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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:

1. Choose providers who accept Medicare assignment
2. Confirm billing practices before receiving care
3. Consider a Medigap plan (especially Plan G or Plan F) if you’re on Original Medicare
4. 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.

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Medicare vs. Employer Insurance: Which One Pays First

When you’re eligible for Medicare and also have employer-sponsored health insurance, things can get a little confusing. One question that comes up often: is Medicare or employer coverage primary?

The answer depends on employment status, the size of the employer, and the type of Medicare you have. Here’s what you need to know about how Medicare coordinates with employer coverage and who pays first.

Primary Payer

When you have more than one type of health coverage, the primary payer is the insurance that pays first for your healthcare services. The secondary payer may cover remaining costs, such as copayments, coinsurance, or deductibles.

Knowing which plan is primary ensures:

• Your claims are processed correctly
• You avoid unexpected bills
• You stay compliant with Medicare rules

General Rule: Employment Size Determines Priority

If You’re 65 or Older and Still Working

If your employer has 20 or more employees:

• Employer insurance is primary
• Medicare is secondary

If your employer has fewer than 20 employees:

• Medicare is primary
• Employer insurance is secondary

Note: The same rule applies if you’re covered under your spouse’s employer plan.

Watch a video on how Medicare works with employer coverage

Under 65 and Have Medicare Due to Disability:

If your (or your spouse’s) employer has 100 or more employees

• Employer insurance is primary
• Medicare is secondary

If the employer has fewer than 100 employees

• Medicare is primary

Retiree Coverage or COBRA

• Medicare is always primary
• Retiree plans and COBRA are considered secondary

In fact, if you delay enrolling in Medicare while on COBRA, you could lose COBRA coverage. Always sign up for Medicare Part B when first eligible to avoid penalties and gaps in coverage.

What About Veterans Benefits or TRICARE

If you have VA coverage, TRICARE, or other federal health benefits, the rules may differ:

• VA only covers care at VA facilities. If you go to a non-VA provider, Medicare pays first.
• TRICARE for Life acts as secondary coverage to Medicare for eligible military retirees.

Beneficiaries

• Don’t assume employer insurance will always pay first; check the size of the employer.
• Always inform Medicare and your employer plan that you have dual coverage so they can coordinate benefits properly.
• If Medicare is supposed to be primary and you haven’t enrolled in Part B, your employer plan may refuse to pay claims.

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