Key Takeaways

  • Coinsurance under PSHB in 2025 is not a fixed cost. It is a percentage-based obligation that fluctuates with the cost of medical services, which can create unpredictable and sometimes substantial out-of-pocket expenses for retirees.

  • Retirees on a fixed income face increased financial risk if they do not fully understand how coinsurance applies across hospital stays, specialty care, and outpatient procedures, especially when Medicare is not integrated.

Why Coinsurance Can Be So Misleading

At first glance, coinsurance may seem like a manageable feature of your Postal Service Health Benefits (PSHB) plan. It’s easy to assume it functions like a flat copayment: you pay a set amount, and the plan covers the rest. However, in 2025, coinsurance under PSHB is based on percentages, not flat fees. That difference can lead to significant and often unexpected costs, especially for retirees.

Coinsurance typically kicks in after you meet your deductible. From that point, your plan pays a fixed percentage of covered healthcare expenses, and you pay the remaining portion. In-network coinsurance rates usually range from 10% to 30%, while out-of-network services can push your share to 40% or even 50%. But these percentages don’t mean much unless you know what the total cost of care is.

That’s the catch: since coinsurance is a percentage, the higher the cost of the service, the higher your out-of-pocket responsibility.

How Coinsurance Works in 2025 Under PSHB

In 2025, PSHB coinsurance applies to various services after you’ve met your annual deductible. Common services that fall under coinsurance include:

  • Hospital inpatient and outpatient stays

  • Outpatient surgery

  • Specialist visits

  • Durable medical equipment (DME)

  • Emergency services

The average in-network coinsurance for these services ranges between 10% and 30%. But that doesn’t mean you pay 10% of your deductible; you pay 10% of the full medical bill for the service. So if an MRI costs $2,000, and your coinsurance is 20%, your out-of-pocket cost for that one service is $400, even after your deductible has been met.

Out-of-network services are where coinsurance becomes even more burdensome. These typically come with coinsurance rates of 40% to 50%, and the total cost is often not capped. Worse, out-of-network expenses may not count toward your annual out-of-pocket maximum.

Why Retirees Are More Vulnerable

Retirees enrolled in PSHB are especially susceptible to the unpredictability of coinsurance. Several factors contribute to this:

  • Fixed Incomes: Retirees often rely on limited monthly income sources like their FERS annuity, Social Security, and possibly the Thrift Savings Plan. Unexpected medical expenses can destabilize carefully planned budgets.

  • More Frequent Care Needs: As healthcare needs increase with age, retirees are more likely to encounter services that trigger coinsurance. These include repeated specialist visits, advanced imaging, and hospital stays.

  • Limited Work-Related Resources: Active employees can seek help from HR or benefits coordinators. Retirees must often navigate PSHB rules on their own or through outside advisors.

This vulnerability makes it even more important to understand how coinsurance works and how to plan for its impact.

Medicare Part B Integration Can Reduce the Burden

For Medicare-eligible retirees, enrolling in Medicare Part B in 2025 may reduce your coinsurance obligations under PSHB. Many PSHB plans coordinate benefits with Medicare, resulting in lowered or waived coinsurance responsibilities when both cover the same service.

If you retired on or before January 1, 2025, you are not required to enroll in Part B, but doing so can still offer cost-sharing benefits. For retirees subject to mandatory enrollment in Medicare Part B, not enrolling can mean losing access to PSHB coverage altogether.

For those enrolled in both PSHB and Medicare Part B:

  • Your PSHB plan may waive hospital coinsurance

  • Specialist visit coinsurance may drop significantly

  • Your deductible may be reduced or eliminated for some services

But these benefits only apply if your providers accept both Medicare and your PSHB plan.

Annual Out-of-Pocket Maximums: A Safety Net with Limits

All PSHB plans have an annual in-network out-of-pocket maximum. In 2025, this cap is set at $7,500 for Self Only and $15,000 for Self Plus One and Self & Family. Once your total deductible, coinsurance, and copayments reach this limit, the plan covers all additional in-network costs.

However, there are important limits:

  • Out-of-network costs often do not count toward this cap

  • Prescription drug costs under Part D have their own $2,000 cap

  • Coinsurance on services like durable medical equipment or specialty procedures can drive up your expenses quickly

This cap provides some relief, but you could still face substantial expenses before you hit it. For retirees on fixed incomes, absorbing even a few thousand dollars can be difficult.

In-Network vs. Out-of-Network: A Critical Choice

Staying in-network is the most effective way to control coinsurance costs. In 2025, PSHB plans feature wide provider networks, but they vary in scope. Retirees who travel often, move, or live in rural areas may find it challenging to stay in-network.

Here’s why this matters:

  • Out-of-network coinsurance is usually higher (40% to 50%)

  • Out-of-network charges may not count toward your out-of-pocket maximum

  • Balance billing risk is real: You could be billed the difference between what the provider charges and what the plan allows

Understanding your plan’s provider directory and coverage area can prevent costly surprises.

Timing of Services and the Cost Ripple Effect

The timing of when you receive care also matters. For example:

  • Having major procedures early in the year means you’re likely paying out-of-pocket until you meet your deductible and coinsurance maximums

  • Elective procedures later in the year may cost less if you’ve already paid significant out-of-pocket expenses

Retirees can use this timing strategy to minimize their financial exposure. By planning necessary but non-urgent care after meeting deductibles and coinsurance responsibilities, you could reduce your year-end costs.

What to Ask Before a Procedure

Understanding your coinsurance responsibilities requires being proactive. Before undergoing a test, procedure, or hospital stay, ask your provider:

  • Is the provider in-network with my PSHB plan?

  • What is the estimated total cost of the service?

  • How much of that cost will be subject to coinsurance?

  • Are there alternative services or providers that might reduce my share?

These questions help ensure you’re not blindsided by a large bill, especially in retirement.

How PSHB Differs from Private Medicare Supplements

Retirees often ask whether they should purchase a private Medicare Supplement (Medigap) in addition to PSHB. In 2025, this is usually unnecessary and can even lead to duplicative coverage.

Medigap plans are designed to fill the cost-sharing gaps in Original Medicare. But when you already have PSHB, which covers most of what Medigap does, adding a Medigap plan may:

  • Not pay anything because PSHB is your primary coverage

  • Add a second layer of premiums without reducing your coinsurance further

  • Offer no additional value if PSHB already coordinates with Medicare Part B

Instead of layering additional insurance, the smarter move is to fully understand how your PSHB plan interacts with Medicare and whether it already reduces or waives your coinsurance.

Coinsurance and Prescription Drug Costs

Another area where coinsurance appears is in prescription drug pricing. Under PSHB plans that integrate with Medicare Part D in 2025, you face coinsurance for non-preferred or specialty drugs.

But there’s a critical development: Part D now includes a $2,000 out-of-pocket maximum. Once you reach that threshold, your drug plan covers 100% of covered drug costs for the rest of the year.

Still, coinsurance for high-cost medications can be steep until you reach that cap. A 25% coinsurance rate on a $600 drug means $150 out-of-pocket per fill. Multiply that by 3 or 4 refills, and you can reach the cap quickly—but you still feel the pain upfront.

Don’t Confuse Coinsurance with Copayments

It’s easy to confuse coinsurance with copayments, but they are not the same. Copayments are fixed dollar amounts (like $30 or $50 per visit). Coinsurance is a percentage of the total bill. That means your cost with coinsurance varies depending on what your provider charges and how your plan processes the claim.

While copayments are more predictable, coinsurance is often open-ended. For retirees managing multiple conditions or relying on expensive treatments, this can create budgeting challenges.

Proactive Steps to Take in 2025

To limit your coinsurance exposure this year, consider these steps:

  • Integrate Medicare Part B with your PSHB plan if you’re eligible

  • Stay in-network to reduce percentage rates and avoid balance billing

  • Plan procedures strategically, especially if you’ve met your deductible

  • Use generic drugs and mail-order options to reduce pharmacy coinsurance

  • Ask for cost estimates in advance and shop for care when possible

  • Track your out-of-pocket spending to avoid exceeding your cap without knowing it

These proactive measures can help you avoid the worst financial surprises and preserve your retirement income.

Understanding Coinsurance Can Make a Big Financial Difference

The more you understand how PSHB coinsurance works, the better prepared you are to protect your retirement income in 2025. Coinsurance is not a flat fee, and that unpredictability can catch you off guard. But with Medicare coordination, careful plan usage, and smart timing, you can make it work in your favor.

To get a clearer picture of how coinsurance affects your specific situation, speak to a licensed agent listed on this website. An informed conversation today can prevent costly missteps tomorrow.