Key Takeaways

• Medicare Part A may appear to be cost-free, but it comes with limitations that can leave significant coverage gaps unless you pair it with additional insurance like PSHB.

• Understanding what Part A does not cover is just as important as knowing what it does—especially when you’re deciding how to coordinate it with your Postal Service Health Benefits plan in retirement.

What Medicare Part A Actually Covers

Medicare Part A, often referred to as hospital insurance, covers a limited set of services that are generally tied to inpatient care. Here’s what it includes:

• Inpatient hospital stays (after the deductible is met)

• Skilled nursing facility care (following a qualifying hospital stay)

• Home health care (when medically necessary)

• Hospice care

These benefits sound reassuring, but you should be aware that coverage is based on strict eligibility and time-bound rules. For example, Medicare only pays for skilled nursing care after a three-day hospital stay, and even then, the coverage is capped at 100 days per benefit period—with significant coinsurance beginning after day 20.

The Costs You Still Have to Pay Under Part A

Although many retirees believe Part A is entirely free, that’s only true if you or your spouse paid Medicare taxes for at least 40 quarters (10 years). Even then, you are still responsible for significant out-of-pocket expenses:

• Inpatient deductible: $1,676 per benefit period in 2025

• Coinsurance:

  • Days 1–60: $0 (after deductible)

  • Days 61–90: $419 per day

  • Days 91–Lifetime Reserve Days: $838 per day

  • After Lifetime Reserve Days: All costs

• Skilled nursing facility coinsurance: $209.50/day for days 21–100

This means a single extended hospital stay could result in thousands of dollars in costs—even under Part A.

What Part A Leaves Out Entirely

Here’s where most retirees are caught off guard: Medicare Part A doesn’t cover many types of care that are essential to long-term wellness or emergency support. It does not cover:

• Outpatient care

• Doctor visits

• Emergency room services not resulting in inpatient admission

• Ambulance transportation (unless tied to an admission)

• Prescription drugs taken at home

• Custodial long-term care

That last point—long-term care—is a major one. Many retirees assume Medicare will step in if they ever need assistance with daily activities in a nursing home or at home. But unless you meet very narrow criteria for skilled care, Medicare won’t pay a cent.

How PSHB Complements Medicare Part A

Starting in 2025, Postal Service annuitants must enroll in the new Postal Service Health Benefits (PSHB) Program, replacing FEHB coverage. If you’re Medicare-eligible, your PSHB plan is designed to integrate with Medicare, offering enhanced benefits when you enroll in both Part A and Part B.

When coordinated properly, PSHB plans can:

• Waive or reduce your deductible

• Lower your coinsurance and copayments

• Include prescription drug coverage through an EGWP (Employer Group Waiver Plan)

• Offer additional benefits not covered by Medicare, such as dental and vision

But here’s the catch: most of these enhanced benefits rely on you enrolling in both Part A and Part B. Part A alone leaves you underinsured.

Why Enrolling in Part B Matters, Too

Part B covers outpatient care, doctor visits, lab tests, preventive screenings, and durable medical equipment. Without it, you’re missing half the equation.

As of 2025, some PSHB plans require enrollment in Medicare Part B to receive full benefits. For example:

• Prescription drug integration: If you don’t enroll in Part B, you may lose your plan’s drug coverage since it’s tied to a Part D EGWP.

• Cost-sharing reductions: Some PSHB plans only offer lower out-of-pocket costs if you’re enrolled in both Parts A and B.

If you skip Part B, even though you have PSHB and Part A, you might end up paying more out of pocket and losing key services.

Don’t Wait Too Long to Sign Up

Your Initial Enrollment Period (IEP) for Medicare starts three months before your 65th birthday and ends three months after. If you miss this, you may need to wait for the General Enrollment Period from January 1 to March 31, with coverage starting July 1—and you may face late enrollment penalties for Part B.

There was a Special Enrollment Period in 2024 for annuitants who hadn’t signed up for Part B, but that window has now closed. Moving forward, retirees must plan proactively.

What If You Already Have PSHB and Medicare?

If you’re already enrolled in Medicare Part A and you’ve selected a PSHB plan, you still need to verify how they work together:

• Check your PSHB plan brochure to confirm if reduced cost-sharing applies only with Part B.

• Review your Medicare ID and PSHB cards—both must be presented at appointments.

• Ensure your provider accepts both Medicare and your PSHB plan to avoid denied claims.

Don’t assume automatic coordination. Being enrolled in both doesn’t mean everything is streamlined. Mistakes in billing, ID use, or provider understanding can result in unnecessary bills.

Prescription Drug Coverage Isn’t Built Into Part A

Medicare Part A doesn’t cover medications you take at home. In 2025, all PSHB enrollees with Medicare get their drug coverage through a Part D EGWP, but you must remain enrolled in Medicare to keep it.

• If you opt out of Part B, your drug coverage may be suspended.

• There’s a $2,000 annual out-of-pocket cap on Part D drugs in 2025.

Your PSHB plan may waive the deductible and offer formulary advantages, but only if Medicare remains active.

What About International Coverage?

Medicare doesn’t generally cover care outside the U.S., and Part A is no exception. If you travel abroad, Medicare won’t pay for hospital stays or emergency services unless you’re in specific border situations or on a cruise ship near the U.S.

Some PSHB plans offer limited international coverage. If you’re enrolled in both Medicare and PSHB, check whether:

• Your PSHB plan offers emergency coverage abroad

• Claims must be filed manually

• There are special reimbursement forms or provider requirements

Making the Most of Your Coverage Moving Forward

Medicare Part A alone is not sufficient coverage in retirement. It leaves out essential outpatient care, emergency services, and routine doctor visits. And while it might seem free, the deductibles and coinsurance can quickly eat into your budget.

When combined with a properly selected PSHB plan—and if you’re enrolled in Medicare Part B—you can unlock substantial benefits:

• Lower out-of-pocket costs

• Full drug coverage

• Waived or reduced deductibles

• Access to both Medicare and PSHB provider networks

But that only happens when everything is aligned. Timing matters. Plan selection matters. And Medicare enrollment decisions matter.

Your Next Steps to Avoid Surprises

If you’re approaching retirement—or already retired and eligible for Medicare—it’s time to:

• Review your Medicare enrollment status and timelines

• Understand your PSHB plan’s Medicare coordination rules

• Avoid delaying enrollment in Part B to prevent penalties and gaps

• Confirm your PSHB plan has enhanced integration with Medicare

To get clear answers tailored to your situation, get in touch with a licensed agent listed on this website. They can help you make sense of timelines, enrollment options, and how to protect yourself from unexpected costs.