Key Takeaways

• Coinsurance under the Postal Service Health Benefits (PSHB) Program may appear manageable at first, but cumulative costs can escalate quickly if you face ongoing or high-cost medical care.

• Understanding how coinsurance interacts with deductibles, out-of-pocket maximums, and Medicare enrollment is essential to avoid unexpected financial strain.

What Coinsurance Actually Means Under PSHB

Coinsurance is your share of the cost of a healthcare service, calculated as a percentage of the allowed amount for the service after your deductible is met. Unlike a copayment, which is a fixed dollar amount, coinsurance varies depending on the cost of the service.

In the PSHB program, coinsurance for in-network services typically ranges between 10% and 30%. For out-of-network services, the rate may spike to 40% or even 50%. While that may seem reasonable when you look at it on paper, these percentages translate into significant costs over the course of a year.

Why the First Few Bills Don’t Raise Red Flags

In many cases, your initial medical bills might not look alarming. For a simple office visit, coinsurance may only amount to $20 to $40 depending on the billed amount. For enrollees in good health or those with minimal medical needs, coinsurance might barely register on their radar.

But this calm is often short-lived.

Once you encounter lab tests, imaging, outpatient procedures, or hospital stays, that same percentage-based cost-sharing quickly grows. For example, 20% of a $5,000 procedure means you owe $1,000 out of pocket.

The Real Problem Begins with Recurring or Complex Care

What really makes coinsurance expensive under PSHB is when medical services are not one-time events.

• Multiple follow-ups with specialists

• Physical therapy sessions

• Monthly lab work

• Prescriptions not fully covered by copays

All of these can involve coinsurance that accumulates rapidly. If each session costs a few hundred dollars and you’re paying 20% every time, you might find yourself spending thousands over the year before hitting your out-of-pocket maximum.

The Role of Deductibles in Increasing Coinsurance Impact

Before coinsurance even kicks in, you typically need to satisfy your plan’s deductible. In 2025, many PSHB plans set individual deductibles between $350 and $2,000, depending on whether it’s a low or high-deductible plan.

Until your deductible is met, you pay the full allowed amount for services. After that, coinsurance applies. This means your cost burden can be twofold:

• Full payment for initial services up to the deductible

• Then partial payments via coinsurance until you reach your out-of-pocket maximum

This layering effect often catches enrollees off guard.

Why Medicare Enrollment Matters for Reducing Coinsurance Costs

For Medicare-eligible annuitants in the PSHB program, enrolling in Medicare Part B can significantly reduce or even eliminate coinsurance expenses. Many PSHB plans coordinate benefits with Medicare and waive cost-sharing when Medicare pays primary.

If you’re 65 or older and not enrolled in Part B, coinsurance still applies under your PSHB plan, and you may miss out on:

• Lower coinsurance or copays

• Waived deductibles

• Reimbursement benefits offered by certain PSHB plans

If you retired before January 1, 2025, and are not enrolled in Part B, you are generally exempt from the new PSHB Medicare integration rules. But if you’re newly retired or still working and eligible, enrolling in Part B in 2025 is a crucial decision to reduce long-term coinsurance exposure.

Reaching the Out-of-Pocket Maximum Is Harder Than You Think

Every PSHB plan has a defined out-of-pocket maximum (OOPM) for in-network services, typically ranging from $5,000 to $7,500 for Self Only coverage, and up to $15,000 for Self Plus One or Self and Family.

While that sounds like a safety net, hitting your OOPM can take months of continuous or high-cost care. And until you do, coinsurance will continue to apply. Importantly:

• Coinsurance payments apply toward your OOPM

• Premiums do not count toward your OOPM

• Out-of-network charges may have a separate, higher OOPM

Many people wrongly assume that their monthly premiums cover most care. In truth, premiums are just the entry fee. Coinsurance is where the real costs pile up.

Cost Shock During Emergencies or Major Illness

Medical emergencies and chronic conditions can explode your coinsurance expenses. Whether it’s an ER visit, hospital admission, or outpatient surgery, these scenarios often come with high overall bills.

With coinsurance rates at 20%–30% for in-network services, you could see:

• $2,000–$3,000 due after a single hospital stay

• Ongoing physical or occupational therapy at 20% per session

• Specialist visits and diagnostic imaging charged monthly

What seems manageable in theory becomes overwhelming in reality—especially for retirees living on a fixed income.

High-Deductible PSHB Plans Multiply the Impact

If you’re enrolled in a high-deductible health plan (HDHP) within the PSHB system, coinsurance becomes even more impactful. HDHPs usually require:

• Deductibles of $1,500 to $2,000 for Self Only

• You to pay full costs until the deductible is met

• Coinsurance thereafter until the OOPM is reached

This model is beneficial only if you remain healthy. But if your health needs change mid-year, you’ll feel the weight of every percentage point you’re responsible for.

How to Evaluate Coinsurance Before Open Season

During the Open Season each November to December, you have the opportunity to review your PSHB options. Here’s how to assess coinsurance when comparing plans:

• Look beyond premiums: low premiums often mean higher coinsurance

• Compare in-network vs out-of-network coinsurance rates

• Study the cost-sharing details in the plan brochure

• Check if Medicare coordination reduces coinsurance or waives it

Choosing a plan with slightly higher premiums but lower coinsurance can sometimes save you more over the course of a year—especially if you anticipate moderate to high medical use.

What to Watch Out for in 2025 and Beyond

Coinsurance is likely to remain a critical component of PSHB plans in future years. The 2025 PSHB structure introduces:

• Standardized benefit coordination with Medicare Part B for most annuitants

• Integrated prescription drug coverage that may still carry coinsurance for non-generic or specialty medications

• Possible annual increases to deductibles, coinsurance percentages, or OOPMs due to inflation or plan revisions

Staying proactive about plan changes and reviewing your benefits annually is the best defense against coinsurance creeping up on you.

Why Understanding Coinsurance Now Protects You Later

You might feel like your coinsurance costs are minor when you’re healthy. But the moment something changes—an unexpected diagnosis, a necessary surgery, or a specialist referral—those percentages can snowball.

By understanding how coinsurance works within PSHB in 2025, you’re better equipped to:

• Budget accurately for healthcare costs

• Select a plan that matches your risk tolerance

• Avoid delayed care due to cost hesitations

If you’re Medicare-eligible, coordinating with Part B isn’t just a recommendation—it could be the most important financial decision you make regarding healthcare.

Protect Yourself from Rising Coinsurance Burdens

Even if you’ve managed fine so far, rising healthcare costs mean coinsurance may hit harder in future years. Take time this Open Season to understand exactly what you’re signing up for. The PSHB program provides solid benefits, but only if you actively manage your plan.

If you need help comparing coinsurance structures across PSHB plans or evaluating how Medicare enrollment affects your out-of-pocket costs, get in touch with a licensed agent listed on this website.