Key Takeaways

• Medicare Part A helps cover hospital care, but it doesn’t eliminate the risk of high out-of-pocket expenses unless you coordinate it effectively with other coverage.

• As a PSHB enrollee, understanding the limits of Part A and how it works with your benefits is essential before relying solely on Medicare in retirement.

What Medicare Part A Covers—and What It Doesn’t

Medicare Part A is often referred to as hospital insurance. It covers inpatient hospital care, skilled nursing facility stays, hospice care, and some home health services. But coverage is not automatic or all-encompassing. While it does ease the financial burden of hospitalizations, it doesn’t shield you from all costs.

In 2025, Medicare Part A includes:

• Inpatient hospital stays: Semi-private room, meals, general nursing, and hospital services and supplies.

• Skilled nursing facility (SNF) care: Following a qualifying 3-day inpatient hospital stay.

• Hospice care: For terminally ill patients with a physician’s certification.

• Home health care: Limited to medically necessary part-time or intermittent care.

But it does not cover:

• Private-duty nursing

• A private room (unless medically necessary)

• Personal care items

• Long-term custodial care

The 2025 Cost Structure of Medicare Part A

Even though most people do not pay a monthly premium for Part A if they worked and paid Medicare taxes for at least 40 quarters, the out-of-pocket costs are significant.

Here’s what you face in 2025:

• Inpatient hospital deductible: $1,676 per benefit period

• Coinsurance:

  • Days 1–60: $0 after deductible

  • Days 61–90: $419 per day

  • Days 91–150 (lifetime reserve days): $838 per day

  • After 150 days: You pay all costs

• Skilled Nursing Facility (SNF) coinsurance:

  • Days 1–20: $0

  • Days 21–100: $209.50 per day

  • After 100 days: You pay all costs

As you can see, even a single hospital stay can lead to substantial expenses.

Benefit Periods Can Reset—And So Can Your Costs

Unlike most insurance plans that reset annually, Medicare Part A uses benefit periods. Each benefit period begins the day you’re admitted to a hospital and ends when you haven’t received any inpatient care for 60 days in a row. That means you could pay the $1,676 deductible more than once in a single year.

If you’re hospitalized multiple times in a year with gaps of more than 60 days, the deductible restarts each time. That adds unpredictability and potential financial stress.

How PSHB Coordinates With Medicare Part A

Your PSHB plan can help reduce your exposure to these high out-of-pocket costs—but only if you coordinate your benefits correctly. Once you enroll in Medicare Part A (and typically Part B), your PSHB plan becomes secondary payer.

When coordinated properly:

• Medicare pays first, covering the majority of eligible hospital expenses.

• Your PSHB plan pays second, potentially covering the remainder, depending on the plan design.

• Out-of-pocket costs are reduced or eliminated, depending on how your PSHB plan integrates with Medicare.

However, not all PSHB plans are the same. Some plans waive deductibles and coinsurance if you have both Part A and Part B, while others may only offer partial cost-sharing benefits. You should review your specific plan brochure carefully.

Why Part A Alone Is Not Enough

Relying on Medicare Part A alone, without Part B and coordination through your PSHB plan, exposes you to several financial risks:

• Uncapped costs after 150 days of hospitalization

• Daily coinsurance charges during longer stays

• Multiple deductibles per year if benefit periods reset

• No outpatient or physician coverage (Part A only covers inpatient care)

For PSHB annuitants, having just Part A and skipping Part B may reduce premiums, but it also increases the share of medical bills you’ll be responsible for out-of-pocket.

Medicare Part A and the PSHB Prescription Drug Benefit

Another important limitation: Part A does not include any outpatient prescription drug coverage. If you’re only enrolled in Part A, you won’t have access to the PSHB plan’s Medicare Part D prescription drug benefits, which are integrated through an Employer Group Waiver Plan (EGWP).

To access:

• $35 insulin copays

• $2,000 annual out-of-pocket maximum for prescriptions

• An expanded pharmacy network

You must also be enrolled in Medicare Part B. Skipping Part B means losing this valuable Part D coverage under PSHB.

Enrollment Timing Matters

The best time to enroll in Medicare Part A is during your Initial Enrollment Period (IEP), which spans:

• 3 months before your 65th birthday

• The month of your 65th birthday

• 3 months after your 65th birthday

Enrollment is usually automatic if you’re already receiving Social Security or Railroad Retirement Board benefits. Otherwise, you’ll need to actively enroll.

If you’re a Postal retiree or annuitant, coordination begins once you have both Medicare Parts A and B in place. Your PSHB plan will recognize you as Medicare-eligible and adjust coverage accordingly.

What If You Delay Medicare Part B?

While Medicare Part A is premium-free for most, Part B requires monthly premiums. Some PSHB annuitants consider delaying Part B to save money. But this comes with trade-offs:

• You lose secondary coverage: Your PSHB plan will treat you as primary payer, meaning you’ll be responsible for more out-of-pocket expenses.

• You may face penalties: If you don’t enroll in Part B during your IEP and later decide to, you may pay a permanent late enrollment penalty.

• Prescription drug coverage is affected: As noted earlier, Medicare Part D through your PSHB plan is not available unless you have Part B.

Using PSHB to Limit Part A Out-of-Pocket Costs

To get the most out of your PSHB coverage, consider the following strategies:

• Enroll in both Medicare Part A and Part B once eligible to ensure maximum coordination.

• Review your PSHB plan brochure each year to understand how it coordinates with Medicare and what cost-sharing benefits it offers.

• Use in-network providers for PSHB-covered services to avoid out-of-network coinsurance.

• Consider plans that reimburse Medicare Part B premiums, if available.

Some PSHB plans may offer reduced or waived inpatient deductibles and coinsurance when Medicare is the primary payer. This can dramatically lower your financial liability during hospital stays.

Common Misconceptions About Part A Coverage

Many Postal retirees mistakenly believe that Medicare Part A will cover all their hospital expenses, especially since it’s often referred to as “hospital insurance.” But that’s not true.

Some of the most common misconceptions include:

• Thinking there is no cost after enrollment: While the premium may be zero, deductibles and coinsurance can add up quickly.

• Assuming one-time deductible: Benefit periods can restart multiple times per year, reapplying the $1,676 deductible each time.

• Believing it covers everything in a hospital: Items like private rooms or TV services are not covered.

• Confusing custodial care with skilled care: Medicare does not pay for long-term custodial care.

Understanding these gaps is crucial before making decisions about delaying Part B or modifying your PSHB enrollment.

Medicare Part A After Retirement: Ongoing Responsibilities

Once you’re enrolled in Medicare Part A, there’s not much maintenance required. But you should:

• Keep your coverage updated: Notify Medicare and OPM of any address or status changes.

• Review your Explanation of Benefits (EOBs): Make sure both Medicare and PSHB are processing claims correctly.

• Check your PSHB plan every Open Season: Plans can change benefits annually. Evaluate whether a different plan offers better coordination.

How This Affects PSHB-Eligible Spouses and Dependents

Medicare coordination also affects your eligible family members.

• Spouses who are also Medicare-eligible must have both Part A and Part B to take full advantage of PSHB-Medicare coordination.

• Non-Medicare eligible dependents will remain covered under the PSHB plan as usual, with no coordination required.

• Mixed households (where one spouse is Medicare-eligible and the other isn’t) should choose PSHB plans carefully to balance cost and coverage.

Hospital Bills Don’t Have to Catch You Off Guard

Medicare Part A does provide critical coverage, but it doesn’t eliminate financial risk—especially for extended hospital stays or repeat admissions. If you’re relying solely on Part A, your exposure to large, uncapped expenses remains high.

Coordinating your PSHB plan with both Medicare Parts A and B helps contain those costs. It strengthens your protection against unexpected hospital bills and secures your access to prescription benefits and expanded coverage options.

To make the most of your retirement benefits, consider speaking with a licensed agent listed on this website. They can help you understand your options and choose a plan that fits your health needs and financial goals.