Medicare Excess Charges: What They Are & How to Avoid Them
When navigating Medicare, many beneficiaries are surprised to learn about a lesser-known cost called Medicare excess charges. While not everyone will encounter them, knowing how they work, and how to avoid them, can help protect your wallet and ensure you receive the most value from your healthcare coverage.
What Are Medicare Excess Charges
Medicare excess charges occur when a healthcare provider charges more than the Medicare-approved amount for a service under Original Medicare Part B. In most cases, providers who accept Medicare agree to bill only the amount that Medicare approves. However, some providers do not accept Medicare assignment, meaning they can legally charge up to 15% more than the approved rate. This extra amount is known as the excess charge.
For example, if Medicare approves $200 for a service and pays 80% ($160), you’re responsible for the remaining 20% coinsurance ($40). If the provider adds a 15% excess charge ($30), you would owe $70 total instead of $40.
When Do Excess Charges Apply
Excess charges apply only to Medicare Part B services when a provider:
Accepts Medicare but
Does not accept Medicare assignment
These providers still treat Medicare patients, but they can bill above the standard Medicare fee schedule.
Learn about Medicare High Deductible G Plans – Watch a YouTube video
Where Excess Charges Do Not Apply
You do not need to worry about excess charges if:
- You see a doctor who accepts Medicare assignment
- You receive care in a Medicare-participating facility
- You live in a state that bans excess charges (see below)
- You have a Medigap Plan G or Plan F (these plans pay excess charges)
States That Prohibit Medicare Excess Charges
Some states have passed laws to protect Medicare beneficiaries. In these states, providers cannot charge more than the Medicare-approved amount:
- Connecticut
- Massachusetts
- Minnesota
- New York
- Ohio
- Pennsylvania
- Rhode Island
- Vermont
If you live in one of these states, you are fully shielded from excess charges.
How to Avoid Medicare Excess Charges
Here are simple steps to ensure you don’t pay more than necessary:
- Choose providers who accept Medicare assignment
- Confirm billing practices before receiving care
- Consider a Medigap plan (especially Plan G or Plan F) if you’re on Original Medicare
- Use Medicare’s provider finder tool to verify assignment status
What About Medicare Advantage Plans
If you’re enrolled in a Medicare Advantage (Part C) plan, excess charges typically do not apply, as long as you stay within the plan’s network. Medicare Advantage plans negotiate rates with providers directly, separate from Original Medicare rules.
Medicare excess charges aren’t common, but when they do occur, they can add up. The good news is that with the right knowledge and a little planning you can easily avoid them. Whether you choose Original Medicare with a Medigap plan or enroll in Medicare Advantage, being proactive about your provider choices helps ensure your healthcare is both high-quality and cost-effective.