What Are Medicare Excess Charges?

The term Medicare excess charges refer to the additional number of charges, over and above the Medicare-approved payment amount that non-participating doctors and hospitals may bill patients. Here is how it works:

• Medicare sets a limit on what they will pay for each service provided under Part B. This is called the Medicare-approved amount.
• Providers that agree to accept assignment will bill Medicare directly and agree to accept the Medicare-approved amount as full payment.
• Providers who do not accept assignment may charge up to 15% over the Medicare-approved amount. The additional charge is what is known as Medicare excess charges.
• You are responsible for paying 100% of any excess charges billed by the provider. These excess charges do not count toward your Medicare Part B deductible.

Excess charges could potentially cost thousands of dollars depending on the services received. However, some states prohibit excess charges to protect Medicare beneficiaries.

Are Medicare Excess Charges Common?

In many areas, excess charges are relatively uncommon because most doctors accept Medicare assignment.

However, this can vary depending on:

• Your location
• The specialists you see
• Whether you travel frequently
• The types of medical providers you use

Some Medicare beneficiaries never encounter excess charges at all.

Others may prefer the predictability and simplicity of Plan G, which covers them automatically.

States That Do Not Allow Excess Charges

The following eight states have laws prohibiting Medicare providers from charging excess fees above the Medicare-approved amount:

• Connecticut
• Massachusetts
• Minnesota
• New York
• Ohio
• Pennsylvania
• Rhode Island
• Vermont

This means that medical providers in these states must accept Medicare’s assignment or, approved amount. They cannot bill Medicare patients above the Medicare-approved rate, even if they are non-participating providers who opt out of Medicare.
Medicare Beneficiaries in these states will never pay excess charges for Medicare Part B services. However, their protection does not apply to medical treatment received outside of that state.
In these states, providers may choose to accept assignment or not. Those who do not accept Medicare assignment maintain the right to balance bill up to the 115% excess charge limit.
Beneficiaries in these states face greater risk for excess charges. But there are still steps they can take to avoid surprise billing.

How to Avoid Excess Charges

Beneficiaries in states that allow excess charges have a few options to avoid paying extra:

• Ask providers upfront if they accept assignment – Know the billing practices of your doctor or supplier before receiving care. Those who accept assignment cannot excess bill.
• Look for providers who participate with Medicare – Participating providers have signed agreements to always accept assignment. Search for a participating doctor or hospital near you.
• Get a Medigap plan – Medigap Plan F and Plan G both cover 100% of Medicare excess charges from non-participating providers. Plan F is only available to those eligible for Medicare before 2020.
• Use doctors who opt out of Medicare – Opt-out providers are not allowed to balance bill patients. However, traditional Medicare will not cover services. You would need a private contract.
• Go out of state – Visiting Connecticut, Massachusetts, Minnesota, or another state prohibiting excess charges removes the risk entirely.
• Appeal excess charges – If billed, appeal to Medicare and your state insurance department arguing the charges are prohibited or unreasonable.

While most providers accept Medicare assignment, it helps to be proactive if you live in a state allowing excess billing. Avoid surprise medical bills by partnering closely with your providers and Medicare.

Why Excess Charges Matter With Plan G vs Plan N

Medicare Supplement Plan G covers Medicare Part B excess charges.
Medicare Supplement Plan N does not cover excess charges.
Because of this, many people worry that choosing Plan N could expose them to large unexpected medical bills.
However, excess charges are often less common than people think, especially in states where they are prohibited or in areas where most providers accept Medicare assignment.
For many Medicare beneficiaries, Plan N can still be an excellent value due to its lower monthly premium.

Pennsylvania Medicare Beneficiaries Have an Advantage

If you live in Pennsylvania, doctors cannot legally bill Medicare excess charges.
This is one reason many Pennsylvania Medicare beneficiaries strongly consider Plan N when comparing Medicare Supplement options.
Since excess charges are prohibited in Pennsylvania, one of the major differences between Plan G and Plan N becomes less important for many people.

That said, every situation is different, and choosing the right Medicare Supplement plan depends on:

• Your budget
• Your doctor preferences
• Your travel habits
• Your health concerns
• Understanding Excess Charges Protection by State

States Allowing Excess Charges

The remaining 42 states and Washington D.C. allow providers to impose excess charges if they do not accept Medicare assignment however, 98% of doctors in those States, do not charge excess charges and all Beneficiaries would be wise in asking the Providers upfront whether they will accept assignment or not.

Frequently Asked Questions

What is the Medicare excess charge limit?

Doctors who do not accept Medicare assignment can charge up to 15% above the Medicare-approved amount.

Does Plan N cover excess charges?

No. Medicare Supplement Plan N does not cover Medicare Part B excess charges.

Does Plan G cover excess charges?

Yes. Medicare Supplement Plan G covers Medicare Part B excess charges in full.

Are excess charges allowed in Pennsylvania?

No. Pennsylvania prohibits Medicare excess charges.

Can excess charges happen with Medicare Advantage plans?

Medicare Advantage plans work differently and do not use Medicare excess charges in the same way Original Medicare and Medicare Supplements do.

Joe DeAngelis
Medicare Insurance Broker

Contact The DeAngelis Agency

If you’re turning 65 and wondering whether you can keep your employer coverage, I’d be happy to review your situation.

The right decision depends on your employer benefits, retirement plans, and family circumstances.

Call The DeAngelis Agency at 215-967-8828 to discuss your Medicare questions and compare your options.

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• Why I recommend Plan N So Often
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• Medicare Part B Excess Charges
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