Part B excess charges typically only apply if you visit providers who don't accept Medicare or the Medicare-approved cost for services.
Part B excess charges are important to understand on their own but are also an essential thing to keep in mind when shopping for Medigap plans. When it comes to excess charges, you have to understand what they are, how much you can expect to pay, and how to avoid them as much as possible. We’ll cover all of that information here, so you can fully understand how your relationship with your doctor works while limiting any unwanted fees.
Understanding the Medicare-approved amount
Every insurance plan, including Medicare, has some form of an approved amount agreement. This is just what it sounds like: an amount that that plan will pay for a given procedure. This can vary among insurance plans, and even among different providers on the same insurance plan.
The basic idea behind the Medicare-approved amount is that it tells providers how much they will get paid if a patient comes into their office and uses Medicare. Medicare refers to this as assignment, and you’ll often hear it discussed in terms of whether a healthcare provider accepts assignment. Accepting assignment and agreeing to the Medicare-approved amount mean the same thing.
You will also hear providers referred to as “participating providers” if they accept Medicare assignment. This designation means that they will never charge you more than the Medicare-approved amount for any services. Non-participating providers may charge you more, or it may vary.
What are Medicare excess charges?
Excess charges are costs that you must pay out-of-pocket if your healthcare provider does not accept assignment. Although most providers accept assignment, around 5-7% do not. These providers are allowed to charge up to 15% more than the Medicare-approved amount.
If your provider charges this excess amount, you have to pay it out-of-pocket. To discover whether your provider accepts assignment beforehand, simply ask. If you have any doubt about whether your preferred physician accepts assignment, make sure to ask in advance and determine whether the excess charge is worth it.
Which parts of Medicare do excess charges apply to?
Excess charges only apply to Medicare Part B. Part A will never have excess charges, and costs for Part C and Part D plans function differently from Original Medicare. You’ll never have to worry about excess charges at a hospital or inpatient facility, unless your emergency room visit is covered by Part B.
States with no excess charges
In some states, doctors are not allowed to charge higher than the Medicare-approved amount. These states are:
- New York
- Rhode Island
This is especially relevant if you are looking for Medigap plans. We’ll discuss excess charges under Medigap in more detail below.
Excess charges and Medicare Supplement Insurance
Excess charges are very important to keep in mind if you are interested in Medigap enrollment. Medigap plans, also known as Medicare Supplement plans, are private insurance plans that help pay for your out-of-pocket costs. Unlike traditional insurance plans, these plans don’t directly cover medical services. Instead, they cover things like your Part B deductible, copayment, coinsurance, and so on.
Excess charges fall into this category. Not all Medicare Supplement plans cover the Part B excess charge. It’s important to compare Medigap plan coverage before you choose which plan you buy. Even once you see a plan that you think is a good fit for you, the prices may end up pushing you in another direction in the end.
Because Medigap plans are offered by private insurance companies, the prices will vary. For this reason, plans that cover excess charges may end up being so much more expensive that it is better to just pay the excess charges out-of-pocket.
Which plans cover excess charges?
Part B excess charges are only covered by Medigap Plan F and Medigap Plan G. These are among the most popular plans out there, so you should have no issue finding one at a competitive rate.
Plan F is being slowly phased out, so you won’t be able to purchase it if you became eligible for Medicare in 2020 or later. For those who became eligible before this date, Plan F is available, even if you didn’t purchase it yet or didn’t even enroll in Medicare yet. The only thing that matters is eligibility!
Plan G covers the same things as Plan F, minus the Part B deductible. This comes to $226 per year as of 2023, so the coverage is still quite comprehensive.