Welcome to Medicare School Daily where we help you understand Medicare, save money,
avoid mistakes, and above all else, get the most out of your Medicare benefits.
Now today's topic is how to eliminate Medicare excess charges forever.
Now, about half of you, when you start your Medicare benefits, are going to make the decision
to stay in the original Medicare system that began in 1965, that's called Medicare A and
B. And when you make this particular choice, which I think honestly is the best choice,
what that means is Medicare is going to pay first.
Meaning you go to the doctor, you go to a hospital, or have any kind of service, when
that claim is filed, it's going to go to Medicare.
Medicare is going to pay first.
And again, Medicare pays pretty well.
But other than preventive, Medicare never pays for anything
100 percent. You're always going to have some kind of liability, something you're going
to be financially responsible for.
We call that gap in your coverage.
And there's actually six gaps in original Medicare A and B. Three on the A of Medicare,
and three on the B. Now, those gaps first off, would be a deductible.
Both A and B have deductibles.
They would also include some copays.
If you ever had to go to the hospital or skilled nursing facility, you could be responsible
for copays.
We also have coinsurance.
This is the 20 percent that is your liability on the B of Medicare.
And then we have this thing that is very unique called an excess charge.
Okay?
So an excess charge is a gap.
I'm going to explain this in full.
And so the point is access is a gap that you need to be prepared for.
So the majority of people who decide that they want to stay in this system will look
at these gaps and they'll say, I really don't want to be financially liable for those gaps.
And so what they will do is they will add a supplemental plan to take care of these
gaps.
And there's actually some supplemental plans that will take care of excess charges when
they occur, and so I want to teach you about excess charges.
So what exactly is an excess charge?
Well, an excess charge is something, first off, that only doctors can bill you. In other words,
only doctors.
This means hospitals do not charge excess.
Durable medical equipment providers do not charge excess.
So, in other words, the companies you would get a CPap machine from or maybe oxygen equipment
from, they do not charge excess either.
Only doctors can do this.
This would be primary care doctors, specialists, surgeons, anesthesiologists.
They're the ones that can charge excess.
And when they do this, what they're doing is they're adding 15 percent to the bill.
Every service that Medicare covers, Medicare has a fixed payment on that.
We call that Medicare approved amount.
The Medicare reimbursement amount.
And so when a doctor sees a Medicare patient but does not take that as payment of full,
that means that doctor has a legal right to actually add 15 percent to the bill.
And one of the problems with that 15 percent is it never, ever, ever stops.
In other words, doctors can continue to do this, and you will be responsible for it.
So that's really the biggest problem with it.
When excess charges occur, Medicare allows it.
But Medicare does not pay any excess.
You will always be responsible for that.
So let me show you a couple quick examples.
And this would be an example of a surgeon.
Now, remember, if you're going to see a surgeon, that surgeon is going to be paid to the B
of Medicare.
A is going to pay the hospital, but B is going to take care of the surgeon and the anesthesiologist.
So anything in Medicare B is 80/20.
Medicare pays 80 and you're responsible for the 20 percent coinsurance.
And so, again, we have a surgeon who has been approved to do a surgery for $10,000.
And frankly, that's not really a whole lot of money when it comes to surgery.
But this has been approved for $10,000.
And so this surgeon does not add to the bill.
In other words, there's no excess charge in this example.
And so it's 80/20.
Medicare pays $8,000, and you're responsible for $2,000 or 20 percent coinsurance.
So, again, we have no excess.
Now, this example of a surgeon who is not going to take the $10,000 as payment of full,
and they're going to add to the bill 15 percent.
So now we have a bill for $11,500.
So we have an extra $1,500.
And that is what the excess amount is here.
But notice Medicare again on the B is 80/20, Medicare pays 80 percent of their original
amount, and now you're responsible for 20 percent coinsurance and 15 percent excess
charge.
So instead of having to pay the $2,000, only now you're responsible for the extra $1,500
as well.
And so when excess charges occur, you're responsible to pay for those.
Now, the majority of people do not want that liability.
So what they will do is they will make a way to cover it.
But if you don't make a way to cover that excess charge, notice you will pay out of
pocket.
And remember, there's no limit to that whatsoever.
So to eliminate that exposure, what most people do today is they're buying supplemental plans
that will take care of the excess.
And folks, there's only two plans that will pay for the excess charges and that will be
plan F and plan G.
Now, there's actually 10 supplemental plans available on the market today, but eight of
those plans will not pay excess.
So if you bought any of those other letters representing a supplemental plan, you would
have to pay excess.
So it is only plans F and plan G that will pay for that.
Now, just a quick reminder, not everyone can buy F plans today.
You actually had to be born before January 1st, 1955, and you started Medicare before
January 1st, 2020.
If that's you, you can still buy F plans and you can keep those F plans for life.
But if you're born after January 1st, 1955, starting Medicare after January 1, 2020,
you would have to buy a G plan to cover your excess.
OK?
And so if we have $11,500 on our bill, back to our example,
remember 20 percent of that or $2,000 will be paid by F or G. Either one and that extra $1,500,
an extra 15 percent, in our previous example, would be covered by F or G.
But if you had any of those letters, you would have to pay the excess charges.
And so excess charges can occur, and when they occur, they're expensive and you'll be
responsible for them.
But this is one way in which you can limit extra charges forever by plan F or by plan G.