Key Takeaways

• Many PSHB enrollees underestimate how deductibles work, which can lead to surprising out-of-pocket costs, especially after retirement.

• Knowing when and how deductibles reset, and how they interact with coinsurance and copayments, is crucial to budgeting for healthcare in 2025.

What a Deductible Actually Means in 2025

A deductible is the amount you must pay out-of-pocket each year before your PSHB plan starts covering a larger portion of your healthcare costs. Under most Postal Service Health Benefits (PSHB) plans, this amount applies to services such as hospital stays, diagnostic tests, and certain outpatient procedures. Unlike copayments, which are fixed, deductibles can fluctuate depending on the services used and the plan selected.

In 2025, deductibles within PSHB plans typically range from $350 to $2,000 for in-network services, and even higher for out-of-network providers. These amounts reset annually, usually on January 1st.

Why It Matters to You Now

As a retiree or someone approaching retirement, you likely use more healthcare services than you did during your working years. This makes understanding your deductible not just useful, but essential. You may think you’re covered, only to receive a bill because you haven’t yet met your deductible for the year.

When Deductibles Reset and Why It Catches You Off Guard

Most PSHB deductibles reset every January. If you had a series of medical services late in the previous year and then continued treatment into the new year, you might expect cost-sharing to continue seamlessly. But instead, the new calendar year means your deductible resets—and you start paying again out-of-pocket.

This annual reset is one of the main reasons retirees are caught off guard. It’s easy to overlook the change, especially if you assume your “insurance is already covering it.”

What Counts Toward Your Deductible (And What Doesn’t)

To fully understand your PSHB deductible, you need to know which services apply toward it. Here’s a breakdown:

Typically included:

• Inpatient hospital care

• Outpatient surgery

• Diagnostic tests (e.g., MRI, CT scans)

• Emergency room visits (if not waived with Medicare Part B)

Typically excluded:

• Routine checkups

• Preventive screenings

• Certain prescription drugs (covered separately under Part D or drug benefits)

• Services with flat copayments

Notably, if you see out-of-network providers, those expenses often have separate, higher deductibles that don’t count toward your in-network limit.

How Medicare Affects Your PSHB Deductible

For retirees who are Medicare-eligible and enrolled in both Medicare Part A and Part B, your PSHB plan may waive or reduce your deductible. This integration depends on the plan you choose. In 2025, many PSHB plans offer coordination with Medicare, meaning if Medicare pays first, your remaining out-of-pocket may be much smaller.

However, this benefit only applies if you’re enrolled in both Parts A and B. If you’re only enrolled in Part A, or opted out of Medicare entirely, you may be responsible for the full deductible under your PSHB plan.

High vs. Low Deductible PSHB Plans: What to Know

In 2025, PSHB plans generally fall into two categories:

Low-deductible plans:

• Annual deductibles range between $350–$500.

• Higher monthly premiums.

• Lower cost-sharing after the deductible is met.

High-deductible plans:

• Deductibles can range from $1,500–$2,000 or more.

• Lower premiums.

• Often paired with Health Savings Accounts (HSAs), but only if you’re not enrolled in Medicare.

If you’re retired and have Medicare, you’re typically not eligible for an HSA. That makes low-deductible plans more appealing for many retirees, even if the premium is higher.

Why Some Retirees Reach Their Deductible Quickly, and Others Never Do

Whether you hit your deductible depends on your health status and the type of services you use. For example:

• A single hospital admission can easily exceed a $1,000 deductible.

• Multiple physical therapy sessions or imaging tests can add up quickly.

• Regular doctor visits for chronic conditions may not apply toward the deductible if they only require a copayment.

Some retirees mistakenly believe that every visit they make is “chipping away” at the deductible. But unless it’s a service that counts toward the deductible, that assumption could lead to budgeting mistakes.

Planning for the Deductible in Your Retirement Budget

Even if you’re in good health, it’s smart to plan each year as if you might hit your deductible. Here’s how you can prepare:

• Know your plan’s deductible and how it applies. Don’t guess. Look it up every January.

• Factor it into your annual medical budget. Whether it’s $350 or $2,000, plan for it.

• Set aside funds early in the year. Many retirees allocate a portion of their January income (like Social Security or annuity payments) to cover it.

• Review Explanation of Benefits (EOBs). These documents show how much of your deductible has been met.

The Hidden Impact of Deductibles on Chronic Care Costs

If you manage a chronic condition like diabetes, COPD, or heart disease, you may already budget for medications and specialist visits. But hospitalizations, new tests, or therapy adjustments can introduce costs that fall under your deductible.

In some PSHB plans, items like insulin pumps, medical devices, or durable equipment are subject to the deductible before coverage kicks in. This can create a short-term financial strain, even if the item is medically necessary.

How to Strategically Time Your Healthcare in 2025

Once you’ve met your deductible for the year, you’re only responsible for copayments or coinsurance. This opens an opportunity to strategically time healthcare services:

• Schedule elective procedures after meeting your deductible. If you’re planning cataract surgery, for example, try to do it in the same calendar year after you’ve already hit your deductible.

• Group services together when possible. If you need a diagnostic scan and physical therapy, do them close together after meeting your deductible.

This approach ensures that you minimize out-of-pocket costs by using the system to your advantage.

Understanding Deductibles vs. Out-of-Pocket Maximums

Some PSHB retirees confuse the deductible with the out-of-pocket maximum (OOPM), but they’re very different:

• Deductible: The initial amount you must pay before your plan starts cost-sharing.

• Out-of-Pocket Maximum: The cap on how much you’ll spend in total for covered services in a year.

For example, your plan may have a $500 deductible and a $6,000 OOPM. After you pay the $500 deductible, you’re still responsible for coinsurance and copayments until your total spending hits $6,000. After that, the plan pays 100% for covered in-network services.

Mistakes That Cause Unexpected Charges

Many retirees end up surprised by costs due to one of the following oversights:

• Assuming Medicare automatically eliminates the deductible (only true if enrolled in both Parts A and B and the PSHB plan is designed for it).

• Going out of network unknowingly, triggering a separate deductible.

• Believing copays reduce your deductible balance (they usually don’t).

• Not confirming whether a service is considered “preventive,” which is often exempt from the deductible.

Avoiding these errors can make a substantial difference in your annual medical expenses.

Don’t Let Deductibles Derail Your Retirement Budget

For many retirees in the PSHB system, a misunderstanding of how deductibles work results in higher-than-expected bills just when care is most needed. By knowing what your deductible covers, when it resets, how it interacts with Medicare, and how to plan around it, you can protect your budget and avoid surprises.

If you’re uncertain about which plan suits your retirement goals or how your deductible fits into your broader healthcare strategy, now is the time to speak with a licensed agent listed on this website. They can help you compare PSHB plans in detail, especially how they integrate with Medicare and manage deductibles in 2025.