Demystifying Excess Charges
For many seniors relying on Original Medicare, unexpected costs can be a significant source of stress. Excess charges represent one such potential expense, arising from providers who do not accept 'Medicare assignment.' Understanding this concept is the first step toward better financial management of your healthcare.
What is Medicare Assignment?
To grasp excess charges, you must first understand Medicare assignment. A healthcare provider who accepts Medicare assignment has agreed to accept the Medicare-approved amount as full payment for their services. This means they will not charge you anything more than the standard Part B deductible and coinsurance. The provider bills Medicare directly for their portion, and you are only responsible for your share of the cost.
The Role of Non-Participating Providers
Excess charges only apply when you see a 'non-participating' provider—one who accepts Medicare patients but does not accept Medicare assignment. While they can accept Medicare, they have the right to charge you up to 15% more than the Medicare-approved amount for the service. This additional fee is the excess charge, and you are responsible for paying it out-of-pocket.
How Excess Charges Work: An Example
To illustrate how this works in practice, consider a common medical service. Suppose the Medicare-approved amount for an office visit is $100. If your doctor accepts assignment, Medicare pays 80% ($80), and you pay the 20% coinsurance ($20). Your total out-of-pocket cost for that service is just $20 (assuming you’ve met your deductible).
If you see a non-participating provider, the situation changes dramatically. That provider can charge up to 15% more than the Medicare-approved amount, so their bill might be $115. Here's how the costs break down:
- The provider may ask you to pay the full $115 upfront.
- You would then submit a claim to Medicare for reimbursement.
- Medicare would reimburse you for 80% of the Medicare-approved amount ($80), leaving you responsible for the remaining $35 ($20 coinsurance + $15 excess charge).
In this scenario, your out-of-pocket cost is higher, and you have to handle the reimbursement process yourself, which can be a hassle.
Protecting Yourself from Excess Charges
Seniors have several powerful tools and strategies to protect themselves from these unexpected costs.
1. Only See Providers Who Accept Assignment
The most straightforward way to avoid excess charges is to only receive care from providers who accept Medicare assignment. Before booking an appointment, always ask if they accept 'Medicare assignment'—not just 'if they take Medicare.' You can also use the official Medicare.gov physician search tool to find providers who accept assignment in your area. This simple step eliminates the risk of excess charges entirely for covered services.
2. Purchase a Medigap Plan with Excess Charge Coverage
Some Medicare Supplement plans, also known as Medigap plans, offer specific coverage for excess charges. For example, Medigap Plan F and Plan G both cover 100% of Part B excess charges. If you have one of these plans, your policy will cover the extra cost, protecting you from that expense. For those who qualified for Medicare after January 1, 2020, Plan G is the most comprehensive option available that includes this benefit. Researching and selecting the right Medigap plan is an excellent way to gain peace of mind.
3. Know Your State's Regulations
Some states have banned excess charges entirely, meaning providers cannot charge more than the Medicare-approved amount. The following states have enacted such regulations: Connecticut, Massachusetts, Minnesota, New York, Ohio, Pennsylvania, Rhode Island, and Vermont. If you live in one of these states, you are already protected from excess charges, regardless of your provider's assignment status. This is a crucial point to confirm if you reside in one of these locations.
4. Use a Provider Search Tool
Medicare provides a valuable search tool on its website to help you find and compare doctors, hospitals, and other providers. You can filter your search to show only those who accept assignment, ensuring you won't incur excess charges. Making this a regular practice when selecting new providers is a smart move for long-term savings. The tool can be found on the official Medicare website.
Comparison: Assigned vs. Non-Assigned Providers
| Feature | Assigned Providers | Non-Assigned Providers |
|---|---|---|
| Acceptance of Medicare | Yes | Yes (but don't accept assignment) |
| Billable Amount | Medicare-approved amount only | Up to 15% above the Medicare-approved amount |
| Excess Charges | None | Yes, potentially up to 15% |
| Payment Process | Bills Medicare directly; you pay deductible/coinsurance | May ask for full payment upfront; you file a claim for reimbursement |
| Claims Filing | Handled by the provider | You are responsible for filing |
Conclusion
Excess charges are a potential but avoidable pitfall for Original Medicare beneficiaries. By understanding the difference between assigned and non-assigned providers, proactively checking your doctor's status, and considering a Medigap plan with excess charge coverage, you can safeguard your finances. Taking a few extra steps of due diligence can save you hundreds, if not thousands, of dollars in unexpected healthcare costs each year, ensuring your aging process is a little less complicated.
