require coordination with Medicare and approval of medical necessity.

Hospice Care and Home Health Services: Limited Yet Essential

Hospice care under Part A is generally covered with minimal out-of-pocket cost. You might pay small copayments for medications or respite care. Home health services are also covered if your doctor certifies they are medically necessary and you are homebound.

However, many PSHB enrollees mistakenly believe all home care or end-of-life care is free under Part A. It isn’t. PSHB plans may fill these gaps but only when Medicare is billed first and the services qualify.

What PSHB Covers That Part A Doesn’t

PSHB plans offer robust coverage. But they are not identical to traditional FEHB plans, and coordination with Medicare is essential to reduce costs.

Your PSHB plan may provide:

• Coverage for doctor services (normally under Part B)

• Lower cost-sharing for hospital and skilled nursing stays

• Extended coverage for services not covered by Medicare

• Emergency care outside the United States

But many of these benefits only apply when you are enrolled in both Part A and Part B. If you only enroll in Part A and rely solely on your PSHB plan for the rest, you may find higher costs or denied claims.

How Coordination of Benefits Works for PSHB and Medicare

When you become eligible for Medicare at age 65, your PSHB plan changes how it pays for services. Medicare becomes the primary payer, and your PSHB plan becomes secondary—but only if you are enrolled in both Part A and Part B.

Here’s what that means:

• Medicare pays first for all Medicare-covered services

• Your PSHB plan pays its share after Medicare processes the claim

• If you are not enrolled in Part B, your PSHB plan may treat those claims as if Medicare had paid—leaving you to pay the unpaid portion

Skipping Part B often results in higher out-of-pocket costs because your PSHB plan assumes you have full Medicare coverage.

Why You Can’t Count on PSHB Alone at 65

Some annuitants choose to rely solely on PSHB coverage when they turn 65, enrolling only in Part A to avoid the monthly Part B premium. That might seem like a way to save money, but it often leads to:

• Larger deductibles and coinsurance

• Higher out-of-pocket maximums

• Fewer protections against catastrophic costs

• Denials for services Medicare would normally cover

Without Part B, you may not get full secondary coverage from your PSHB plan. In effect, you lose much of the plan’s cost-sharing protection.

Medicare Late Enrollment Penalties Still Apply

If you delay Part B enrollment without other creditable coverage (PSHB alone does not count as creditable for Part B), you may face a permanent late enrollment penalty when you eventually sign up.

For each 12-month period you delay, your monthly Part B premium increases by 10%. The penalty is added to your premium for life. It’s a permanent financial cost that can grow the longer you wait.

There are exceptions if you are still actively working and covered under a group health plan, but once you retire, the clock starts ticking.

PSHB Prescription Drug Coverage and Medicare Part A

Part A provides almost no drug coverage. It may cover drugs administered in a hospital, but not outpatient or self-administered prescriptions. In 2025, PSHB plans for Medicare-eligible annuitants include a Medicare Part D prescription drug benefit automatically.

Key features include:

• $2,000 out-of-pocket maximum under Part D

• $35 monthly cap for insulin (where applicable)

• No more donut hole (coverage gap)

• Wider pharmacy networks than standalone Part D plans

However, this drug coverage only applies if you are enrolled in Medicare. Opting out of Medicare can disqualify you from the integrated PSHB drug benefit.

If You Retired Before 2025, Your Rules May Be Different

If you retired on or before January 1, 2025, and are not enrolled in Medicare Part B, you are not required to enroll. But if you do enroll later, you may still face a late enrollment penalty.

PSHB plans treat these annuitants differently from those who retired after 2025. It’s essential to review your enrollment window and eligibility with a licensed agent to avoid surprises.

Timing Your Enrollment to Avoid Gaps and Penalties

Your Initial Enrollment Period for Medicare begins 3 months before the month you turn 65 and ends 3 months after. That’s a 7-month window.

If you miss it, you may have to wait until the General Enrollment Period from January 1 to March 31. But coverage doesn’t begin until July 1. That’s potentially months without adequate coverage or financial protection.

A Special Enrollment Period may apply if you are working past 65 and covered under a group plan, but that doesn’t apply if you’ve already retired.

What You Can Do Now to Prepare

Being proactive about Medicare and your PSHB plan coordination helps avoid expensive gaps in coverage. Here’s what you can do:

• Confirm your Medicare eligibility and work history for premium-free Part A

• Mark your Initial Enrollment Period on your calendar

• Review your PSHB plan’s Medicare coordination rules

• Evaluate the long-term costs of skipping Part B

• Ask about your prescription drug coverage options under PSHB

Talking to a licensed agent listed on this website can help you review your choices based on your retirement timeline, healthcare needs, and eligibility.

Understand the Full Picture Before Making Medicare Decisions

Medicare Part A may be called “free,” but your healthcare at 65 is anything but. You still have to consider hospital deductibles, coinsurance, late enrollment penalties, and the limits of what Part A covers.

Your PSHB plan can help cover many of these gaps, but only if you also enroll in Medicare Part B and allow full coordination of benefits. Skipping steps or delaying decisions often leads to higher costs and limited coverage.

Before making any Medicare decisions, speak with a licensed agent listed on this website. They can walk you through how Part A works with your PSHB benefits and help you build a plan that fits your needs and timeline.