Key Takeaways

• Medicare Part A and your PSHB plan don’t cover every cost equally—and some gaps may surprise you if you’re not prepared.

• Knowing who pays first and what each plan limits can help you avoid high out-of-pocket costs during hospital stays or skilled nursing care.

Understanding the Medicare Part A and PSHB Cost Split

When you turn 65 and become eligible for Medicare, your PSHB (Postal Service Health Benefits) plan begins coordinating with Medicare. Most PSHB enrollees assume that having both means they’re fully protected. In truth, while this pairing offers broad coverage, there are important distinctions and responsibilities that shift once Medicare Part A becomes your primary hospital insurance.

PSHB plans work in conjunction with Medicare, but they don’t simply duplicate benefits. Medicare pays first for most inpatient services, and PSHB often steps in as secondary coverage. However, the actual financial coordination is more nuanced, and failing to understand it can leave you exposed to unexpected expenses.

What Medicare Part A Covers in 2025

Medicare Part A is your hospital insurance, and in 2025, its benefits include:

• Inpatient hospital stays: Covers semi-private rooms, meals, general nursing, and other hospital services.

• Skilled nursing facility (SNF) care: After a qualifying hospital stay of at least 3 days.

• Hospice care: For terminally ill patients who meet Medicare’s eligibility rules.

• Some home health care services: Only if certain conditions are met.

But Part A has limits:

• Deductible: $1,676 per benefit period.

• Coinsurance: $419 per day for hospital stays on days 61-90, $838 per day for lifetime reserve days, and $209.50 per day for SNF care on days 21-100.

These costs don’t disappear just because you have PSHB coverage.

How PSHB Coordinates With Medicare Part A

Once you’re enrolled in Medicare Part A, your PSHB plan generally becomes the secondary payer for hospital-related services. Here’s how coordination works in practice:

• Medicare pays first, covering approved services up to Medicare limits.

• PSHB pays second, potentially covering some or all of the remaining deductibles, coinsurance, or costs Medicare doesn’t cover.

However, this depends heavily on the PSHB plan you choose. Some plans offer robust wraparound benefits, while others may limit what they cover after Medicare pays. And not every PSHB plan reduces your out-of-pocket exposure in the same way.

Cost-Sharing Pitfalls You May Not See Coming

Even with Medicare Part A and PSHB working together, you might still face:

• Out-of-pocket costs for services outside Medicare coverage.

• Gaps if you use providers not in your PSHB plan’s network, even if they accept Medicare.

• Skilled nursing costs beyond 100 days—neither Medicare nor PSHB generally pays after that point.

• Hospital admissions not meeting Medicare’s definition of inpatient care, such as observation stays.

If you’re admitted for observation rather than as an inpatient, Medicare Part A doesn’t cover the stay—and that means your cost-sharing structure changes significantly.

Who Pays First? Timing and Enrollment Matter

The order in which your plans pay depends on:

• Whether you’re still actively employed: If you’re working and have PSHB through employment, PSHB may pay first. If you’re retired and eligible for Medicare, Medicare pays first.

• Your age: At 65, Medicare eligibility begins. From this point forward, your PSHB plan assumes you’re enrolled unless exempt.

• Your enrollment status: If you delay enrolling in Medicare Part A (though rare, since it’s premium-free for most), PSHB may pay first, but you could miss out on coordination benefits.

Failing to enroll in Medicare Part A when required may also lead to gaps in PSHB coverage and higher personal costs.

Your Financial Exposure Without Part B

While this article focuses on Part A, it’s important to note that Medicare Part B plays a role in overall cost coordination. If you don’t enroll in Part B when eligible, your PSHB plan may not cover costs for outpatient services, physician fees, or preventive care that Part B would typically cover.

Even if your PSHB plan continues to offer coverage, you could face higher copayments, higher deductibles, or service denials. Part A handles inpatient costs, but Part B is essential for nearly everything else. Without it, the cost-splitting arrangement weakens significantly.

What About Emergency Room Visits and Observation Status?

One of the gray areas in PSHB-Medicare coordination arises with ER visits and subsequent hospital stays. Medicare determines if you were admitted as an inpatient or held under observation status:

• Observation status: Treated as outpatient, not covered by Medicare Part A.

• Inpatient status: Covered by Medicare Part A.

Many retirees only discover the financial implications after the fact. Under observation status, Medicare Part B is responsible for payment—and if you aren’t enrolled in Part B, you could end up responsible for a large share of the bill.

Cost Split in Skilled Nursing Facilities

After a qualifying 3-day inpatient stay, Medicare Part A covers skilled nursing care for up to 100 days:

• Days 1-20: Covered in full.

• Days 21-100: $209.50 daily coinsurance.

PSHB may cover some or all of the coinsurance, depending on your plan. However, if the facility isn’t part of your PSHB network or Medicare doesn’t consider your prior hospital stay eligible, you might have to pay the full amount yourself.

Beyond 100 days, Medicare Part A stops paying altogether. PSHB plans also typically don’t extend full coverage beyond that threshold.

Real Risk: Lifetime Reserve Days

Medicare gives you 60 lifetime reserve days to use after day 90 of a hospital stay. In 2025, each of these days carries an $838 coinsurance. Once they’re used up, you’re fully responsible for the cost of care unless your PSHB plan explicitly offers extended inpatient coverage.

Most PSHB plans won’t step in fully at this point. If your plan offers a limited number of additional days or reduced cost-sharing, you need to know that in advance.

The Importance of Reviewing Your PSHB Plan’s Brochure

Every PSHB plan has a brochure available through OPM that outlines how it coordinates with Medicare. Focus on the sections that describe:

• Inpatient cost-sharing

• Skilled nursing facility benefits

• Coverage after Medicare pays

• Limitations if you opt out of Medicare enrollment

This brochure is your key to understanding what your specific plan will and will not pay for. Many retirees discover their gaps too late simply because they didn’t read the fine print.

Where You May Need to Rethink Your Assumptions

Assuming PSHB always fills in the gaps left by Medicare is a common mistake. In reality:

• PSHB doesn’t cover every dollar Medicare leaves behind.

• PSHB may require prior authorization even if Medicare approves a claim.

• Out-of-network services can trigger higher costs or denial.

Also, some retirees wrongly assume that Medicare and PSHB will automatically coordinate. While most plans do so seamlessly, administrative errors or delays in enrollment can result in bills being sent to you before the plans communicate properly.

Reviewing Your Coverage Annually Is Essential

As the PSHB landscape evolves in 2025 and beyond, staying current is critical. Each year during Open Season (held from November to December), you have the opportunity to:

• Review how your PSHB plan has changed.

• Evaluate if your current plan still coordinates well with Medicare.

• Make changes if your medical needs have evolved.

This is not something to leave to chance. Your health needs and plan options shift over time—and with new federal mandates or policy changes, what was covered last year may look different now.

Protect Yourself With the Right Knowledge and Action

The way Medicare Part A and PSHB split costs may seem straightforward on paper, but in practice, there are countless details that can affect your finances. From hospitalization classifications to provider networks, your decisions—and your awareness—play a huge role in what you actually pay.

If you’re already enrolled in both Medicare and a PSHB plan, now is the time to review your Summary Plan Description and speak with a licensed agent listed on this website to ensure you understand how the two work together.

If you’re not yet 65, use the time to plan wisely. And if you’re retired and relying on both, don’t assume you’re fully covered without confirming the limits of your plan.