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Health Insurance Claims When You Pay Part Of The Bill


Understanding how health insurance claims work will help you save time and money. You will spend less time figuring out the claim process and avoid paying more than necessary for health care.

This article applies to private insurance policies under which you pay a portion of the bill and a claim has to be filed before the insurance company will pay. For example:

  • Indemnity policies. (also known as "fee-for-service" policies), the type where you pay and then are reimbursed
  • PPO Plans. ("Preferred Provider Organization" plans) -- where you get a discount if you use particular providers)
  • Managed care plans which have a point-of-service. feature where you can go outside the plan and part of your bill will be covered by the insurer.

What Is A Health Insurance Claim?

A health insurance claim is a formal request for payment of health care expenses submitted to your insurance company.  The forms themselves may be paper or, increasingly, electronically generated by your doctor's office or other health care provider.

Who Files A Health Insurance Claim?

Either you or your doctor or other health care provider can file a claim for services you receive.  Most medical offices these days will file a claim on your behalf, receive reimbursement from the insurance company, and then bill you for the balance.

If you are covered by more than one health insurance plan, there are rules about which plan pays first and which plan pays second. 

No matter what happens, you are responsible for the entire bill getting paid -- whether you pay it or an insurer pays it.  If a claim is not paid, you will owe the health care provider. Likewise, if a provider bills more than he should, your share of the bill will increase.  For these reasons, always get a copy of a bill, even if the provider is filing the claim for you. Studies have shown between 50% and 80% of bills are incorrect. 

How To File A Claim Yourself

Filing a claim yourself is usually not a good idea.  The people who handle billing in the medical office are usually familiar with the health care claims system and therefore reasonably efficient.  Most offices will prefer that you don't file claims yourself. If you do want to file the claim yourself, you will need a claim form and an itemized bill.

  • A Claim form: Claim forms are available from the employer if your coverage is under a group plan, or from the insurance company (possibly at the insurer's web site) or insurance agent if you have individual health coverage.
  • An Itemized Bill: The itemized bill should include:
    • The medical provider's tax I.D. number
    • The diagnosis for which treatment is given, usually in the form of an ICDN code (ICDN code is a standardized coding system for diagnoses and types of treatments), and
    • A description of each service performed, with its CPT code and charge. (CPT is another standardized code for treatments). You can get the CPT code from the medical provider or from the American Medical Association
  • Most medical providers' billing systems generate bills containing this information.

What's The Deadline For Filing A Health Insurance Claim?

All insurance contracts and most states require that health claims be filed within a certain  period of time after the charge is incurred -- in some cases within as little as twenty days.  Insurance companies routinely grant exceptions to these time limits, especially if the delay was due to circumstances beyond your control and the claim is not too old.  To be safe, file the claim as soon as reasonably possible.

NOTE:   Regardless of the reason for the delay, it is very difficult to get insurance companies to honor claims submitted more than a year after being incurred

What Happens After A Health Insurance The Claim Is Filed?

After the insurance company processes a claim, it should send you an Explanation of Benefits ("EOB"), even if the insurance company decides not to pay the claim. This should come within four to six weeks after incurring the charge, but that can vary depending on how quickly the physician bills the carrier and whether the information is complete in the first filing.

EOBs usually contain the following:

  • Identifying Information:
    • Your name, and the patient's name if different.
    • The insurance ID number (frequently your Social Security number).
    • The group number if your coverage is part of a group plan.
    • A claim number.
    • The date the claim was processed.
  • Processing Details: Usually in a box or boxes across the page will be:
    • Name of the doctor or other health care provider
    • Date of service: The date you incurred the charge.
    • Type of service: The type, in very general terms, of medical service that was provided, such as an office visit, laboratory test, or just "health service."
    • Total billed: The amount the doctor or other health care provider charged.
    • Amount covered: The amount upon which the provider will base reimbursement. This can be less that the amount billed if the amount billed is more than the "usual, customary, reasonable" charge the insurance company uses. If the claim is being denied, the amount will be zero. NOTE: Some companies will instead show the "Amount Not Allowed." If this happens, subtract this amount from the total billed to get the "covered charge."
    • Explanation code: If the entire bill is not covered, there will often be a code explaining why. The legend for theses codes will usually be on the bottom or back of the EOB. Explanation code: will often refer to the following explanations:
    • Amount billed exceeds,Usual, Reasonable & Customary: Insurance companies generally don't pay a claim in excess of what they consider to be the Usual Customary and Reasonable charge for the service.
    • Routine physical examinations are not covered: If the charge is denied completely, the insurance company will provide a very brief explanation as to why it was not covered.
    • Duplicate charge: This happens frequently. The physician bills the carrier, then, not having received a payment, re-bills the carrier. Usually, it means the original bill is still being processed.
    • This exceeds the allowed charge for a participating provider. You are not responsible for the excess amount: This means that the physician was a,PPO provider, but billed for more than permitted under the PPO contract. Here the insurance company is saying that it won't pay the bill because of the PPO contract. For the same reason, you don't have to pay the amount either.
    • Applied to Deductible: If your deductible (the amount you have to pay each year before your insurance kicks in) hasn't been satisfied, the covered charges will be applied toward it until it is.
    • Co-Insurance or Co-Pay: This is the amount you are obligated to pay under the insurance contract. For example, if your policy has 80% coinsurance, 20% of the covered charges will appear in this column.
    • Insurance Company Payment: The amount the insurance company has paid and to whom it has been paid.
    • Totals: If several charges are listed on separate lines on one page, there will usually be a line totaling each column.

What If I Have Questions About Or Don't Agree With The Explanation of Benefits (EOB)?

If you have questions about or don't agree with the EOB, contact the insurance company.  There will usually be a toll-free number on the bill.  The carrier will also often indicate how and by when to appeal the decision.

If The Doctor Or Health Care Provider Files Claims, Be Sure Each Claim Is Filed

A week or two after using a new health care provider, contact whatever individual or department handles billing (usually an office manager or billing or insurance department). Confirm that the claim was filed with the insurer.

Once you're confident that claims are being filed on a timely basis, follow-up only when you don't receive an explanation of benefits. from the insurance company within the normal timeframe. 

In any event, you should always get a copy of the bill upon which the claim is based.

Also, if you haven't already, now is the time to set up an easy system for keeping track of medical bills.

If your claim is denied, see: How To Appeal A Denial Of A Health Insurance Claim When There's A Bill Involved

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