Excess Charge – Understanding Additional Costs in Medicare

Most Medicare beneficiaries assume that seeing a doctor means paying roughly the same amount regardless of who they visit. But that's not always the case — and understanding the concept of excess charges can help you avoid an unwelcome surprise on your bill. When a doctor doesn't accept Medicare assignment, they're permitted to charge up to 15% more than the Medicare-approved amount for their services. That extra amount — the excess charge — lands squarely on your shoulders unless you have supplemental coverage designed to absorb it.

What are Excess Charges in Medicare?

In Medicare, excess charges arise when healthcare providers who do not accept assignment for a particular service charge more than the Medicare-approved amount for that service. Healthcare providers who accept assignment agree to the Medicare-approved amount as full payment for covered services, meaning you'll never be billed more than your standard cost-sharing. However, non-participating providers who choose not to accept assignment may legally charge up to 15% more than the Medicare-approved amount — and that additional amount is yours to pay out of pocket.

Calculating Excess Charges

The math is straightforward: excess charges are calculated as a percentage of the Medicare-approved amount for a specific service. For instance, if the Medicare-approved amount for a service is $100, a non-participating provider may charge up to $115 for that same service — resulting in a $15 excess charge on top of your standard 20% coinsurance. For a single routine appointment, that may feel manageable. But for beneficiaries who see specialists frequently or require ongoing care from non-participating providers, those charges can accumulate significantly over time.

Impact on Medicare Beneficiaries

Medicare beneficiaries who receive services from non-participating healthcare providers may be responsible for paying excess charges entirely out of pocket. Original Medicare does not cover these additional costs, which means they fall outside the normal cost-sharing structure of your plan. For beneficiaries managing multiple conditions, complex care needs, or limited fixed incomes, the cumulative impact of excess charges can create real financial strain.

How to Avoid Excess Charges To avoid Excess Charges, Medicare beneficiaries have the following options:

• Choose Participating Providers: The simplest way to sidestep excess charges entirely is to select healthcare providers who accept Medicare assignment. You can use Medicare's online Care Compare tool to identify participating providers in your area before scheduling an appointment.
• Medigap Policies: Some Medicare beneficiaries purchase Medigap (Medicare Supplement) policies specifically designed to cover excess charges. Medigap Plan G (and Plan F for those eligible before January 1, 2020) fully covers Part B excess charges, providing complete protection against this potential cost.

Excess charges are one of Original Medicare's less publicized vulnerabilities — a cost that can catch beneficiaries off guard if they haven't done their homework on provider participation status. The good news is that they're entirely avoidable with the right approach. Sticking with Medicare-participating providers eliminates the risk altogether, and for those who want broader provider flexibility, a Medigap plan that covers excess charges provides an effective financial safety net. A few minutes of research before choosing a doctor can prevent a frustrating and unnecessary bill.