Think Coinsurance Is Simple? PSHB Might Change That Assumption in Retirement

Key Takeaways

• Coinsurance under PSHB plans can vary significantly depending on the type of service, provider network, and Medicare integration status, especially after retirement.

• Understanding your coinsurance responsibilities now can help you avoid costly surprises during retirement when your income may be fixed.

What Coinsurance Really Means Under PSHB

When you hear the term “coinsurance,” it might sound like a straightforward concept: you pay a fixed percentage of medical costs, and your plan covers the rest. But within the Postal Service Health Benefits (PSHB) program, especially as you transition into retirement, coinsurance isn’t always as predictable as it seems.

Coinsurance isn’t just a percentage—it’s a moving target. Your share of the cost can change based on factors like the type of care, the provider you choose, and whether or not you’re enrolled in Medicare. In 2025, as more USPS retirees adjust to the PSHB system, the assumptions you may have carried over from the Federal Employees Health Benefits (FEHB) program could be upended.

Why PSHB Coinsurance May Catch You Off Guard

Coinsurance under PSHB isn’t one-size-fits-all. You might assume you’ll always pay, say, 20% of the bill after your deductible. But in reality, your coinsurance might range from 10% to 30% for in-network care, and jump to 40% or more for out-of-network services. Add in different coinsurance rates for things like mental health, specialist visits, urgent care, and diagnostic testing, and the numbers can add up fast.

Here’s what can drive that variability:

• Type of service received (hospital stay vs. lab test)

• Network status of your provider (in-network vs. out-of-network)

• Whether Medicare is primary or secondary payer

• Plan-specific tiers (some PSHB plans have tiered provider networks)

• Preauthorization requirements (missing one can mean full charges)

Medicare Integration Shifts Your Coinsurance Burden

If you’re eligible for Medicare and don’t enroll in Part B, your coinsurance costs under PSHB can be significantly higher. In 2025, many PSHB plans require Medicare Part B enrollment to access reduced coinsurance and waived deductibles. Without it, you may be billed as though you’re fully responsible, particularly for services Medicare would otherwise cover.

PSHB plans often coordinate benefits with Medicare. This means that if Medicare pays first (as the primary payer), your PSHB plan may cover most or all of the remaining costs. However, if you’re not enrolled in Medicare Part B, your PSHB plan becomes the primary payer, and you may be responsible for:

• Higher coinsurance percentages

• Full deductibles that would otherwise be waived

• Increased cost-sharing for prescriptions and outpatient services

Out-of-Network Coinsurance—A Silent Budget Threat

Out-of-network care introduces another layer of unpredictability. Under PSHB plans, out-of-network coinsurance is almost always higher—and providers can bill you for the difference between what your plan pays and their full rate. This is called balance billing and can significantly inflate your out-of-pocket exposure.

Some PSHB plans use a fixed coinsurance for out-of-network care, such as 40% or 50%, but this doesn’t guarantee a ceiling on your costs. Unlike in-network services, out-of-network charges often aren’t subject to a negotiated rate. That means:

• No cap on what the provider can charge

• No guarantee of plan coverage for those charges

• Higher coinsurance percentages across the board

In retirement, when you might travel more or relocate, out-of-network exposure becomes more likely—and more dangerous to your budget.

Medicare Part B Enrollment Isn’t Just a Choice—It’s a Cost-Saver

Beginning in 2025, most PSHB annuitants who are eligible for Medicare Part B are required to enroll to maintain full PSHB benefits. There are exceptions (such as if you retired before January 1, 2025), but for the majority of new retirees, not enrolling in Part B means higher coinsurance, higher deductibles, and fewer protections.

Enrolling in Medicare Part B can significantly reduce your coinsurance responsibility, as:

• Medicare pays first for covered services

• PSHB plans often pay the balance

• Many PSHB plans waive or reduce deductibles when Medicare is primary

Skipping Part B to avoid the monthly premium can cost you far more later through increased coinsurance and unexpected medical bills.

Preventive Services Often Have Separate Coinsurance Rules

While most preventive services are fully covered under PSHB and Medicare when provided in-network, any deviation can shift the cost to you. If you:

• Use an out-of-network provider

• Schedule a preventive service that turns diagnostic (e.g., a screening colonoscopy that finds polyps)

• Skip required preauthorization or documentation

…then your coinsurance responsibilities can spike.

Always confirm whether a preventive service is billed as preventive or diagnostic, and verify the provider is considered in-network.

Mental Health and Specialty Care Coinsurance Can Be Higher

Certain services come with higher-than-expected coinsurance rates—even within the same plan. In 2025, mental health services, specialty care, and rehabilitative therapy often fall into their own coinsurance categories.

You may see:

• 20% coinsurance for primary care

• 30% coinsurance for specialists or mental health visits

• 40% coinsurance for out-of-network behavioral care

Even when Medicare is involved, if the provider isn’t enrolled in Medicare or PSHB’s network, coinsurance rules can change dramatically.

Coinsurance Isn’t the Only Cost You Face

Coinsurance works in tandem with:

• Deductibles: You may need to pay hundreds or thousands before coinsurance even begins.

• Copayments: Fixed fees for office visits, urgent care, ER, etc.

• Out-of-pocket maximums: A ceiling on total spending—but only for covered, in-network services.

Understanding your coinsurance rate without knowing your deductible or copay requirements gives an incomplete picture of your total healthcare costs. In retirement, these pieces work together to shape your monthly and annual financial exposure.

You Need to Rethink Provider Choices in Retirement

You may currently use providers without thinking much about their network status. But after retirement, especially under PSHB, that can become a costly habit.

Network providers:

• Offer lower coinsurance rates

• Can’t balance bill you

• Count toward out-of-pocket limits

Out-of-network providers:

• Charge more

• Have higher coinsurance

• Don’t contribute to out-of-pocket maximums in many plans

Before retirement, review your usual doctors and specialists. Are they in-network under your chosen PSHB plan? Will they accept Medicare if you enroll in Part B?

What to Do Before You Retire

If you’re nearing retirement from USPS, now is the time to:

• Review your PSHB plan’s Summary of Benefits

• Confirm the in-network status of your regular providers

• Calculate your likely coinsurance with and without Medicare Part B

• Factor coinsurance into your post-retirement budget

• Consider switching to a plan with lower out-of-network exposure if you travel often

Retirement doesn’t just change your income. It also changes how health benefits interact with Medicare—and how coinsurance impacts your wallet.

Paying Attention to Coinsurance Now Helps Avoid Surprises Later

The move from FEHB to PSHB means more USPS retirees are facing new cost structures they didn’t expect. If you go into retirement assuming your plan will cover the same percentage it always has, you could end up underprepared for bills that feel out of sync with your expectations.

That’s why it’s critical to understand coinsurance as more than a percentage. It’s a formula that includes provider networks, Medicare integration, preauthorization, service categories, and timing.

Your retirement deserves a plan that works with your income—not against it.

Review Your PSHB Options With a Licensed Professional

Coinsurance under PSHB is too complex to guess your way through. The good news? You don’t have to. A licensed agent listed on this website can walk you through:

• Which PSHB plans offer the most predictable coinsurance

• Whether your providers are in-network

• How Medicare Part B changes your out-of-pocket costs

• The coinsurance breakdown for services you regularly use

Start planning today—before the bills start coming in. You’ve earned the right to retire with confidence.