Key Takeaways

• Medicare Part B excess charges occur if a provider doesn’t accept the Medicare-approved amount and charges more.
• Checking plan details and confirming provider assignment can help you avoid unexpected out-of-pocket costs.

For Medicare-eligible federal retirees, understanding how excess charges might affect your wallet—and what’s changing with the Postal Service Health Benefits (PSHB) program in 2026—is crucial. With OPM’s transition from FEHB to PSHB, being informed about how excess charges work and how to plan for them will give you greater peace of mind.

What Are Medicare Part B Excess Charges?

Medicare Part B excess charges are a potential extra cost for some beneficiaries. They arise if a healthcare provider charges more than the Medicare-approved amount for a service. Knowing when and why these charges apply can help you make informed choices about your providers and avoid unexpected bills.

Understanding assignment and non-assignment

Medicare “assignment” is when a provider agrees to accept the Medicare-approved amount as full payment for covered services. Providers who accept assignment cannot bill you more than your standard Medicare deductible and coinsurance.

However, if a provider does not accept assignment (“non-assignment”), they are allowed to charge up to 15% over the Medicare-approved amount for covered Part B services. This additional billing is what’s known as an “excess charge.”

• Assignment: Provider agrees to Medicare’s payment.
• Non-assignment: Provider may bill you extra, up to the legal limit.

How excess charges are calculated

The amount of an excess charge is determined by:

1. The Medicare-approved payment for the service.
2. The provider’s billing practices (accept assignment or not).
3. The 15% statutory limit: Providers who don’t accept assignment may bill up to 15% above the approved rate.

For example, if Medicare approves $100 for a certain visit, and the provider does not accept assignment, they could bill you up to $115. Medicare pays 80% of the approved amount ($80), you pay your coinsurance ($20), and you could be billed up to an additional $15 as an excess charge.

What Is the PSHB Program for 2026?

For retired federal employees, the transition from the Federal Employees Health Benefits (FEHB) program to the Postal Service Health Benefits (PSHB) program took effect in 2025. As you look at your options for 2026, understanding the PSHB’s structure and timeline will help you navigate your coverage.

PSHB overview and key features

The PSHB program is overseen by the U.S. Office of Personnel Management (OPM) and designed for USPS employees, retirees, and their eligible family members. It operates parallel to the FEHB program but is exclusive for eligible USPS groups.

Key PSHB features include:

• Broad national coverage similar to FEHB, with some plan differences.
• Integration with Medicare for retirees and those who are Medicare-eligible.
• Some plan details may differ from legacy FEHB coverage—especially regarding coordination with Medicare Part B.

Timeline and transition details

• The transition to PSHB officially began January 1, 2025.
• Open Season for the first PSHB enrollment occurred in Fall 2024, with coverage going live in 2025.
• If you were previously enrolled in FEHB as a USPS retiree, you generally transitioned to a comparable PSHB plan unless you made a different Open Season election.
• Starting with 2026, annual Open Season periods give you a chance to review or change your PSHB coverage.

How Do PSHB Plans Handle Excess Charges?

Not all health plans coordinate coverage with Medicare Part B in the same way, and PSHB plans may have their own guidelines about handling excess charges. Knowing what to expect from your plan helps you avoid gaps in coverage.

Coverage variations for excess charges

Some PSHB plans may offer additional protection for retirees enrolled in both Medicare Part B and their PSHB plan. This can include extra payment toward excess charges, but not all plans provide this benefit. Others may coordinate only with Medicare’s standard payments and leave you responsible for any Part B excess charges not covered by Medicare.

What’s covered may depend on:

• The specific PSHB plan you choose
• Whether you are actively enrolled in Medicare Parts A and B
• The plan’s policy on secondary payment for excess charges

Checking plan documents for details

Before you select a PSHB plan—or schedule care with a particular provider—always check your plan’s official documentation, such as the plan brochure, Summary of Benefits, or Evidence of Coverage. Key points to look for:

• Does the plan cover excess charges from non-assignment Medicare providers?
• Are there limits or conditions for when the plan will pay?
• Is there a network requirement, or is coverage nationwide?

For clarity, contact your plan’s customer service with specific questions about Medicare integration and out-of-pocket costs. Always base your decisions on official plan documents for the coverage year.

Are Excess Charges Common for Retirees?

If you haven’t encountered excess charges before, you may wonder how likely they are in practice. The answer depends both on provider habits and your location.

Frequency of excess charges in practice

Nationwide, most health care providers who see Medicare beneficiaries accept Medicare assignment. In fact, recent CMS data indicates that more than 95% of U.S. physicians accept assignment. This means excess charges are relatively uncommon, but not impossible, especially in some specialties or geographic areas.

Typical provider billing practices

Some specialties—such as psychiatry and certain surgical subspecialties—may have more providers who do not accept assignment. Providers in more rural or less densely populated states may be more likely to charge excess fees due to supply and demand dynamics.

If you see a provider you haven’t visited before, or who works outside large hospital systems, it’s wise to check on their billing practices in advance.

How Can You Avoid Excess Charges?

While the risk of excess charges is generally low, there are practical steps you can take to further reduce or eliminate the risk of out-of-pocket surprises.

Confirming provider Medicare assignment

The easiest way to avoid excess charges is to verify that your provider accepts Medicare assignment. You can:

• Ask the office directly: “Do all of your providers accept Medicare assignment for Part B services?”
• Check the official Medicare ‘Physician Compare’ tool online, which lets you search for providers who accept assignment.

If your provider is non-participating, ask about their fees for Medicare patients upfront and whether they routinely charge excess fees.

Asking questions before appointments

Being proactive helps you avoid surprises. Before medical appointments, you can ask:

• Do you accept Medicare assignment?
• Will I be responsible for any excess charges?
• If you work with multiple providers or specialists, will they also accept assignment?

This information allows you to make informed decisions and avoid out-of-pocket costs that could add up unexpectedly.

What Should Retirees Compare in 2026?

The shift to PSHB means you have new factors to consider when reviewing your health plan options. Taking the time to compare features now can help you meet your health and financial goals.

Comparing PSHB and Medicare features

Key comparison points include:

• Coordination of benefits: How does your PSHB plan pay in relation to Medicare?
• Excess charge coverage: Does your plan help pay for any excess charges, or are those your responsibility?
• Provider networks: Does the plan restrict you to specific providers, or does it align with national Medicare access?
• Out-of-pocket limits: What is your total financial exposure for a year?

Reviewing special rules for former FEHB enrollees

If you’re coming from the FEHB program, be sure you:

• Review your prior FEHB coverage compared with your new PSHB benefits.
• Pay attention to any special transition provisions for former FEHB members.
• Understand Open Season timing for switching PSHB plans if your needs change.

Annual Open Season periods give you an opportunity to switch plans or clarify benefits, so take advantage of these windows to find the coverage that fits you best.

FAQs About PSHB and Medicare Part B

Can I change plans after 2026?

Yes, each Fall Open Season allows you to review your PSHB plan options and make changes for the next calendar year. It’s a good time to reassess your coverage needs and see if a different plan offers better alignment with your Medicare benefits.

Do excess charges apply to all services?

No, excess charges apply only to certain Medicare Part B services provided by non-participating providers who do not accept assignment. Most providers accept assignment, and excess charges are typically not allowed for some services such as clinical laboratory tests, home health care, and specific supplies.