Key Takeaways

• The Medicare limiting charge sets a maximum allowable fee for certain out-of-network providers, affecting potential out-of-pocket costs.
• Understanding coordination between Medicare, FEHB, and PSHB can help federal retirees avoid unexpected medical bills after the 2025 PSHB transition.

Many federal retirees are surprised to learn that some doctors can bill more than the standard Medicare rate. Understanding the limiting charge could help prevent unexpected medical costs. This article will clarify the limiting charge rules and how they uniquely impact you as a federal retiree in 2026.

What Is the Medicare Limiting Charge?

Definition and background

The Medicare limiting charge is a rule that caps how much certain non-participating doctors can bill patients for services covered under Medicare Part B. Specifically, it restricts these providers from charging more than 15% above the Medicare-approved amount for a given service. The purpose is to protect beneficiaries, like you, from excessive out-of-pocket fees if you receive care from doctors who have chosen not to fully accept Medicare’s standard payment agreement.

Who sets the limiting charge?

The Centers for Medicare & Medicaid Services (CMS) determines the limiting charge each year. CMS bases this calculation on national Medicare payment regulations. Providers who do not fully “participate” in Medicare are subject to this charge limit, while participating providers agree to accept Medicare’s approved amount as full payment.

Why Does the Limiting Charge Matter?

Medicare-approved charging rules

Medicare has established two categories of providers—participating and non-participating. Participating providers accept the Medicare-approved amount as full payment for covered services. Non-participating providers, however, may choose to take the assignment (accept Medicare payment for a service) on a patient-by-patient basis. When they do not, they are allowed to bill you up to the limiting charge (generally 15% more than the Medicare-approved fee for that service).

Impact on federal retirees

If you are a federal retiree with FEHB or PSHB coverage and are enrolled in Medicare, you may still encounter non-participating providers—particularly specialists or those in rural areas. If you see a non-participating doctor, understanding the limiting charge rules helps you plan for possible extra costs above what Medicare and your federal plan will reimburse. This ensures no surprise bills put your retirement budget at risk.

How Does the Limiting Charge Work?

Calculating allowed charges in 2026

In 2026, the limiting charge is up to 115% of Medicare’s approved amount for a covered Part B service. For example, if the Medicare-approved amount for a procedure is $200, a non-participating doctor subject to the limiting charge could bill you up to $230 ($200 × 1.15). However, most providers you encounter are likely to accept assignment, so the limiting charge typically only comes into play with certain out-of-network or non-participating providers.

Example: Out-of-pocket payment scenarios

Imagine you need a Medicare-covered outpatient procedure in 2026. Medicare’s approved amount is $300. A non-participating provider who does NOT accept assignment could bill the limiting charge ($300 × 1.15 = $345). Here’s how it could affect you:

• Medicare pays 80% of the approved amount ($240)
• You pay 20% coinsurance ($60), plus
• Any charges up to the limiting charge (potentially up to $45 more)

If you also have FEHB or PSHB as secondary coverage, your plan may help with some or all of those out-of-pocket costs, but benefits vary. Always check your plan documents for details.

Can My Doctor Bill Above the Limit?

Which doctors may use the limiting charge?

Only non-participating providers—those who do not fully participate in the Medicare program—can bill up to the limiting charge. However, many states restrict or prohibit billing above the Medicare-approved amount for certain types of services. Participating providers, by definition, cannot bill you more than the Medicare-approved amount.

How to verify doctor participation

Before scheduling an appointment, ask the provider’s office if they “accept Medicare assignment” or are “participating” in Medicare. Medicare publishes an online Physician Compare tool that shows doctor participation status. If you are unsure, your FEHB or PSHB plan’s customer service can assist you in checking a provider’s status and what charges may apply.

What Changed After the PSHB Transition?

Overview of PSHB post-2025

The Postal Service Health Benefits (PSHB) Program replaced FEHB coverage for USPS retirees and their families starting January 1, 2025. After this transition, all eligible postal retirees are now enrolled in PSHB plans, which are designed to coordinate directly with Medicare.

Effect on Medicare-related billing

After 2025, most PSHB plans for Medicare-eligible retirees are structured to work alongside your Medicare benefits. While the transition was designed to maintain continued access and minimize disruption, it’s essential to check how your new PSHB plan handles payments and reimbursements for providers who bill up to or at the limiting charge.

How Does the Limiting Charge Affect FEHB and PSHB?

Coordination with Medicare coverage

For those federal retirees still on FEHB or now covered under PSHB, your federal plan generally pays secondary to Medicare once you enroll in Medicare Part A and B. If Medicare covers a service and you are billed by a non-participating provider, your plan may help pay what Medicare does not cover—up to the limiting charge—but not always the full amount. Coordination rules and benefits can vary by plan, so it’s important to review your benefits annually.

Billing scenarios for federal retirees

Say you visit a doctor who charges the full limiting charge for a covered service. Medicare pays its share, and your FEHB or PSHB plan may pay all, some, or none of the patient portion depending on your plan’s rules. If your plan has a benefit that coordinates with Medicare, you might owe less—or nothing—after both pay. Always verify with your plan administrator before seeking care.

Frequently Asked Questions in 2026

How do I avoid extra charges?

Choose participating Medicare providers whenever possible. Ask your doctor up front about their Medicare status, and check the official Medicare or PSHB resources for provider directories. Understanding your own plan’s coverage, especially regarding out-of-network billing, helps you avoid surprises.

Where can I get official guidance?

Always refer to original sources such as Medicare.gov, OPM guidance, or your official PSHB or FEHB plan documents for the latest, most accurate information. If you need help understanding your benefits, contact your plan’s customer service or use Medicare’s official helplines for assistance.