Key Takeaways

• Medicare Part A may seem free, but it comes with substantial costs if you require extended hospital care, skilled nursing, or have limited work history.

• If you’re covered by PSHB and eligible for Medicare, understanding how Part A integrates with your plan is critical to avoiding large, unexpected out-of-pocket expenses.

What Medicare Part A Covers in 2025

Medicare Part A, also called hospital insurance, is often viewed as a default benefit for anyone aged 65 or older. In 2025, it covers the following:

• Inpatient hospital stays

• Skilled nursing facility (SNF) care

• Some home health services

• Hospice care

But coverage does not mean complete protection. While Part A can reduce your medical bills during serious illnesses or surgeries, there are specific limitations, durations, and cost-sharing rules that leave gaps you need to plan for.

Is Medicare Part A Really Free?

The common perception is that Medicare Part A comes at no cost. But that only applies if you or your spouse worked and paid Medicare taxes for at least 40 quarters (10 years). If you don’t meet that threshold, premiums apply:

• 30-39 quarters: $284/month in 2025

• Less than 30 quarters: $518/month in 2025

Even if you qualify for “premium-free” Part A, that doesn’t mean you’re immune from other expenses. Hospital stays and skilled nursing care come with steep deductibles and coinsurance obligations.

How Part A Costs Stack Up in 2025

Here’s what you can expect to pay out of pocket under Medicare Part A this year:

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

• Days 1-60 of hospitalization: $0 (after deductible)

• Days 61-90: $419 per day

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

• Beyond 150 days: All costs fall to you

For skilled nursing facility care:

• First 20 days: $0

• Days 21-100: $209.50 per day

• After 100 days: No coverage; full cost is yours

These are not hypothetical figures. They apply in 2025 to anyone with traditional Medicare Part A. As you can see, the so-called “free” benefit can lead to significant bills if your medical situation is prolonged or complicated.

How PSHB Affects (and Doesn’t Replace) Part A

Under the Postal Service Health Benefits (PSHB) Program, Medicare-eligible annuitants are still encouraged—and sometimes required—to enroll in Medicare Part A and B. But what does PSHB do in relation to Part A?

• PSHB does not replace Medicare. It functions as your secondary coverage once you enroll in Medicare.

• If you don’t enroll in Part A, your PSHB plan becomes your primary payer, but you might face higher out-of-pocket costs.

• When you do enroll in Part A, your PSHB plan generally pays costs that Medicare doesn’t cover, such as:

  • Deductibles

  • Coinsurance

  • Additional hospital days (depending on your plan)

While PSHB plans often coordinate benefits with Medicare, you must understand that some of them assume Medicare is already covering the first layer. That assumption could leave you vulnerable if you skip Medicare Part A altogether.

You May Be Mandated to Enroll in Part A

Starting in 2025, certain groups within the PSHB program are required to enroll in Medicare Part A and B to maintain their full benefits:

• Retirees who were not already retired as of January 1, 2025

• Medicare-eligible annuitants and family members

• Those without a valid exemption (e.g., overseas residents, tribal health recipients)

If you fall into these groups and decline to enroll in Part A, your PSHB plan may deny claims that it would otherwise pay as secondary coverage. That means the hospital bills come to you.

The Catch with Hospital Deductibles and Benefit Periods

Medicare Part A coverage resets with each benefit period, which begins when you’re admitted to a hospital and ends after you haven’t received inpatient care for 60 consecutive days.

This can trigger multiple deductibles in a single year. Imagine being admitted in January and again in July—you’d owe the $1,676 deductible twice in 2025.

PSHB plans may cover this second deductible, but only if you’re enrolled in Part A. Without it, you’re at the mercy of PSHB’s primary coverage rules, which could be less favorable.

Skilled Nursing Facility Costs Sneak Up Quickly

Medicare Part A covers up to 100 days in a skilled nursing facility after a hospital stay of at least three days. But once you hit day 21, you start paying $209.50 per day.

Many PSHB enrollees assume their plan will automatically pick up these costs. But if you’re not enrolled in Medicare Part A, PSHB may treat this differently. Some plans only cover SNF care after Medicare pays first.

That means:

• No Medicare Part A = PSHB might not pay at all

• Medicare Part A enrolled = PSHB pays after day 20, often reducing or eliminating the copay

Hospice and Home Health Coverage Gaps

While Part A does include hospice and certain home health services, access and coverage can be limited if you bypass enrollment.

• Hospice care under Medicare Part A generally has no cost, but without Part A, your PSHB plan becomes the primary payer, which may mean higher cost-sharing or limited access.

• Home health services can be highly regulated under Medicare. PSHB plans may not cover them with the same scope if Part A isn’t backing them.

Understanding the payer hierarchy is crucial. If Medicare isn’t your first layer, PSHB may restrict or deny claims you assumed were covered.

PSHB and Medicare Integration: A Two-Tiered Approach

The ideal setup in 2025 for many retirees involves the following structure:

1. Medicare Part A (and Part B) as your primary payer

2. PSHB Plan as your secondary payer

This two-tiered structure gives you the most comprehensive protection:

• Part A pays first for hospital and SNF care

• Your PSHB plan covers remaining deductibles, coinsurance, and extended days (depending on the plan)

If you remove Part A from this structure, you disrupt the balance. Your PSHB plan becomes solely responsible for inpatient claims, and it might limit coverage or increase your out-of-pocket expenses.

You Could Lose Drug Coverage If You Decline Part A

Some PSHB plans automatically enroll Medicare-eligible members in a Medicare Part D Employer Group Waiver Plan (EGWP), which coordinates with your health plan. But there’s a catch:

• You must be enrolled in Medicare Part A or B to remain eligible for the EGWP

Declining Part A can disqualify you from this benefit. Without EGWP enrollment:

• You lose enhanced drug benefits

• You become subject to higher out-of-pocket prescription costs

• Re-enrollment options are limited once you opt out

Why You Can’t Rely on PSHB Alone in Retirement

It’s tempting to think PSHB coverage is enough. But in 2025, plans are structured around coordination with Medicare. If you opt out of Part A, you don’t just lose hospital coverage; you risk:

• Full liability for deductibles and coinsurance

• Denied claims due to lack of Medicare primary coverage

• Gaps in hospice, home health, and SNF coverage

• Loss of eligibility for integrated drug benefits

These are significant risks that aren’t obvious until a major medical event occurs.

What You Should Do Next

To make sure you aren’t caught off guard by Medicare Part A gaps, follow this checklist:

• Confirm your Medicare eligibility status

• Verify whether you qualify for premium-free Part A

• Review your PSHB plan’s Medicare coordination rules

• Enroll in Medicare Part A (and B) if required or advantageous

• Consult a licensed agent listed on this website to evaluate your personal situation

When a “Free” Benefit Becomes Financial Risk

In 2025, Medicare Part A is no longer something you can afford to ignore or misunderstand. For Postal retirees and annuitants, Part A plays a vital role in shielding you from large hospital and nursing facility bills.

What looks like a free government benefit can quickly become a financial liability if you skip enrollment, don’t understand the cost-sharing structure, or assume PSHB will fill every gap. Your decisions today directly shape your protection tomorrow.

Make sure your Medicare and PSHB coverage work together, not against each other. For professional guidance on building your retirement health strategy, get in touch with a licensed agent listed on this website.