Key Takeaways

• Your monthly PSHB premium is just the starting point—additional costs like copayments, coinsurance, and deductibles add up quickly across the year.

• Understanding where your contributions go can help you make smarter decisions during Open Season and avoid unexpected medical expenses.

What You’re Actually Paying For Every Month

When you look at your monthly PSHB contribution, it might seem manageable. However, that premium only covers part of the true cost of your healthcare. In 2025, the Postal Service Health Benefits (PSHB) program includes more than just the visible premium deducted from your paycheck or annuity. From shared costs with the federal government to behind-the-scenes provider reimbursements, your premium is one slice of a larger pie.

Understanding how that monthly contribution is used can give you better control over your healthcare choices. Here’s where your money really goes.

Administrative Overhead and Plan Operations

A portion of your monthly premium supports the operational costs of running the PSHB program. These include:

• Claims processing and management

• Member services and support lines

• Fraud prevention and compliance

• Provider network management

While not the most visible part of your benefits, these functions ensure your plan works efficiently when you need it most.

Provider Reimbursements

A significant chunk of your contribution goes directly toward payments made to doctors, hospitals, labs, and specialists. These reimbursements are negotiated in advance through the plan’s network agreements. The amounts vary depending on whether you:

• Use in-network or out-of-network providers

• See a specialist vs. a primary care provider

• Receive preventive care or complex procedures

The PSHB system pays a pre-set percentage or negotiated rate, and you often share the rest through copayments or coinsurance.

Prescription Drug Coverage

Your PSHB premium also contributes to your prescription drug coverage. In 2025, this includes automatic enrollment in a Medicare Part D Employer Group Waiver Plan (EGWP) if you’re Medicare-eligible. Here’s how this breaks down:

• Drug costs are divided between the plan, Medicare, and you.

• Formularies control which drugs are covered and how much you pay.

• Tiered pricing influences your out-of-pocket costs.

Many enrollees underestimate how much of their monthly contribution funds drug benefit management, including pharmacy networks and medication safety programs.

Government Cost-Sharing

Though you pay a premium each month, you’re not footing the entire bill. The federal government covers roughly 70% of the total cost of your PSHB plan, based on a formula tied to the standard government contribution.

This means your contribution represents only about 30% of the full premium amount. However, this percentage does not reduce your exposure to deductibles, coinsurance, or copayments.

Annual Deductibles: Paid Separately, But Influenced by Premiums

Most PSHB plans in 2025 include an annual deductible—an amount you must pay out-of-pocket before your plan begins sharing costs. While deductibles are separate from premiums, the two are connected:

• Higher premiums often correspond to lower deductibles.

• Lower premiums usually come with higher deductibles.

So while you may feel like you’re saving on a monthly basis, those savings might disappear after just one or two significant healthcare visits early in the year.

Coinsurance: The Cost That Grows with the Bill

Coinsurance is a percentage-based cost you pay after meeting your deductible. For example, your plan might cover 70%, leaving you with 30%. Since coinsurance is based on the total bill, it can lead to significant out-of-pocket costs for high-priced procedures like:

• MRIs or CT scans

• Outpatient surgery

• Emergency room services

• Hospital stays

The more care you receive, the higher your coinsurance costs—making your PSHB contributions only part of the story.

Copayments: Small Charges That Add Up Fast

Unlike coinsurance, copayments are fixed amounts you pay for routine care. These typically apply to:

• Primary care visits

• Specialist appointments

• Urgent care clinics

• Prescription medications

Copayments may seem minor compared to coinsurance, but frequency is the real cost-driver. A few visits each month can translate into hundreds of dollars annually—above and beyond your regular premium.

Out-of-Pocket Maximums: Your True Annual Ceiling

In 2025, PSHB plans include an out-of-pocket maximum that limits how much you’ll spend on covered services. This limit includes:

• Deductibles

• Coinsurance

• Copayments

However, premiums do not count toward your out-of-pocket maximum. So even if you hit your plan’s cap—for example, $7,500 for Self Only or $15,000 for Self Plus One or Family—you’ll still continue paying your monthly premium.

Understanding this separation helps you plan better and avoid surprise costs near the end of the year.

How Medicare Affects Where Your Premium Dollars Go

If you’re eligible for Medicare and enrolled in both Medicare Part B and your PSHB plan, your premium may support additional benefits like:

• Waived or reduced deductibles

• Lower copayments and coinsurance

• Coordination of benefits with Medicare as the primary payer

Some PSHB plans offer incentives or reimbursement arrangements for enrollees who maintain Medicare Part B enrollment. This shifts a portion of the healthcare cost burden to Medicare, which can ease pressure on the PSHB plan and reduce your out-of-pocket expenses.

Still, your PSHB premium remains the same—regardless of whether you’re using Medicare or not. So knowing how these programs coordinate is crucial to understanding what you’re really paying for.

Where the Rest of Your Healthcare Costs Come From

Beyond premiums, your healthcare expenses also include:

• Non-covered services: Anything not included in your plan’s benefit description, like cosmetic procedures.

• Out-of-network care: You’ll pay more if you go outside your plan’s provider network.

• Late or missed enrollment: If you missed key deadlines, you may face penalties or restricted coverage access.

• Extra benefits: Some plans offer wellness programs, dental, or vision—funded partially through your contributions.

These additional costs further stretch the gap between what your premium covers and what you actually spend each year.

Annual Review Is Essential: Premiums Alone Don’t Tell the Whole Story

It’s easy to focus solely on the monthly premium when choosing a PSHB plan. But if you don’t consider the full spectrum of healthcare expenses—copayments, coinsurance, deductibles, and out-of-pocket maximums—you could end up paying far more than you expected.

Each year during Open Season (November to December), take time to evaluate:

• Your past year’s usage and costs

• Anticipated health needs for the upcoming year

• Changes in plan benefits, costs, and provider networks

Plans can and do change annually, so staying informed will help you better predict your total financial exposure—not just the premium.

Digging Deeper Into Your PSHB Plan Can Help You Stay in Control

Your PSHB premium is just the tip of the iceberg. To make the most of your benefits in 2025, understand how every dollar is distributed—across administrative costs, provider reimbursements, prescription drugs, and more.

Look beyond the monthly deduction and focus on how your plan handles:

• Cost-sharing structures

• Coordination with Medicare

• Support services and added benefits

If you’re unsure about any details, it’s smart to speak with a licensed agent listed on this website. They can help you break down your total cost exposure and assist in selecting a plan that better fits your needs.