What is an assignment of benefits?
Jim Probasco is an expert in the areas of personal income, saving and investing, banking, home buying, insurance, and more. A Dayton, Ohio-based writer, Jim has written for radio and television, and authored books for parents in arts education opportunities for their children.
The last time you sought medical care, you likely made an appointment with your provider, got the treatment you needed, paid your copay or deductible, and that was it. No paperwork, no waiting to be reimbursed; your doctor received payment from your insurance company and you both went on with your lives.
This is how most people receive health care in the U.S. This system, known as assignment of benefits or AOB, is now being used with other types of insurance, including auto and homeowners coverage .
What is an assignment of benefits?
An AOB is a legal agreement that allows your insurance company to directly pay a third party for services performed on your behalf. In the case of health care, it could be your doctor or another medical professional providing care. With a homeowners, renters, or auto insurance claim, the third party could be a contractor, auto repair shop, or other facility.
Assignment of benefits is legal, thanks to a concept known as freedom of contract, which says two parties may make a private agreement, including the forfeiture of certain rights, and the government may not interfere. There are exceptions, making freedom of contract something less than an absolute right. For example, the contract may not violate the law or contain unfair terms.
Not all doctors or contractors utilize AOBs. Therefore, it’s a good idea to make sure the doctor or service provider and you are on the same page when it comes to AOBs before treatment or work begins.
How an AOB works
The function of an AOB agreement varies depending on the type of insurance policy involved, the healthcare provider, contractor, or service provider, and increasingly, state law. Although an AOB is normal in health insurance, other applications of assignment of benefits have now included the auto and homeowners insurance industry.
Because AOBs are common in health care, you probably don’t think twice about signing a piece of paper that says “assignment of benefits” across the top. But once you sign it, you’re likely turning over your right to deal with your insurance company regarding service from that provider. Why would you do this?
According to Dr. David Berg of Redirect Health , the reason is simple: “Without an AOB in place, the patient themselves would be responsible for paying the cost of their service and would then file a claim with their insurance company for reimbursement.”
With homeowners or auto insurance, the same rules apply. Once you sign the AOB, you are effectively out of the picture. The contractor who reroofs your house or the mechanic who rebuilds your engine works with your insurance company by filing a claim on your behalf and receiving their money without your help or involvement.
“Each state has its own rules, regulations, and permissions regarding AOBs,” says Gregg Barrett, founder and CEO of WaterStreet , a cloud-based P&C insurance administration platform. “Some states require a strict written breakdown of work to be done, while others allow assignment of only parts of claims.”
Within the guidelines of the specific insurance rules for AOBs in your state, the general steps include:
- You and your contractor draw up an AOB clause as part of the contract.
- The contract stipulates the exact work that will be completed and all necessary details.
- The contractor sends the completed AOB to the insurance company where an adjuster reviews, asks questions, and resolves any discrepancies.
- The contractor’s name (or that of an agreed-upon party) is listed to go on the settlement check.
After work is complete and signed off, the insurer will issue the check and the claim will be considered settled.
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Example of an assignment of benefits
If you’re dealing with insurance, how would an AOB factor in? Let’s take an example. “Say you have a water leak in the house,” says Angel Conlin, chief insurance officer at Kin Insurance . “You call a home restoration company to stop the water flow, clean up the mess, and restore your home to its former glory. The restoration company may ask for an assignment of benefits so it can deal directly with the insurance company without your input.”
In this case, by eliminating the homeowner, whose interests are already represented by an experienced insurance adjustor, the AOB reduces redundancy, saves time and money, and allows the restoration process to proceed with much greater efficiency.
When would you need to use an assignment of benefits?
An AOB can simplify complicated and costly insurance transactions and allow you to turn these transactions over to trusted experts, thereby avoiding time-consuming negotiations.
An AOB also frees you from paying the entire bill upfront and seeking reimbursement from your insurance company after work has been completed or services rendered. Since you are not required to sign an assignment of benefits, failure to sign will result in you paying the entire medical bill and filing for reimbursement. The three most common uses of AOBs are with health insurance, car insurance, and homeowners insurance.
Assignment of benefits for health insurance
As discussed, AOBs in health insurance are commonplace. If you have health insurance, you’ve probably signed AOBs for years. Each provider (doctor) or practice requires a separate AOB. From your point of view, the big advantages of an AOB are that you receive medical care, your doctor and insurance company work out the details and, in the event of a disagreement, those two entities deal with each other.
Assignment of benefits for car owners
If your car is damaged in an accident and needs extensive repair, the benefits of an AOB can quickly add up. Not only will you have your automobile repaired with minimal upfront costs to you, inconvenience will be almost nonexistent. You drop your car off (or have it towed), wait to be called, told the repair is finished, and pick it up. Similar to a health care AOB, disagreements are worked out between the provider and insurer. You are usually not involved.
Assignment of benefits for homeowners
When your home or belongings are damaged or destroyed, your primary concern is to “return to normal.” You want to do this with the least amount of hassle. An AOB allows you to transfer your rights to a third party, usually a contractor, freeing you to deal with the crisis at hand.
When you sign an AOB, your contractor can begin immediately working on damage repair, shoring up against additional deterioration, and coordinating with various subcontractors without waiting for clearance or communication with you.
The fraud factor
No legal agreement, including an AOB, is free from the possibility of abuse or fraud. Built-in safeguards are essential to ensure the benefits you assign to a third party are as protected as possible.
In terms of what can and does go wrong, the answer is: plenty. According to the National Association of Mutual Insurance Companies (NAMICs), examples of AOB fraud include inflated invoices or charges for work that hasn’t been done. Another common tactic is to sue the insurance company, without the policyholder’s knowledge or consent, something that can ultimately result in the policyholder being stuck with the bill and higher insurance premiums due to losses experienced by the insurer.
State legislatures have tried to protect consumers from AOB fraud and some progress has been made. Florida, for example, passed legislation in 2019 that gives consumers the right to rescind a fraudulent contract and requires that AOB contracts include an itemized description of the work to be done. Other states, including North Dakota, Kansas, and Iowa have all signed NAMIC-backed legislation into law to protect consumers from AOB fraud.
The National Association of Insurance Commissioners (NAIC), offers advice for consumers to help avoid AOB fraud and abuse:
- File a claim with your insurer before you hire a contractor. This ensures you know what repairs need to be made.
- Don’t pay in full upfront. Legitimate contractors do not require it.
- Get three estimates before selecting a contractor.
- Get a full written contract and read it carefully before signing.
- Don’t be pressured into signing an AOB. You are not required to sign an AOB.
Pros and cons of an assignment of benefits
The advantages and disadvantages of an AOB agreement depend largely on the amount and type of protection your state’s insurance laws provide.
- An AOB frees you from paying for services and waiting for reimbursement from your insurer
- Some people appreciate not needing to negotiate with their insurer
- You are not required to sign an AOB.
- Signing an AOB could make you the victim of a scam without knowing it until your insurer refuses to pay
- An AOB doesn’t free you from the ultimate responsibility to pay for services rendered, which could drag you into expensive litigation if things go south
- Any AOB you do sign is legally binding
The takeaway
An AOB, as the health insurance example shows, can simplify complicated and costly insurance transactions and help consumers avoid time-consuming negotiations. And it can save upfront costs while letting experts work out the details.
It can also introduce a nightmare scenario laced with fraud requiring years of costly litigation. Universal state-level legislation with safeguards is required to avoid the latter. Until that is in place, your best bet is to work closely with your insurer when signing an AOB. Look for suspicious or inflated charges when negotiating with contractors, providers, and other servicers.
- Our ranking of the best jewelry insurance can help you insure your personal treasures.
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- Check out the best personal loans to help fund your next big purchase.
- Small business owners should check out this ranking of the best business checking accounts .
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EDITORIAL DISCLOSURE : The advice, opinions, or rankings contained in this article are solely those of the Fortune Recommends ™ editorial team. This content has not been reviewed or endorsed by any of our affiliate partners or other third parties.
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What is Medicare assignment and how does it work?
Kimberly Lankford,
Because Medicare decides how much to pay providers for covered services, if the provider agrees to the Medicare-approved amount, even if it is less than they usually charge, they’re accepting assignment.
A doctor who accepts assignment agrees to charge you no more than the amount Medicare has approved for that service. By comparison, a doctor who participates in Medicare but doesn’t accept assignment can potentially charge you up to 15 percent more than the Medicare-approved amount.
That’s why it’s important to ask if a provider accepts assignment before you receive care, even if they accept Medicare patients. If a doctor doesn’t accept assignment, you will pay more for that physician’s services compared with one who does.
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How much do I pay if my doctor accepts assignment?
If your doctor accepts assignment, you will usually pay 20 percent of the Medicare-approved amount for the service, called coinsurance, after you’ve paid the annual deductible. Because Medicare Part B covers doctor and outpatient services, your $240 deductible for Part B in 2024 applies before most coverage begins.
All providers who accept assignment must submit claims directly to Medicare, which pays 80 percent of the approved cost for the service and will bill you the remaining 20 percent. You can get some preventive services and screenings, such as mammograms and colonoscopies , without paying a deductible or coinsurance if the provider accepts assignment.
What if my doctor doesn’t accept assignment?
A doctor who takes Medicare but doesn’t accept assignment can still treat Medicare patients but won’t always accept the Medicare-approved amount as payment in full.
This means they can charge you up to a maximum of 15 percent more than Medicare pays for the service you receive, called “balance billing.” In this case, you’re responsible for the additional charge, plus the regular 20 percent coinsurance, as your share of the cost.
How to cover the extra cost? If you have a Medicare supplement policy , better known as Medigap, it may cover the extra 15 percent, called Medicare Part B excess charges.
All Medigap policies cover Part B’s 20 percent coinsurance in full or in part. The F and G policies cover the 15 percent excess charges from doctors who don’t accept assignment, but Plan F is no longer available to new enrollees, only those eligible for Medicare before Jan. 1, 2020, even if they haven’t enrolled in Medicare yet. However, anyone who is enrolled in original Medicare can apply for Plan G.
Remember that Medigap policies only cover excess charges for doctors who accept Medicare but don’t accept assignment, and they won’t cover costs for doctors who opt out of Medicare entirely.
Good to know. A few states limit the amount of excess fees a doctor can charge Medicare patients. For example, Massachusetts and Ohio prohibit balance billing, requiring doctors who accept Medicare to take the Medicare-approved amount. New York limits excess charges to 5 percent over the Medicare-approved amount for most services, rather than 15 percent.
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How do I find doctors who accept assignment?
Before you start working with a new doctor, ask whether he or she accepts assignment. About 98 percent of providers billing Medicare are participating providers, which means they accept assignment on all Medicare claims, according to KFF.
You can get help finding doctors and other providers in your area who accept assignment by zip code using Medicare’s Physician Compare tool .
Those who accept assignment have this note under the name: “Charges the Medicare-approved amount (so you pay less out of pocket).” However, not all doctors who accept assignment are accepting new Medicare patients.
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What does it mean if a doctor opts out of Medicare?
Doctors who opt out of Medicare can’t bill Medicare for services you receive. They also aren’t bound by Medicare’s limitations on charges.
In this case, you enter into a private contract with the provider and agree to pay the full bill. Be aware that neither Medicare nor your Medigap plan will reimburse you for these charges.
In 2023, only 1 percent of physicians who aren’t pediatricians opted out of the Medicare program, according to KFF. The percentage is larger for some specialties — 7.7 percent of psychiatrists and 4.2 percent of plastic and reconstructive surgeons have opted out of Medicare.
Keep in mind
These rules apply to original Medicare. Other factors determine costs if you choose to get coverage through a private Medicare Advantage plan . Most Medicare Advantage plans have provider networks, and they may charge more or not cover services from out-of-network providers.
Before choosing a Medicare Advantage plan, find out whether your chosen doctor or provider is covered and identify how much you’ll pay. You can use the Medicare Plan Finder to compare the Medicare Advantage plans and their out-of-pocket costs in your area.
Return to Medicare Q&A main page
Kimberly Lankford is a contributing writer who covers Medicare and personal finance. She wrote about insurance, Medicare, retirement and taxes for more than 20 years at Kiplinger’s Personal Finance and has written for The Washington Post and Boston Globe . She received the personal finance Best in Business award from the Society of American Business Editors and Writers and the New York State Society of CPAs’ excellence in financial journalism award for her guide to Medicare.
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Assignment of benefits: what you need to know.
- August 17, 2022
- Steven Schwartzapfel
Insurance can be useful, but dealing with the back-and-forth between insurance companies and contractors, medical specialists, and others can be a time-consuming and ultimately unpleasant experience. You want your medical bills to be paid without having to act as a middleman between your healthcare provider and your insurer.
However, there’s a way you can streamline this process. With an assignment of benefits, you can designate your healthcare provider or any other insurance payout recipient as the go-to party for insurance claims. While this can be convenient, there are certain risks to keep in mind as well.
Below, we’ll explore what an assignment of insurance benefits is (as well as other forms of remediation), how it works, and when you should employ it. For more information, or to learn whether you may have a claim against an insurer, contact Schwartzapfel Lawyers now at 1-516-342-2200 .
What Is an Assignment of Benefits?
An assignment of benefits (AOB) is a legal process through which an insured individual or party signs paperwork that designates another party like a contractor, company, or healthcare provider as their insurance claimant .
Suppose you’re injured in a car accident and need to file a claim with your health insurance company for medical bills and related costs. However, you also need plenty of time to recover. The thought of constantly negotiating between your insurance company, your healthcare provider, and anyone else seems draining and unwelcome.
With an assignment of benefits, you can designate your healthcare provider as your insurance claimant. Then, your healthcare provider can request insurance payouts from your healthcare insurance provider directly.
Through this system, the health insurance provider directly pays your physician or hospital rather than paying you. This means you don’t have to pay your healthcare provider. It’s a streamlined, straightforward way to make sure insurance money gets where it needs to go. It also saves you time and prevents you from having to think about insurance payments unless absolutely necessary.
What Does an Assignment of Benefits Mean?
An AOB means that you designate another party as your insurance claimant. In the above example, that’s your healthcare provider, which could be a physician, hospital, or other organization.
With the assignment of insurance coverage, that healthcare provider can then make a claim for insurance payments directly to your insurance company. The insurance company then pays your healthcare provider directly, and you’re removed as the middleman.
As a bonus, this system sometimes cuts down on your overall costs by eliminating certain service fees. Since there’s only one transaction — the transaction between your healthcare provider and your health insurer — there’s only one set of service fees to contend with. You don’t have to deal with two sets of service fees from first receiving money from your insurance provider, then sending that money to your healthcare provider.
Ultimately, the point of an assignment of benefits is to make things easier for you, your insurer, and anyone else involved in the process.
What Types of Insurance Qualify for an Assignment of Benefits?
Most types of commonly held insurance can work with an assignment of benefits. These insurance types include car insurance, healthcare insurance, homeowners insurance, property insurance, and more.
Note that not all insurance companies allow you to use an assignment of benefits. For an assignment of benefits to work, the potential insurance claimant and the insurance company in question must each sign the paperwork and agree to the arrangement. This prevents fraud (to some extent) and ensures that every party goes into the arrangement with clear expectations.
If your insurance company does not accept assignments of benefits, you’ll have to take care of insurance payments the traditional way. There are many reasons why an insurance company may not accept an assignment of benefits.
To speak with a Schwartzapfel Lawyers expert about this directly, call 1-516-342-2200 for a free consultation today. It will be our privilege to assist you with all your legal questions, needs, and recovery efforts.
Who Uses Assignments of Benefits?
Many providers, services, and contractors use assignments of benefits. It’s often in their interests to accept an assignment of benefits since they can get paid for their work more quickly and make critical decisions without having to consult the insurance policyholder first.
Imagine a circumstance in which a homeowner wants a contractor to add a new room to their property. The contractor knows that the scale of the project could increase or shrink depending on the specifics of the job, the weather, and other factors.
If the homeowner uses an assignment of benefits to give the contractor rights to make insurance claims for the project, that contractor can then:
- Bill the insurer directly for their work. This is beneficial since it ensures that the contractor’s employees get paid promptly and they can purchase the supplies they need.
- Make important decisions to ensure that the project completes on time. For example, a contract can authorize another insurance claim for extra supplies without consulting with the homeowner beforehand, saving time and potentially money in the process.
Practically any company or organization that receives payments from insurance companies may choose to take advantage of an assignment of benefits with you. Example companies and providers include:
- Ambulance services
- Drug and biological companies
- Lab diagnostic services
- Hospitals and medical centers like clinics
- Certified medical professionals such as nurse anesthetists, nurse midwives, clinical psychologists, and others
- Ambulatory surgical center services
- Permanent repair and improvement contractors like carpenters, plumbers, roofers, restoration companies, and others
- Auto repair shops and mechanic organizations
Advantages of Using an Assignment of Benefits
An assignment of benefits can be an advantageous contract to employ, especially if you believe that you’ll need to pay a contractor, healthcare provider, and/or other organization via insurance payouts regularly for the near future.
These benefits include but are not limited to:
- Save time for yourself. Again, imagine a circumstance in which you are hospitalized and have to pay your healthcare provider through your health insurance payouts. If you use an assignment of benefits, you don’t have to make the payments personally or oversee the insurance payouts. Instead, you can focus on resting and recovering.
- Possibly save yourself money in the long run. As noted above, an assignment of benefits can help you circumvent some service fees by limiting the number of transactions or money transfers required to ensure everyone is paid on time.
- Increased peace of mind. Many people don’t like having to constantly think about insurance payouts, contacting their insurance company, or negotiating between insurers and contractors/providers. With an assignment of benefits, you can let your insurance company and a contractor or provider work things out between them, though this can lead to applications later down the road.
Because of these benefits, many recovering individuals, car accident victims, homeowners, and others utilize AOB agreements from time to time.
Risks of Using an Assignment of Benefits
Worth mentioning, too, is that an assignment of benefits does carry certain risks you should be aware of before presenting this contract to your insurance company or a contractor or provider. Remember, an assignment of benefits is a legally binding contract unless it is otherwise dissolved (which is technically possible).
The risks of using an assignment of benefits include:
- You give billing control to your healthcare provider, contractor, or another party. This allows them to bill your insurance company for charges that you might not find necessary. For example, a home improvement contractor might bill a homeowner’s insurance company for an unnecessary material or improvement. The homeowner only finds out after the fact and after all the money has been paid, resulting in a higher premium for their insurance policy or more fees than they expected.
- You allow a contractor or service provider to sue your insurance company if the insurer does not want to pay for a certain service or bill. This can happen if the insurance company and contractor or service provider disagree on one or another billable item. Then, you may be dragged into litigation or arbitration you did not agree to in the first place.
- You may lose track of what your insurance company pays for various services . As such, you could be surprised if your health insurance or other insurance premiums and deductibles increase suddenly.
Given these disadvantages, it’s still wise to keep track of insurance payments even if you choose to use an assignment of benefits. For example, you might request that your insurance company keep you up to date on all billable items a contractor or service provider charges for the duration of your treatment or project.
For more on this and related topic, call Schwartzapfel Lawyers now at 1-516-342-2200 .
How To Make Sure an Assignment of Benefits Is Safe
Even though AOBs do carry potential disadvantages, there are ways to make sure that your chosen contract is safe and legally airtight. First, it’s generally a wise idea to contact knowledgeable legal representatives so they can look over your paperwork and ensure that any given assignment of benefits doesn’t contain any loopholes that could be exploited by a service provider or contractor.
The right lawyer can also make sure that an assignment of benefits is legally binding for your insurance provider. To make sure an assignment of benefits is safe, you should perform the following steps:
- Always check for reviews and references before hiring a contractor or service provider, especially if you plan to use an AOB ahead of time. For example, you should stay away if a contractor has a reputation for abusing insurance claims.
- Always get several estimates for work, repairs, or bills. Then, you can compare the estimated bills and see whether one contractor or service provider is likely to be honest about their charges.
- Get all estimates, payment schedules, and project schedules in writing so you can refer back to them later on.
- Don’t let a service provider or contractor pressure you into hiring them for any reason . If they seem overly excited about getting started, they could be trying to rush things along or get you to sign an AOB so that they can start issuing charges to your insurance company.
- Read your assignment of benefits contract fully. Make sure that there aren’t any legal loopholes that a contractor or service provider can take advantage of. An experienced lawyer can help you draft and sign a beneficial AOB contract.
Can You Sue a Party for Abusing an Assignment of Benefits?
Sometimes. If you believe your assignment of benefits is being abused by a contractor or service provider, you may be able to sue them for breaching your contract or even AOB fraud. However, successfully suing for insurance fraud of any kind is often difficult.
Also, you should remember that a contractor or service provider can sue your insurance company if the insurance carrier decides not to pay them. For example, if your insurer decides that a service provider is engaging in billing scams and no longer wishes to make payouts, this could put you in legal hot water.
If you’re not sure whether you have grounds for a lawsuit, contact Schwartzapfel Lawyers today at 1-516-342-2200 . At no charge, we’ll examine the details of your case and provide you with a consultation. Don’t wait. Call now!
Assignment of Benefits FAQs
Which states allow assignments of benefits.
Every state allows you to offer an assignment of benefits to a contractor and/or insurance company. That means, whether you live in New York, Florida, Arizona, California, or some other state, you can rest assured that AOBs are viable tools to streamline the insurance payout process.
Can You Revoke an Assignment of Benefits?
Yes. There may come a time when you need to revoke an assignment of benefits. This may be because you no longer want the provider or contractor to have control over your insurance claims, or because you want to switch providers/contractors.
To revoke an assignment of benefits agreement, you must notify the assignee (i.e., the new insurance claimant). A legally solid assignment of benefits contract should also include terms and rules for this decision. Once more, it’s usually a wise idea to have an experienced lawyer look over an assignment of benefits contract to make sure you don’t miss these by accident.
Contact Schwartzapfel Lawyers Today
An assignment of benefits is an invaluable tool when you need to streamline the insurance claims process. For example, you can designate your healthcare provider as your primary claimant with an assignment of benefits, allowing them to charge your insurance company directly for healthcare costs.
However, there are also risks associated with an assignment of benefits. If you believe a contractor or healthcare provider is charging your insurance company unfairly, you may need legal representatives. Schwartzapfel Lawyers can help.
As knowledgeable New York attorneys who are well-versed in New York insurance law, we’re ready to assist with any and all litigation needs. For a free case evaluation and consultation, contact Schwartzapfel Lawyers today at 1-516-342-2200 !
Schwartzapfel Lawyers, P.C. | Fighting For You™™
What Is an Insurance Claim? | Experian
What is assignment of benefits, and how does it impact insurers? | Insurance Business Mag
Florida Insurance Ruling Sets Precedent for Assignment of Benefits | Law.com
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Medicare Assignment
Home / Medicare 101 / Medicare Costs / Medicare Assignment
Summary: If a provider accepts Medicare assignment, they accept the Medicare-approved amount for a covered service. Though most providers accept assignment, not all do. In this article, we’ll explain the differences between participating, non-participating, and opt-out providers. You’ll also learn how to find physicians in your area who accept Medicare assignment. Estimated Read Time: 5 min
What is Medicare Assignment
Medicare assignment is an agreement by your doctor or other healthcare providers to accept the Medicare-approved amount as the full cost for a covered service. Providers who “accept assignment” bill Medicare directly for Part B-covered services and cannot charge you more than the applicable deductible and coinsurance.
Most healthcare providers who opt-in to Medicare accept assignment. In fact, CMS reported in its Medicare Participation for Calendar Year 2024 announcement that 98 percent of Medicare providers accepted assignment in 2023.
Providers who accept Medicare are divided into two groups: Participating providers and non-participating providers. Providers can decide annually whether they want to participate in Medicare assignment, or if they want to be non-participating.
Providers who do not accept Medicare Assignment can charge up to 15% above the Medicare-approved cost for a service. If this is the case, you will be responsible for the entire amount (up to 15%) above what Medicare covers.
Below, we’ll take a closer look at participating, non-participating, and opt-out physicians.
Medicare Participating Providers: Providers Who Accept Medicare Assignment
Healthcare providers who accept Medicare assignment are known as “participating providers”. To participate in Medicare assignment, a provider must enter an agreement with Medicare called the Participating Physician or Supplier Agreement. When a provider signs this agreement, they agree to accept the Medicare-approved charge as the full charge of the service. They cannot charge the beneficiary more than the applicable deductible and coinsurance for covered services.
Each year, providers can decide whether they want to be a participating or non-participating provider. Participating in Medicare assignment is not only beneficial to patients, but to providers as well. Participating providers get paid by Medicare directly, and when a participating provider bills Medicare, Medicare will automatically forward the claim information to Medicare Supplement insurers. This makes the billing process much easier on the provider’s end.
Medicare Non-Participating Providers: Providers Who Don’t Accept Assignment
Healthcare providers who are “non-participating” providers do not agree to accept assignment and can charge up to 15% over the Medicare-approved amount for a service. Non-participating Medicare providers still accept Medicare patients. However they have not agreed to accept the Medicare-approved cost as the full cost for their service.
Doctors who do not sign an assignment agreement with Medicare can still choose to accept assignment on a case-by-case basis. When non-participating providers do add on excess charges , they cannot charge more than 15% over the Medicare-approved amount. It’s worth noting that providers do not have to charge the maximum 15%; they may only charge 5% or 10% over the Medicare-approved amount.
When you receive a Medicare-covered service at a non-participating provider, you may need to pay the full amount at the time of your service; a claim will need to be submitted to Medicare for you to be reimbursed. Prior to receiving care, your provider should give you an Advanced Beneficiary Notice (ABN) to read and sign. This notice will detail the services you are receiving and their costs.
Non-participating providers should include a CMS-approved unassigned claim statement in the additional information section of your Advanced Beneficiary Notice. This statement will read:
“This supplier doesn’t accept payment from Medicare for the item(s) listed in the table above. If I checked Option 1 above, I am responsible for paying the supplier’s charge for the item(s) directly to the supplier. If Medicare does pay, Medicare will pay me the Medicare-approved amount for the item(s), and this payment to me may be less than the supplier’s charge.”
This statement basically summarizes how excess charges work: Medicare will pay the Medicare-approved amount, but you may end up paying more than that.
Your provider should submit a claim to Medicare for any covered services, however, if they refuse to submit a claim, you can do so yourself by using CMS form 1490S .
Opt-Out Providers: What You Need to Know
Opt-out providers are different than non-participating providers because they completely opt out of Medicare. What does this mean for you? If you receive supplies or services from a provider who opted out of Medicare, Medicare will not pay for any of it (except for emergencies).
Physicians who opt-out of Medicare are even harder to find than non-participating providers. According to a report by KFF.org, only 1.1% of physicians opted out of Medicare in 2023. Of those who opted out, most are physicians in specialty fields such as psychiatry, plastic and reconstructive surgery, and neurology.
How to Find A Doctor Who Accepts Medicare Assignment
Finding a doctor who accepts Medicare patients and accepts Medicare assignment is generally easier than finding a provider who doesn’t accept assignment. As we mentioned above, of all the providers who accept Medicare patients, 98 percent accept assignment.
The easiest way to find a doctor or healthcare provider who accepts Medicare assignment is by visiting Medicare.gov and using their Compare Care Near You tool . When you search for providers in your area, the Care Compare tool will let you know whether a provider is a participating or non-participating provider.
If a provider is part of a group practice that involves multiple providers, then all providers in that group must have the same participation status. As an example, we have three doctors, Dr. Smith, Dr. Jones, and Dr. Shoemaker, who are all part of a group practice called “Health Care LLC”. The group decides to accept Medicare assignment and become a participating provider. Dr. Smith decides he does not want to accept assignment, however, because he is part of the “Health Care LLC” group, he must remain a participating provider.
Using Medicare’s Care Compare tool, you can select a group practice and see their participation status. You can then view all providers who are part of that group. This makes finding doctors who accept assignment even easier.
To ensure you don’t end up paying more out-of-pocket costs than you anticipated, it’s always a good idea to check with your provider if they are a participating Medicare provider. If you have questions regarding Medicare assignment or are having trouble determining whether a provider is a participating provider, you can contact Medicare directly at 1-800-633-4227. If you have questions about excess charges or other Medicare costs and would like to speak with a licensed insurance agent, you can contact us at the number above.
Announcement About Medicare Participation for Calendar Year 2024, Centers for Medicare & Medicaid Services. Accessed January 2024
https://www.cms.gov/files/document/medicare-participation-announcement.pdf
Annual Medicare Participation Announcement, CMS.gov. Accessed January 2024
https://www.cms.gov/medicare-participation
Does Your Provider Accept Medicare as Full Payment? Medicare.gov. Accessed January 2024
https://www.medicare.gov/basics/costs/medicare-costs/provider-accept-Medicare
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What Is the Assignment of Insurance Benefits?
An assignment of insurance benefits shares the ownership interest of an insurance policy with another party.
Hemera Technologies/AbleStock.com/Getty Images
More Articles
- 1. What Is a Life Insurance Assignment?
- 2. Absolute Assignment of Life Insurance Policies
- 3. What Is the Collateral Assignment of a Life Insurance Policy?
Assigning insurance benefits is a legal procedure that gives another party permission to receive payments or benefits directly from your insurance company rather than you receiving the benefits yourself. Depending on the arrangement, you may be able to terminate the assignment at will, or be required to keep the arrangement in place until you meet certain conditions.
Health Insurance
When you require medical care, it's important to have health insurance in place to protect your financial well-being. If your health care provider does not have a direct contract with your insurance company, it may require you to fill out an assignment of benefits form allowing it to bill the insurance company directly for your medical treatments. You remain responsible for any deductibles and co-pays, however, and are ultimately responsible for any medical bills.
Income Loan
Whole life insurance policies with accumulating cash values can act as supplementary retirement income planning investments. When you wish to access the cash value in your policy, you can assign your policy to a bank in exchange for a loan. Typically the bank lends you up to a specified percentage of the policy's cash value, and it becomes the primary beneficiary of the death benefit up to and including the outstanding balance of the loan at your death. The advantage of such an arrangement is that the bank loan is not treated as taxable income, unlike a policy withdrawal, and you repay the bank loan with the tax-free death benefit.
Collateral Loan
If you are self-employed and wish to secure a loan for your business, you may be required by your lenders to purchase life insurance as an additional guarantee. Once the insurance is purchased you complete a assignment of benefits, sharing ownership control with the bank. You must pay the insurance premiums and cannot make any decisions affecting the policy without the written consent of the lender. If and when you pay off your business loan, the assignment is terminated and you regain full control of the policy.
Charitable Contribution
Life insurance can be purchased as a means to finance a charitable gift at death. There are several ways to set this up, one of which involves assigning the benefits to the charity immediately after purchase. The assignment is typically irrevocable, as this requires the charity's consent to make any changes to the policy. The advantage of such an assignment is that your premiums are tax-deductible as a charitable contribution. Upon your death, the charity receives the death benefit directly, without the money passing through your estate.
- Massachusetts Avenue Surgery Center: Assignment of Insurance Benefits
- Feeley and Driscoll, P.C.: Life insurance leads way to charitable contribution
Philippe Lanctot started writing for business trade publications in 1990. He has contributed copy for the "Canadian Insurance Journal" and has been the co-author of text for life insurance company marketing guides. He holds a Bachelor of Science in mathematics from the University of Montreal with a minor in English.
Related Articles
What is a life insurance assignment, absolute assignment of life insurance policies, what is the collateral assignment of a life insurance policy, how do i set up a trust fund with a life insurance policy, how much can i borrow against cash value, is whole-term life insurance with a retirement plan a good idea, how to finance a funeral, can you write off life insurance payments, can life insurance proceeds paid to a beneficiary be forced to pay the deceased's debts, taxation of death benefits paid on a life insurance policy, is life insurance taxed at payout, does life insurance count towards the two million for federal estate tax.
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What is an Assignment of Benefits?
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The last time you sought medical care, you likely made an appointment with your provider, got the treatment you needed, paid your copay or deductible, and that was it. No paperwork, no waiting to be reimbursed; your doctor received payment from your insurance company and you both went on with your lives.
This is how most people receive health care in the U.S. This system, known as assignment of benefits or AOB, is now being used with other types of insurance, including auto and homeowners coverage .
What is an assignment of benefits?
An AOB is a legal agreement that allows your insurance company to directly pay a third party for services performed on your behalf. In the case of health care, it could be your doctor or another medical professional providing care. With a homeowners, renters, or auto insurance claim, the third party could be a contractor, auto repair shop, or other facility.
Assignment of benefits is legal, thanks to a concept known as freedom of contract, which says two parties may make a private agreement, including the forfeiture of certain rights, and the government may not interfere. There are exceptions, making freedom of contract something less than an absolute right. For example, the contract may not violate the law or contain unfair terms.
Not all doctors or contractors utilize AOBs. Therefore, it’s a good idea to make sure the doctor or service provider and you are on the same page when it comes to AOBs before treatment or work begins.
How an AOB works
The function of an AOB agreement varies depending on the type of insurance policy involved, the healthcare provider, contractor, or service provider, and increasingly, state law. Although an AOB is normal in health insurance, other applications of assignment of benefits have now included the auto and homeowners insurance industry.
Because AOBs are common in health care, you probably don’t think twice about signing a piece of paper that says “assignment of benefits” across the top. But once you sign it, you’re likely turning over your right to deal with your insurance company regarding service from that provider. Why would you do this?
According to Dr. David Berg of Redirect Health, the reason is simple: “Without an AOB in place, the patient themselves would be responsible for paying the cost of their service and would then file a claim with their insurance company for reimbursement.”
With homeowners or auto insurance, the same rules apply. Once you sign the AOB, you are effectively out of the picture. The contractor who reroofs your house or the mechanic who rebuilds your engine works with your insurance company by filing a claim on your behalf and receiving their money without your help or involvement.
“Each state has its own rules, regulations, and permissions regarding AOBs,” says Gregg Barrett, founder and CEO of WaterStreet , a cloud-based P&C insurance administration platform. “Some states require a strict written breakdown of work to be done, while others allow assignment of only parts of claims.”
Within the guidelines of the specific insurance rules for AOBs in your state, the general steps include:
- You and your contractor draw up an AOB clause as part of the contract.
- The contract stipulates the exact work that will be completed and all necessary details.
- The contractor sends the completed AOB to the insurance company where an adjuster reviews, asks questions, and resolves any discrepancies.
- The contractor’s name (or that of an agreed-upon party) is listed to go on the settlement check.
After work is complete and signed off, the insurer will issue the check and the claim will be considered settled.
Example of an assignment of benefits
If you’re dealing with insurance, how would an AOB factor in? Let’s take an example. “Say you have a water leak in the house,” says Angel Conlin, chief insurance officer at Kin Insurance . “You call a home restoration company to stop the water flow, clean up the mess, and restore your home to its former glory. The restoration company may ask for an assignment of benefits so it can deal directly with the insurance company without your input.”
In this case, by eliminating the homeowner, whose interests are already represented by an experienced insurance adjustor, the AOB reduces redundancy, saves time and money, and allows the restoration process to proceed with much greater efficiency.
When would you need to use an assignment of benefits?
An AOB can simplify complicated and costly insurance transactions and allow you to turn these transactions over to trusted experts, thereby avoiding time-consuming negotiations.
An AOB also frees you from paying the entire bill upfront and seeking reimbursement from your insurance company after work has been completed or services rendered. Since you are not required to sign an assignment of benefits, failure to sign will result in you paying the entire medical bill and filing for reimbursement. The three most common uses of AOBs are with health insurance, car insurance, and homeowners insurance.
Assignment of benefits for health insurance
As discussed, AOBs in health insurance are commonplace. If you have health insurance, you’ve probably signed AOBs for years. Each provider (doctor) or practice requires a separate AOB. From your point of view, the big advantages of an AOB are that you receive medical care, your doctor and insurance company work out the details and, in the event of a disagreement, those two entities deal with each other.
Assignment of benefits for car owners
If your car is damaged in an accident and needs extensive repair, the benefits of an AOB can quickly add up. Not only will you have your automobile repaired with minimal upfront costs to you, inconvenience will be almost nonexistent. You drop your car off (or have it towed), wait to be called, told the repair is finished, and pick it up. Similar to a health care AOB, disagreements are worked out between the provider and insurer. You are usually not involved.
Assignment of benefits for homeowners
When your home or belongings are damaged or destroyed, your primary concern is to “return to normal.” You want to do this with the least amount of hassle. An AOB allows you to transfer your rights to a third party, usually a contractor, freeing you to deal with the crisis at hand.
When you sign an AOB, your contractor can begin immediately working on damage repair, shoring up against additional deterioration, and coordinating with various subcontractors without waiting for clearance or communication with you.
The fraud factor
No legal agreement, including an AOB, is free from the possibility of abuse or fraud. Built-in safeguards are essential to ensure the benefits you assign to a third party are as protected as possible.
In terms of what can and does go wrong, the answer is: plenty. According to the National Association of Mutual Insurance Companies (NAMICs), examples of AOB fraud include inflated invoices or charges for work that hasn’t been done. Another common tactic is to sue the insurance company, without the policyholder’s knowledge or consent, something that can ultimately result in the policyholder being stuck with the bill and higher insurance premiums due to losses experienced by the insurer.
State legislatures have tried to protect consumers from AOB fraud and some progress has been made. Florida, for example, passed legislation in 2019 that gives consumers the right to rescind a fraudulent contract and requires that AOB contracts include an itemized description of the work to be done. Other states, including North Dakota, Kansas, and Iowa have all signed NAMIC-backed legislation into law to protect consumers from AOB fraud.
The National Association of Insurance Commissioners (NAIC), offers advice for consumers to help avoid AOB fraud and abuse:
- File a claim with your insurer before you hire a contractor. This ensures you know what repairs need to be made.
- Don’t pay in full upfront. Legitimate contractors do not require it.
- Get three estimates before selecting a contractor.
- Get a full written contract and read it carefully before signing.
- Don’t be pressured into signing an AOB. You are not required to sign an AOB.
Pros and cons of an assignment of benefits
The advantages and disadvantages of an AOB agreement depend largely on the amount and type of protection your state’s insurance laws provide.
Pros of assignment of benefits
With proper safeguards in place to reduce opportunities for fraud, AOBs have the ability to streamline and simplify the insurance claims process.
- An AOB frees you from paying for services and waiting for reimbursement from your insurer.
- Some people appreciate not needing to negotiate with their insurer.
- You are not required to sign an AOB.
Cons of assignment of benefits
As with most contracts, AOBs are a double-edged sword. Be aware of potential traps and ask questions if you are unsure.
- Signing an AOB could make you the victim of a scam without knowing it until your insurer refuses to pay.
- An AOB doesn’t free you from the ultimate responsibility to pay for services rendered, which could drag you into expensive litigation if things go south.
- Any AOB you do sign is legally binding.
The takeaway
An AOB, as the health insurance example shows, can simplify complicated and costly insurance transactions and help consumers avoid time-consuming negotiations. And it can save upfront costs while letting experts work out the details.
It can also introduce a nightmare scenario laced with fraud requiring years of costly litigation. Universal state-level legislation with safeguards is required to avoid the latter. Until that is in place, your best bet is to work closely with your insurer when signing an AOB. Look for suspicious or inflated charges when negotiating with contractors, providers, and other servicers.
By: Jim Probasco
From: Fortune Recommends
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Can You Assign Your Insurance Benefits to Someone Else?
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Most business insurance policies contain a so-called anti-assignment clause. This clause prohibits policyholders from transferring any of their rights under the policy to someone else. This means that the insured business cannot cede its right to collect claim payments to another party. However, laws in most states permit policyholders to transfer their rights to another party under certain circumstances.
Anti-Assignment Clause
In the standard ISO policies , the anti-assignment clause is located in a separate form called the Common Policy Conditions. These conditions apply to all coverages that are included in the policy. For instance, if a policy includes business auto , general liability , and commercial property coverages, the anti-assignment clause applies to all three coverages.
The clause is entitled Transfer of Your Rights and Duties Under This Policy. It includes the following provision:
Your rights and duties under this policy may not be transferred without our written consent except in the case of death of an individual named insured.
The anti-assignment clause prohibits the named insured from transferring any of its rights or obligations under the policy to someone else without the insurer's permission. The only exception is if the named insured is an individual (sole proprietor) and he or she dies. An assignment is permitted in this case because a sole proprietorship and the individual owner are one and the same. If the individual dies, the business cannot survive unless it is sold to someone else.
An anti-assignment clause is intended to prevent the insurer from unwittingly assuming risks it never intended to take on. Commercial insurers review business insurance applicants carefully. Before they issue policies, underwriters consider the knowledge and experience of a company's owners and managerial staff. If a business is sold to someone else, the new owners may not be as skilled or attentive as the previous ones. From the insurer's perspective, the new owners are an unknown risk.
Post-Loss Assignments Permitted
The anti-assignment clause doesn't distinguish between assignments made before a loss and those made afterward. Even so, courts in most states have allowed policyholders to assign their rights to another party after a loss has occurred. Pre-loss assignments are still prohibited. Here is an example of a post-loss assignment of insurance benefits.
Victor operates a restaurant called Vital Vittles out of a building he owns. Late one January night two water pipes in the building freeze. The pipes subsequently burst, causing considerable water damage to Victor's building. Victor is forced to close his restaurant until the repairs are completed.
Victor hires a water damage contractor called Rapid Restoration to repair the damage to his building. He tells the contractor that he needs the repairs done quickly as he is anxious to reopen his restaurant. The contractor says that the repairs can be expedited if Victor signs over his rights under the policy to Rapid Restoration. The contractor will then proceed with the repairs and negotiate a claim settlement with Vital Vittles' commercial property insurer. Victor agrees to the assignment and the contractor begins the repair work.
While Vital Vittles' commercial property policy contains an anti-assignment clause, Victor has assigned his rights to Rapid Restoration after a loss has occurred. Thus, in most states, Victor's insurer cannot reject the assignment (assuming post-loss assignments are permitted in Victor's state).
Problems With Assignments of Benefits
In recent years, assignment of benefits (AOB) agreements have been problematic in some states, particularly Florida. Unscrupulous contractors have preyed on unsuspecting homeowners and business owners who have suffered water damage . Some contractors work alone while others operate in cahoots with crooked lawyers. In either event, the contractor convinces the policyholder to assign his or her rights under the policy over to the contractor. The contractor then exaggerates the cost of the repairs and collects the inflated amount from the insurer. The policyholder is left with a large claim on his or her loss history. When the policy expires, the insurer may refuse to renew it.
In the previous example, Victor has assigned his rights under the policy to Rapid Restoration. Suppose that Rapid Restoration completes only half of the repair work on Victor's building. The actual cost is $15,000 but the contractor submits a bill to the insurer for $30,000. Alternatively, the contractor never submits a bill but sues the insurer for $30,000. In either case, the insurer may refuse to pay on the basis that the contractor has committed insurance fraud. Victor cannot intervene because he has signed his rights over to the contractor. If the contractor is unsuccessful in its lawsuit against the insurer, it may demand payment from Victor's company.
Avoiding Problems With AOBs
As a business owner, you can avoid problems associated with AOBs and unscrupulous contractors by taking the following steps:
- Report any loss or accident directly to your insurer (or your agent or broker ). Notify your insurer immediately. Don't allow a contractor to do the notification on your behalf.
- Take photos of the damage.
- Don't allow any contractor to begin work until an insurance adjuster has documented the damage
- Vet contractors thoroughly before hiring them. Make sure they are properly licensed. If your area has suffered a natural disaster, watch out for construction scams.
- Don't sign an AOB unless you have reviewed it carefully. If you don't understand it, ask your agent, insurer, or attorney for assistance.
- If your contractor won't do any work until you've signed an AOB, find another contractor.
AOBs in Health Insurance
Assignment of benefit agreements are common in health insurance. Patients are often asked to agree to such clauses before they receive treatment from a physician, hospital, or another healthcare provider. The assignment of benefits clause transfers a patient's right to collect benefits under his or her health policy to the provider. By signing the document, the patent agrees that payments will be made directly to the provider for the services rendered. The clause states that the patient is ultimately responsible for the charges if the insurer fails to pay.
Once the treatment has been performed, the provider submits the AOB along with a claim to the patient's health insurer. The insurer pays the provider for services rendered to the patient.
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What is an assignment of benefits.
The last time you sought medical care, you likely made an appointment with your provider, got the treatment you needed, paid your copay or deductible, and that was it. No paperwork, no waiting to be reimbursed; your doctor received payment from your insurance company and you both went on with your lives.
This is how most people receive health care in the U.S. This system, known as assignment of benefits or AOB, is now being used with other types of insurance, including auto and homeowners coverage .
An AOB is a legal agreement that allows your insurance company to directly pay a third party for services performed on your behalf. In the case of health care, it could be your doctor or another medical professional providing care. With a homeowners, renters, or auto insurance claim, the third party could be a contractor, auto repair shop, or other facility.
Assignment of benefits is legal, thanks to a concept known as freedom of contract, which says two parties may make a private agreement, including the forfeiture of certain rights, and the government may not interfere. There are exceptions, making freedom of contract something less than an absolute right. For example, the contract may not violate the law or contain unfair terms.
Not all doctors or contractors utilize AOBs. Therefore, it’s a good idea to make sure the doctor or service provider and you are on the same page when it comes to AOBs before treatment or work begins.
How an AOB works
The function of an AOB agreement varies depending on the type of insurance policy involved, the healthcare provider, contractor, or service provider, and increasingly, state law. Although an AOB is normal in health insurance, other applications of assignment of benefits have now included the auto and homeowners insurance industry.
Because AOBs are common in health care, you probably don’t think twice about signing a piece of paper that says "assignment of benefits" across the top. But once you sign it, you’re likely turning over your right to deal with your insurance company regarding service from that provider. Why would you do this?
According to Dr. David Berg of Redirect Health, the reason is simple: “Without an AOB in place, the patient themselves would be responsible for paying the cost of their service and would then file a claim with their insurance company for reimbursement.”
With homeowners or auto insurance, the same rules apply. Once you sign the AOB, you are effectively out of the picture. The contractor who reroofs your house or the mechanic who rebuilds your engine works with your insurance company by filing a claim on your behalf and receiving their money without your help or involvement.
“Each state has its own rules, regulations, and permissions regarding AOBs,” says Gregg Barrett, founder and CEO of WaterStreet , a cloud-based P&C insurance administration platform. “Some states require a strict written breakdown of work to be done, while others allow assignment of only parts of claims.”
Within the guidelines of the specific insurance rules for AOBs in your state, the general steps include:
You and your contractor draw up an AOB clause as part of the contract.
The contract stipulates the exact work that will be completed and all necessary details.
The contractor sends the completed AOB to the insurance company where an adjuster reviews, asks questions, and resolves any discrepancies.
The contractor’s name (or that of an agreed-upon party) is listed to go on the settlement check.
After work is complete and signed off, the insurer will issue the check and the claim will be considered settled.
Example of an assignment of benefits
If you’re dealing with insurance, how would an AOB factor in? Let’s take an example. “Say you have a water leak in the house,” says Angel Conlin, chief insurance officer at Kin Insurance . “You call a home restoration company to stop the water flow, clean up the mess, and restore your home to its former glory. The restoration company may ask for an assignment of benefits so it can deal directly with the insurance company without your input.”
In this case, by eliminating the homeowner, whose interests are already represented by an experienced insurance adjustor, the AOB reduces redundancy, saves time and money, and allows the restoration process to proceed with much greater efficiency.
When would you need to use an assignment of benefits?
An AOB can simplify complicated and costly insurance transactions and allow you to turn these transactions over to trusted experts, thereby avoiding time-consuming negotiations.
An AOB also frees you from paying the entire bill upfront and seeking reimbursement from your insurance company after work has been completed or services rendered. Since you are not required to sign an assignment of benefits, failure to sign will result in you paying the entire medical bill and filing for reimbursement. The three most common uses of AOBs are with health insurance, car insurance, and homeowners insurance.
Assignment of benefits for health insurance
As discussed, AOBs in health insurance are commonplace. If you have health insurance, you’ve probably signed AOBs for years. Each provider (doctor) or practice requires a separate AOB. From your point of view, the big advantages of an AOB are that you receive medical care, your doctor and insurance company work out the details and, in the event of a disagreement, those two entities deal with each other.
Assignment of benefits for car owners
If your car is damaged in an accident and needs extensive repair, the benefits of an AOB can quickly add up. Not only will you have your automobile repaired with minimal upfront costs to you, inconvenience will be almost nonexistent. You drop your car off (or have it towed), wait to be called, told the repair is finished, and pick it up. Similar to a health care AOB, disagreements are worked out between the provider and insurer. You are usually not involved.
Assignment of benefits for homeowners
When your home or belongings are damaged or destroyed, your primary concern is to “return to normal.” You want to do this with the least amount of hassle. An AOB allows you to transfer your rights to a third party, usually a contractor, freeing you to deal with the crisis at hand.
When you sign an AOB, your contractor can begin immediately working on damage repair, shoring up against additional deterioration, and coordinating with various subcontractors without waiting for clearance or communication with you.
The fraud factor
No legal agreement, including an AOB, is free from the possibility of abuse or fraud. Built-in safeguards are essential to ensure the benefits you assign to a third party are as protected as possible.
In terms of what can and does go wrong, the answer is: plenty. According to the National Association of Mutual Insurance Companies (NAMICs), examples of AOB fraud include inflated invoices or charges for work that hasn’t been done. Another common tactic is to sue the insurance company, without the policyholder’s knowledge or consent, something that can ultimately result in the policyholder being stuck with the bill and higher insurance premiums due to losses experienced by the insurer.
State legislatures have tried to protect consumers from AOB fraud and some progress has been made. Florida, for example, passed legislation in 2019 that gives consumers the right to rescind a fraudulent contract and requires that AOB contracts include an itemized description of the work to be done. Other states, including North Dakota, Kansas, and Iowa have all signed NAMIC-backed legislation into law to protect consumers from AOB fraud.
The National Association of Insurance Commissioners (NAIC), offers advice for consumers to help avoid AOB fraud and abuse:
File a claim with your insurer before you hire a contractor. This ensures you know what repairs need to be made.
Don’t pay in full upfront. Legitimate contractors do not require it.
Get three estimates before selecting a contractor.
Get a full written contract and read it carefully before signing.
Don’t be pressured into signing an AOB. You are not required to sign an AOB.
Pros and cons of an assignment of benefits
The advantages and disadvantages of an AOB agreement depend largely on the amount and type of protection your state’s insurance laws provide.
Pros of assignment of benefits
With proper safeguards in place to reduce opportunities for fraud, AOBs have the ability to streamline and simplify the insurance claims process.
An AOB frees you from paying for services and waiting for reimbursement from your insurer.
Some people appreciate not needing to negotiate with their insurer.
You are not required to sign an AOB.
Cons of assignment of benefits
As with most contracts, AOBs are a double-edged sword. Be aware of potential traps and ask questions if you are unsure.
Signing an AOB could make you the victim of a scam without knowing it until your insurer refuses to pay.
An AOB doesn’t free you from the ultimate responsibility to pay for services rendered, which could drag you into expensive litigation if things go south.
Any AOB you do sign is legally binding.
The takeaway
An AOB, as the health insurance example shows, can simplify complicated and costly insurance transactions and help consumers avoid time-consuming negotiations. And it can save upfront costs while letting experts work out the details.
It can also introduce a nightmare scenario laced with fraud requiring years of costly litigation. Universal state-level legislation with safeguards is required to avoid the latter. Until that is in place, your best bet is to work closely with your insurer when signing an AOB. Look for suspicious or inflated charges when negotiating with contractors, providers, and other servicers.
This story was originally featured on Fortune.com
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Consumer Insight
Sept. 13, 2023
Assignment of Benefits: Consumer Beware
You've just survived a severe storm, or a tornado and you've experienced some extensive damage to your home that requires repairs, including the roof. Your contractor is now asking for your permission to speak with your insurance company using an Assignment of Benefits. Before you sign, read the fine print. Otherwise, you may inadvertently sign over your benefits and any extra money you’re owed as part of your claim settlement.
The National Association of Insurance Commissioners (NAIC) offers information to help you better understand insurance, your risk and what to do in the event you need repairs after significant storm damage.
Be cautious about signing an Assignment of Benefits. An Assignment of Benefits, or an AOB, is an agreement signed by a policyholder that allows a third party—such as a water extraction company, a roofer or a plumber—to act on behalf of the insured and seek direct payment from the insurance company. An AOB can be a useful tool for getting repairs done, as it allows the repair company to deal directly with your insurance company when negotiating repairs and issuing payment directly to the repair company. However, an AOB is a legal contract, so you need to understand what rights you are signing away and you need to be sure the repair company is trustworthy.
- With an Assignment of Benefits, the third party, like a roofing company or plumber, files your claim, makes the repair decision and collects insurance payments without your involvement.
- Once you have signed an AOB, the insurer only communicates with the third party and the other party can sue your insurer and you can lose your right to mediation.
- It's possible the third party may demand a higher claim payment than the insurer offers and then sue the insurer when it denies your claim.
- You are not required to sign an AOB to have repairs completed. You can file a claim directly with your insurance company, which allows you to maintain control of the rights and benefits provided by your policy in resolving the claim.
Be on alert for fraud. Home repair fraud is common after a natural disaster. Contractors often come into disaster-struck regions looking to make quick money by taking advantage of victims.
- It is a good idea to do business with local or trusted companies. Ask friends and family for references.
- Your insurer may also have recommendations or a list of preferred contractors.
- Always get more than one bid on work projects. Your adjuster may want to review estimates before you make repairs.
Immediately after the disaster, have an accurate account of the damage for your insurance company when you file a claim.
- Before removing any debris or belongings, document all losses.
- Take photos or video and make a list of the damages and lost items.
- Save damaged items if possible so your insurer can inspect them, some insurance companies may have this as a requirement in their policy.
Most insurance companies have a time requirement for reporting a claim, so contact your agent or company as soon as possible. Your state insurance department can help you find contact information for your insurance company, if you cannot find it.
- Insurance company officials can help you determine what damages are covered, start your claim and even issue a check to start the recovery process.
- When reporting losses, you will need insurance information, current contact information and a home inventory or list of damaged and lost property . If you do not have a list, the adjuster will give you some time to make one. Ask the adjuster how much time you have to submit this inventory list. The NAIC Post Disaster Claims Guide has details on what you can do if you do not have a home inventory list.
After you report damage to your insurance company, they will send a claims adjuster to assess the damage at no cost to you . An adjuster from your insurance company will walk through and around your home to inspect damaged items and temporary repairs you may have made.
- A public adjuster is different from an adjuster from your insurance company and has no ties to the insurance company.
- They estimate the damage to your home and property, review your insurance coverage, and negotiate a settlement of the insurance claim for you.
- Many states require public adjusters to be licensed. Some states prohibit public adjusters from negotiating insurance claims for you. In those states, only a licensed attorney can represent you.
- You have to pay a public adjuster.
- The NAIC Post Disaster Claims Guide has information on the different types of adjusters.
Once the adjuster has completed an assessment, they will provide documentation of the loss to your insurer to determine your claims settlement. When it comes to getting paid, you may receive more than one check. If the damage is severe or you are displaced from your home, the first check may be an emergency advance. Other payments may be for the contents of your home, other personal property, and structural damages. Please note that if there is a mortgage on your home, the payment for structural damage may be payable to you and your mortgage lender. Lenders may put that money into an escrow account and pay for repairs as the work is completed.
More information. States have rules governing how insurance companies handle claims. If you think that your insurer is not responding in a timely manner or completing a reasonable investigation of your claim, contact your state insurance department .
About the National Association of Insurance Commissioners
As part of our state-based system of insurance regulation in the United States, the National Association of Insurance Commissioners (NAIC) provides expertise, data, and analysis for insurance commissioners to effectively regulate the industry and protect consumers. The U.S. standard-setting organization is governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S. territories. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer reviews, and coordinate regulatory oversight. NAIC staff supports these efforts and represents the collective views of state regulators domestically and internationally.
Assignment Of Benefits
What does assignment of benefits mean.
Assignment of benefits (AOB) is the official way an insured person asks their insurance company to pay a professional or facility for services rendered.
Insuranceopedia Explains Assignment Of Benefits
Assignment of benefits is a document that directs payment to a third party at the insured’s request. It becomes legitimate once both the insured party and their insurer have signed the AOB form. AOB is used in a number of insurance contexts, such as paying physicians or clinics through health insurance or paying contractors for repairs through a homeowner’s insurance policy.
Usually, AOBs are issued when the third party pursues it in the hopes that payment from the insurance company will be more certain and delivered more quickly than it would be from the insured.
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Assignment of benefits
Assignment of benefits is a legal agreement where a patient authorizes their healthcare provider to receive direct payment from the insurance company for services rendered.
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What is Assignment of Benefits?
Assignment of benefits (AOB) is a crucial concept in the healthcare revenue cycle management (RCM) process. It refers to the legal transfer of the patient's rights to receive insurance benefits directly to the healthcare provider. In simpler terms, it allows healthcare providers to receive payment directly from the insurance company, rather than the patient being responsible for paying the provider and then seeking reimbursement from their insurance company.
Understanding Assignment of Benefits
When a patient seeks medical services, they typically have health insurance coverage that helps them pay for the cost of their healthcare. In most cases, the patient is responsible for paying a portion of the bill, known as the copayment or deductible, while the insurance company covers the remaining amount. However, in situations where the patient has assigned their benefits to the healthcare provider, the provider can directly bill the insurance company for the services rendered.
The assignment of benefits is a legal agreement between the patient and the healthcare provider. By signing this agreement, the patient authorizes the healthcare provider to receive payment directly from the insurance company on their behalf. This ensures that the provider receives timely payment for the services provided, reducing the financial burden on the patient.
Difference between Assignment of Benefits and Power of Attorney
While the assignment of benefits may seem similar to a power of attorney (POA) in some respects, they are distinct legal concepts. A power of attorney grants someone the authority to make decisions and act on behalf of another person, including financial matters. On the other hand, an assignment of benefits only transfers the right to receive insurance benefits directly to the healthcare provider.
In healthcare, a power of attorney is typically used in situations where a patient is unable to make decisions about their medical care. It allows a designated individual, known as the healthcare proxy, to make decisions on behalf of the patient. In contrast, an assignment of benefits is used to streamline the payment process between the healthcare provider and the insurance company.
Examples of Assignment of Benefits
To better understand how assignment of benefits works, let's consider a few examples:
Sarah visits her primary care physician for a routine check-up. She has health insurance coverage through her employer. Before the appointment, Sarah signs an assignment of benefits form, authorizing her physician to receive payment directly from her insurance company. After the visit, the physician submits the claim to the insurance company, and they reimburse the physician directly for the covered services.
John undergoes a surgical procedure at a hospital. He has health insurance coverage through a private insurer. Prior to the surgery, John signs an assignment of benefits form, allowing the hospital to receive payment directly from his insurance company. The hospital submits the claim to the insurance company, and they reimburse the hospital for the covered services. John is responsible for paying any copayments or deductibles directly to the hospital.
Mary visits a specialist for a specific medical condition. She has health insurance coverage through a government program. Mary signs an assignment of benefits form, granting the specialist the right to receive payment directly from the government program. The specialist submits the claim to the program, and they reimburse the specialist for the covered services. Mary is responsible for any applicable copayments or deductibles.
In each of these examples, the assignment of benefits allows the healthcare provider to receive payment directly from the insurance company, simplifying the billing and reimbursement process for both the provider and the patient.
Assignment of benefits is a fundamental concept in healthcare revenue cycle management. It enables healthcare providers to receive payment directly from the insurance company, reducing the financial burden on patients and streamlining the billing process. By understanding the assignment of benefits, patients can make informed decisions about their healthcare and ensure that their providers receive timely payment for the services rendered.
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Related terms.
Medicare is a federal health insurance program in the United States that provides coverage for individuals aged 65 and older, as well as certain younger individuals with disabilities.
Soft coding
Soft coding is the practice of using configurable parameters within software systems to enable easy modification and customization without altering the underlying code.
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What is Assignment of Benefits in Medical Billing
The health care industry has a wide network of health care insurance payers that make payments on behalf of patients having insurance plans. Without insurance plans, many patients would not be able to seek medical services. Whenever a patient visits a doctor for the treatment he/she needs to ensure that the insurance payer makes the payment for all the medical benefits he/she may have received. This is where the assignment of benefits comes in.
Definition of Assignment of Benefits
The term assignment of benefits (AOB) may be referred to as an agreement that transfers the health insurance claims benefits of the policy from the patient to the health care provider. This agreement is signed by the patient as a request to pay the designated amount to the health care provider for the health benefits he/she may have received. On the patient’s request the insurance payer makes the payment to the hospital/doctor.
Understanding of Assignment of Benefits
The assignment of benefits is generally transferred by designing a legal document— for which, the format may vary across medical offices. This document is called the ‘Assignment of Benefits’ form. While signing the form, the patient also authorizes the insurance company to release any and all written information that is required by the hospital for reimbursement purposes. This also means that any medical billing and collection company hired by the hospital is free to use the released information for billing purposes. In addition to this, the patient agrees to appoint anyone from the hospital as a representative on his/her behalf to seek payment from the insurance payer. In other words, once the document has been signed, the patient is no longer required to deal directly with the insurance company or its representative, unless asked to do so.
It is important to note that the assignment of benefits occurs only when a claim has been successfully processed with the insurance company/payer. However, the insurance company may not always honor and accept the request for AOB. The acceptance or rejection of AOB depends on the patient’s or member’s health benefits contract and/or the State Law. Therefore all three parties— patient, health care provider, and the insurance company must stay updated with the State Law and also, review the patient’s health benefit plan thoroughly. This will help in saving time and unnecessary paperwork if the chances of the insurance company rejecting the AOB seem to be high.
Following are some providers or medical services that use AOB:
- Ambulance services.
- Ambulatory surgical center services.
- Clinical diagnostic laboratory services.
- Biological(s) and drugs.
- Home dialysis equipment and supplies.
- Physician services for patients having Medicare and Medicaid plans.
- Services of medical professionals other than a primary physician, including certified registered nurse anesthetists, clinical nurse specialists, clinical psychologists, clinical social workers, nurse midwives, nurse practitioners, and physician assistants.
- Simplified billing roster for vaccines, such as— influenza virus and pneumococcal.
AOB plays an important role in medical billing by establishing direct contact with the patient’s health care insurance payer. The purpose is to increase the chances of reimbursement and accelerate the process without contacting the patient additionally..
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Our firm represents medical providers in a variety of contexts – Workers’ Compensation, Personal Injury Protection (PIP), and Commercial Insurance (Major Medical) – and obtaining an Assignment of Benefits is crucial in litigating these matters. An Assignment of Benefits is essential for a medical provider – whether the physician, facility, or ancillary service provider – to have a right to payment from the Insurance Carrier or Third-Party Administrator (TPA).
A medical provider or the administrative staff for the medical provider may feel overwhelmed by the number of forms that patients have to fill out prior to treatment. For instance, there are HIPPA release forms, as required by the Health Insurance Portability and Accountability Act, which authorizes the use or disclosure of protected health information, and intake forms requesting medical history, insurance coverage information, and general patient information. Requiring more paperwork from the patients may be viewed as an additional burden placed on the administrative staff, as well as a burden on the patient receiving the treatment. However, these documents, in addition to obtaining a signed Assignment of Benefits, are a vital in protecting the interests of the treating medical provider and the patient.
How Does An Assignment of Benefits Affect a Medical Provider ?
By signing an Assignment of Benefits (AOB), a patient is authorizing the Insurance Carrier or Third-Party Administrator to make health insurance payments directly to the treating medical provider. Essentially, the patient is “assigning” his or her right to receive the payment for the medical benefits. While medical providers benefit tremendously from having payments made directly to them, instead of the patient, from the Insurance Carrier or Third-Party Administrator, a signed Assignment of Benefits will also medical providers appeal denials and underpayments from the Insurance Carrier or Third-Party Administrator.
For example, a patient may seek treatment from a medical provider who is not in network with their health insurance plan. These medical providers may also be referred to as a non-participating provider, a non-network provider, or an out of network provider. Essentially, this designation means that there is no contract in place between the medical provider and the Insurance Carrier or Third-Party Administrator for agreed upon, negotiated rates for services rendered. Therefore, the out of network medical provider has an expectation that payments for the treatment rendered will be made at their actual, billed charges. By having a signed Assignment of Benefits form, a medical provider may submit the Assignment of Benefits with the claim and request that payment be made directly to the medical provider, instead of having checks go to the patient. This provides a convenience for both the medical provider and the patient.
Additionally, if the out of network medical provider is paid less than the actual, billed charges, the medical provider will likely want to challenge the payment directly with the Insurance Carrier or Third-Party Administrator. By having an Assignment of Benefits signed by the Patient, the out of network medical provider may rely on the Assignment of Benefits to appeal the denial or underpayment. While having a signed Assignment of Benefits does not guarantee an out of network medical provider will have standing to file a litigation matter to recover the underpaid reimbursement from the Insurance Carrier, the Assignment of Benefits could be sufficient under the terms of certain health plans. An attorney who is experienced in healthcare law and medical revenue recovery can review the terms of the health insurance plan and provide guidance to the medical provider as to what, if any, additional documentation may be required to pursue recovery in a litigation matter.
Because the use of an Assignment of Benefits, containing the most effective language, is such an important element to a medical provider’s financial interest in collecting payment from an Insurance Carrier or Third-Party Administrator and, possibly, challenging improper payments, a medical provider may want to have an attorney experienced with medical revenue recovery review the Assignment of Benefits. For more information or to consult with an attorney, contact Callagy Law today .
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What is Assignment of Benefits in Medical Billing?
An assignment of benefits is the act of signing documentation authorizing a health insurance company to pay a physician directly. In other words, the insurance company can pay claims without the direct involvement of the patient in the process. There are other situations where AOBs can be helpful, but we’ll focus on their use in relation to medical benefits.
If there isn’t an assignment of benefits agreement in place, the patient would be responsible for paying the other party directly from their own pocket, then filing a claim with their insurance provider to receive reimbursement. This could be time-consuming and costly, especially if the patient has no idea how to file a claim.
The document is typically signed by patients when they undergo medical procedures. The purpose of this form is to assign the responsibility of payment for any future medical bills that may arise after the procedure. It’s important to note that not all procedures require an AOB.
An assignment of benefits agreement might be utilized to pay a medical practitioner the patient didn’t choose, like an anesthesiologist. The patient may have picked a surgeon, but an anesthesiologist assigned on the day of the procedure might issue a separate bill. They’re, in essence, signing that anyone involved in their treatment can receive direct payment from the insurance carrier. It doesn’t have to go through the patient.
This document can also eliminate service fees surrounding processing. As a result, the patient can focus on medical treatment and recovery without being bogged down with the complexities of paying medical bills. The overall intent of an assignment of benefits agreement is to make the process more manageable for the patient, as they don’t need to haggle directly with their insurer.
List of Providers and Services
When the patient signs an AOB agreement, they give a third party right to obtain payment for services the provider performed, and medical billing services are a prime example of where they may sign an AOB agreement.
- Ambulance services
- Medical insurance claims
- Drugs and pharmaceuticals
- Diagnostic and clinical lab services
- Emergency surgical center services
- Dialysis supplies and equipment used in the home
- Physician services for Medicare and Medicaid patients
Services of professionals other than a primary care physician, which includes:
- Physician assistants
- Clinical nurse specialists
- Clinical social workers
- Clinical psychologists
- Certified registered nurse anesthetists
Information Commonly Requested on Assignment of Benefits Form:
- Signature of patient or person legally responsible
- Signature of parent or legal guardian
How AOBs Affect the Medical Practitioner
A medical provider or their administrative staff may feel overwhelmed by the sheer number of forms patients must fill out prior to treatment. Demanding more paperwork from patients may be seen as an added burden on the managerial staff, as well as the patient. However, getting a signed AOB is vital in preserving the interests of everyone involved.
In addition to receiving direct payment from the insurance company without needing to go through the patient, a signed assignment of benefits form will help medical providers appeal denied and underpaid claims. They can ask that payments be made directly to them rather than through the patient. This makes the process more manageable for both the doctors and the patient.
Things to Bear in Mind
The patient gives their rights and benefits to third parties under their current health plan. Depending on the wording in the AOB, their insurer may not be allowed to contact them directly about their claims. In addition, the patient may be unable to negotiate settlements or approve payments on their behalf and enable third parties to endorse checks on behalf of the patient. Finally, when the patient signs an AOB, the insurer may sue the third parties involved in the dispute.
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INSIGHT: An Ounce of Prevention—The Importance of Early Review of Assignment of Benefits and Powers of Attorney
By Anthony P. La Rocco, George P. Barbatsuly, Stacey A. Hyman, and Alyssa F. Conn
Introduction
One of the most frequently litigated issues in reimbursement cases brought by in- and out-of-network healthcare providers against insurers is provider standing, or a provider’s right to file a lawsuit to recover for services it provided to its patients. This is because the health insurance industry bases the rights and responsibilities that one party owes to another on contract law. While network contracts often dictate that insurers pay in-network providers directly for services, providers who do not participate in the networks have no independent legal right to payment from the insurer as such providers do not share a contractual relationship with the plan.
Accordingly, these providers must ensure that patients assign their rights to benefits under the health insurance plan to the non-participating provider via an assignment of benefits (“AOB”). Under a valid AOB, the provider “steps into the shoes” of the patient with respect to the contract between the patient and the insurer and may pursue the same benefits that the patient would have been able to pursue him or herself. Without a valid AOB, courts have been clear that the provider has no legal standing to sue the health insurer for payment.
Additionally, participating providers should also obtain and maintain irrevocable AOBs from their patients, despite network contractual language directing payment. Possessing a valid AOB is often a legal prerequisite to submitting a claim, even under the participation agreement, and participation status may change. Moreover, providers may not be participating with all insurers and assignments provide an alternative basis for recovery.
However, the road to recovery on claims is not as simple as merely executing an AOB: insurers frequently challenge the scope of AOBs, requiring courts to analyze them and determine whether the language sufficiently confers standing on the provider to assert a claim. The case law on assignments is, therefore, constantly evolving. The following article explores some of the common issues surrounding crafting and obtaining valid AOBs from patients as well as alternative avenues to survive a standing challenge where plans contain anti-assignment clauses.
What Kind of Language Should the Assignment of Benefits Contain?
An AOB should be “broadly specific”: It should be broad enough to cover all conceivable rights and claims the provider could bring under the plan, but specific enough in that it enumerates the rights in order to survive challenges of overbreadth. These enumerated rights should include, but are not limited to: the right to appeal, the right to request plan documents, the right to pursue claims for benefits, and the right to pursue claims for equitable relief/breaches of fiduciary duties.
The below examples provide AOB language ranked in order from least likely to confer standing to most likely.
- Least Likely to Confer Standing : “I authorize insurance payments to be made to [PROVIDER] for services provided at [PROVIDER’S FACILITY].”
This AOB simply authorizes payments to be made, but does not give the provider any right to pursue payment or other remedies. Therefore, this language would likely be insufficient to confer legal standing.
- Improved language : “I authorize [PROVIDER] to appeal to my insurance company on my behalf . . . . I hereby assign to [PROVIDER] all payments for medical services rendered to myself or my dependents.”
This language would, at least, give the provider the right to sue for payment under ERISA Section 502(a). However, the language is still lacking as it does not give the provider the right to pursue claims for equitable relief or for breaches of fiduciary duties.
- An example of even better, (albeit not perfect) language : “I voluntarily consent to the collection and testing of my specimen, and all future testing, performed by [the Laboratories] or [their] affiliated laboratories unless I give written notice that I have revoked my consent. I authorize my insurance company to pay and mail directly to [the Laboratories] or [their] affiliated laboratories all medical benefits for payment of services rendered. I also authorize [the Laboratories] or [their] affiliated laboratories to endorse any checks received on my behalf for payment of services provided. I hereby irrevocably assign to [the Laboratories] or [their] affiliated laboratories all benefits under any policy of insurance, indemnity agreement, or any collateral source as defined by statute for services provided. This assignment includes all rights to collect benefits directly from my insurance company and all rights to proceed against my insurance company in any action, including legal suit, if for any reason my insurance company fails to make payment of benefits due. This assignment also includes all rights to recover attorney’s fees and costs for such action brought by the provider as my assignee.
The language here is “broadly specific” in that it enumerates with specificity a myriad of rights the provider seeks to have the patient assign. One federal appeals court found that similar assignment language clearly applied to claims against fully-insured health insurance plans, and at least arguably applied to self-funded plans. The court sent the case back to the trial court for further discovery on whether this language applied to self-funded plans. Health care providers can remove this uncertainty up front by having their assignment of benefit forms specifically refer to self-funded plans.
When Should the Provider Require the Assignment to Be Executed?
The best time to have a patient execute an assignment of benefits is at or before the time that services are provided. This is because it is often difficult to track down patients later when a provider must submit a large volume of claims that have gone unpaid. Ideally, these forms are executed together with other intake forms, such as consent for treatment and privacy policies/releases.
If the AOB is not obtained prior to the services, courts will still generally permit assignments that are executed after treatment, at least absent a showing of prejudice to the insurer. Furthermore, although logistical challenges may sometimes ensue where a patient is incapacitated or deceased, courts have upheld the validity of AOBs executed by spouses of such patients.
Navigating Anti-Assignment Provisions in Plans
Some patient plans contain anti-assignment language that prohibits the patient from assigning his or her benefits. This language is a challenge to a provider’s ability to establish standing. Courts are however, split on the issue. Some courts hold that an unambiguous anti-assignment clause is enforceable and can invalidate a patient’s assignment. In these cases, the courts have focused on the freedom of contracting parties.
Other courts hold that an anti-assignment clause is not, in and of itself, dispositive of whether a provider has standing. Anti-assignment clauses are subject to traditional contract defenses, such as fraud, misrepresentation, and unconscionability. For example, if a clause is buried in illegible “fine print” or if it was plainly neither intended nor likely to be read by the other party, those circumstances might support an inference of fraud. Other considerations include: ambiguity in the clause, the scope of the clause, course of dealing, and waiver or estoppel arguments.
An example of anti-assignment language that is completely prohibitory would be: “The benefits of the Contract or Certificate are personal to the Subscriber and are not assignable by the Subscriber in whole or in part to a Non-Member hospital or provider, or to any other person or entity.”
Another example of language that permits assignment only with consent would be: “You may not assign your Benefits under the Plan to a non-Network provider without our consent.”
Providers may, however, still recover in circumstances where the plans contain valid anti-assignment provisions. Recently, for example, the Third Circuit, in American Orthopedic & Sports Med. v. Indep. Blue Cross Blue Shield , 2018 BL 173478 (3d Cir., No. 17-1663, 5/16/18), recognized an alternative basis under which health care providers may obtain standing to sue in federal court. Where a patient grants a valid power of attorney to a health care provider, the Third Circuit has now recognized that a health care provider may pursue a claim for reimbursement on the patient’s behalf, even if the ERISA plan contains a valid and enforceable anti-assignment clause. The court explained that, whereas a plan can limit a beneficiary’s ability to assign claims as a matter of contract law, an anti-assignment clause does not prevent the beneficiary from assigning the health care provider to act as the beneficiary’s agent, any more than it would strip the beneficiary of his or her own interest in the claim.
In sum, while there is no “one size fits all” approach, a simple direction of payment often does not survive scrutiny and will likely be challenged by insurers. Thus, prudent providers will want to work with experienced healthcare counsel to craft assignment language to encompass all of the patient’s rights under the plan and, if applicable, take advantage of the Third Circuit alternative basis for standing by including language that creates a valid power of attorney.
Anthony P. La Rocco is the Managing Partner of K&L Gates’ Newark office. He leads a national health care team involved in significant reimbursement litigation matters on behalf of health care providers against various insurance companies’ health benefits plans and their third party administrators related to under-payment and non-payment of claims for a variety of covered medical testing procedures conducted across the United States. Tony can be reached at [email protected] .
George P. Barbatsuly is a Partner in K&L Gates’ Newark office. His health care and ERISA disputes experience includes representing health care providers in disputes with payer insurance companies, health benefits plans, and third party administrators. George can be reached at [email protected] .
Stacey A. Hyman is an Associate in K&L Gates’ Newark office. She focuses her practice on commercial disputes and insurance coverage, specifically insurance reimbursement recovery. Stacey can be reached at [email protected] .
Alyssa F. Conn is an Associate in K&L Gates’ Newark office. She focuses her practice on a range of complex commercial litigation and insurance coverage disputes in federal and state courts, including healthcare and ERISA disputes. Alyssa can be reached at [email protected] .
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Cbo publishes new projections related to health insurance for 2024 to 2034.
Today, CBO published updated baseline projections of federal subsidies for health insurance coverage. In projections by CBO and the staff of the Joint Committee on Taxation (JCT), net federal subsidies in 2024 for insured people are $2.0 trillion. In 2034, that annual amount is projected to reach $3.5 trillion (or 8.5 percent of gross domestic product). Over the 2025–2034 period, subsidies are projected to total $27.5 trillion—with Medicare accounting for 46 percent; Medicaid and the Children’s Health Insurance Program (CHIP), 25 percent; employment-based coverage, 21 percent; subsidies for coverage obtained through the Affordable Care Act’s marketplaces or the Basic Health Program, 5 percent; and other subsidies, 2 percent.
By CBO’s estimates, the share of people without health insurance reached an all-time low of 7.2 percent in 2023. The rate in 2034 is projected to be 8.9 percent—higher than it was during the 2021–2023 period but lower than the rate of 10.0 percent in 2019, before the coronavirus pandemic. CBO attributes much of the increase over the next 10 years to the end of Medicaid’s continuous eligibility provisions in 2023 and 2024 and the expiration of enhanced marketplace subsidies after 2025. (Both of those policies were put in place during the pandemic.) The surge in immigration that began in 2021 (and that CBO projects will continue through 2026) will contribute to the increase as well, as those newly arrived immigrants will, the agency expects, be substantially less likely to have health insurance coverage than the overall population. The largest increase in the uninsured population between 2024 and 2034 will be among adults who are 19 to 44 years old.
CBO’s updated projections of health insurance coverage are described in an article published today in the journal Health Affairs . In that article, CBO’s analysts detailed the agency’s June 2024 baseline projections of health insurance over the next decade, along with projections of health insurance coverage by age. The estimates underlie the agency’s baseline budget projections and serve as the benchmark for estimating the effects that proposed legislation would have on the federal budget and on health insurance coverage.
In the agency’s June 2023 article in Health Affairs , the projections were for the civilian noninstitutionalized population younger than age 65 residing in the 50 states and Washington, D.C., constituting 80 percent of the entire population in 2024. In response to questions from Members of Congress and their staff and to better align with analyses in other CBO products, this year the agency expanded its analysis in Health Affairs to include the entire population.
At a press briefing that Health Affairs organized, CBO’s analysts presented an overview of today’s updated projections, including these findings:
Enrollment in Medicaid and the CHIP Is Projected to Decline
Declines in enrollment over the next decade are concentrated in Medicaid and CHIP. In CBO’s estimates, enrollment in those programs falls from 92 million in 2023 to 79 million in 2034. That decrease is greater than the increase in uninsured people partly because some people losing Medicaid coverage have concurrent coverage from another source. In the agency’s projections, the number of people with multiple sources of coverage declines from 29 million in 2023 to 21 million in 2024 and remains at that level in 2034.
Enrollment in Medicare Is Projected to Increase
People age 65 or older have the highest rates of insurance coverage, mainly because of Medicare coverage, and are projected to grow substantially as a segment of the population over the next decade. Medicare enrollment rises from 60 million in 2023 to 74 million in 2034 in CBO’s projections. Notably, more than half of all Medicare enrollees with Part A and Part B coverage are enrolled in Medicare Advantage in 2023, and on the basis of trends in enrollment and payments, the agency projects that share to rise to nearly two-thirds by 2034.
CBO’s Estimates of Employment-Based and Marketplace Enrollment Are Higher Than Previous Projections
CBO also looked back at its September 2023 projections and compared them with the latest data on enrollment in 2023 and with its current projections. For the 2024–2033 period, the years spanned by both last year’s projections and the current ones, the largest revisions in the agency’s projections were to the number of people covered through an employer and the health insurance marketplaces.
In the current projections, estimated average annual enrollment in employment-based coverage over the 2024–2033 period is up by 3.5 million over the previous estimate. The projection of higher enrollment derives from higher projections of net immigration and employment growth. Projected average annual enrollment through the marketplaces over the period is 3.2 million more than previously estimated. The increase stems from two main factors. First, in the agency’s current projections, more people are eligible for premium tax credits because of changes to CBO’s economic and demographic forecasts. Second, the current projections account for greater-than-anticipated effects on enrollment resulting from Medicaid’s continuous eligibility provisions and from the availability of enhanced marketplace subsidies.
Alexandra Minicozzi is CBO’s Chief of the Health Insurance Modeling Unit within the Health Analysis Division, and Sarah Masi is a Senior Adviser in the Budget Analysis Division.
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Does your health insurance plan meet Penn State's recommendations?
If you currently have health insurance coverage offered through a U.S. employer-sponsored program, or coverage that was purchased through the Health Insurance Marketplace (HealthCare.gov) there is a good chance that it will meet Penn State's recommended coverage.
We recommend asking your health insurance company the following five questions to help determine if your plan meets University recommendations.
The SHIP for Penn State Answer:
Yes, the SHIP for Penn State is effective August 13, 2023 - August 12, 2024.
The SHIP for Penn State, underwritten by UnitedHealthcare StudentResources, offers a national network of health care providers including clinicians at University Health Services-University Park, and other campus locations.
$250 deductible $10 office visit copay 10% coinsurance $1,300 out-of-pocket maximum (in network)
The SHIP for Penn State offers $0 copay at University Health Services Pharmacy and $10/$30/$60 copay at other in-network pharmacies.
The SHIP for Penn State provides protection for both emergency and non-emergency medical services (see deductible and out-of-pocket fees). In addition, preventative vaccines are covered per federal health care guidelines.
Interested in learning more about insurance planning? Check out MoneyCounts: A Financial Literacy Series Self-Study Module .
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Federal appeals court says some employers can exclude HIV prep from insurance coverage
FILE - This Sept. 15, 2014, file photo shows part of the HealthCare,gov Website in Washington. A group of employers who challenged some federal health insurance requirements cannot be forced to provide no-cost coverage for certain types of preventive care, including HIV prep and some kinds of cancer screenings, a federal appeals court in New Orleans ruled Friday, June 21,2024. (AP Photo/Jon Elswick, File)
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NEW ORLEANS (AP) — Employers who challenged some federal health insurance requirements cannot be forced to provide no-cost coverage for certain types of preventive care, including HIV prep and some kinds of cancer screenings, a federal appeals court in New Orleans ruled Friday.
The ruling from the 5th U.S. Circuit Court of Appeals is narrow, applying only to the eight employers who objected to providing the coverage. The conservative court declined to make the ruling apply nationwide.
“While we were predicting the worst, at the moment insurers will still have to cover preventive services, including PrEP, except for the original plaintiffs. That is the good news,” Carl Schmid, executive director of the HIV+Hepatitis Policy Institute, said in an email, referring to a common HIV preventative treatment. But, Schmid lamented that the court found that the coverage requirement for HIV prevention was adopted in violation of the Constitution, and that the case is going back to a lower court for resolution of other issues that could further muddy the coverage issue.
The requirements in question were adopted by federal health officials under provisions of the Affordable Care Act, sometimes referred to as Obamacare. Challengers raised religious and procedural objections to some of the requirements.
U.S. District Judge Reed O’Connor in Texas ruled last year that the requirements violated the Constitution. In it’s ruling Friday, a three-judge 5th Circuit panel said the coverage requirements in question were adopted unconstitutionally because they came from a body — the United States Preventive Services Task Force — whose members were not nominated by the president and confirmed by the Senate.
Not all preventive care is threatened by the ruling and attorneys on both sides said that some employers could decide to adopt copays or deductibles that would keep the affected coverages, including HIV preventatives, available, if not free.
An analysis prepared last year by the KFF, a nonprofit, found that some screenings, including mammography and cervical cancer screening, would still be covered without out-of-pocket costs because the task force recommended them before the health care law was enacted in March 2010.
Meanwhile, the opinion left some issues unresolved, including whether coverage can be required that was adopted from recommendations by two other entities, the Public Health Service’s Advisory Committee on Immunization Practices, and the Health Resources and Services Administration.
“The bad news is, the court still finds the mandate to cover USPSTF recommended services unconstitutional and now asks the lower court to review both the HRSA and ACIP preventive services,” Schmid said.
The U.S. Department of Health and Human Services did not immediately respond to an emailed request for comment Friday afternoon.
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VIDEO
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An AOB is a legal agreement that allows your insurance company to directly pay a third party for services performed on your behalf. In the case of health care, it could be your doctor or another ...
Summary: Medicare Assignment is an agreement between healthcare providers and Medicare, where providers accept the Medicare-approved amount as full payment, preventing them from charging beneficiaries extra. This benefits Medicare beneficiaries by controlling their costs and ensuring they only pay deductibles and copayments.
Mar 06, 2020 Share. Assignment of benefits, widely referred to as AOB, is a contractual agreement signed by a policyholder, which enables a third party to file an insurance claim, make repair ...
Kimberly Lankford is a contributing writer who covers Medicare and personal finance. She wrote about insurance, Medicare, retirement and taxes for more than 20 years at Kiplinger's Personal Finance and has written for The Washington Post and Boston Globe.She received the personal finance Best in Business award from the Society of American Business Editors and Writers and the New York State ...
There are many reasons why an insurance company may not accept an assignment of benefits. To speak with a Schwartzapfel Lawyers expert about this directly, call 1-516-342-2200 for a free consultation today. It will be our privilege to assist you with all your legal questions, needs, and recovery efforts.
What is Medicare Assignment. Medicare assignment is an agreement by your doctor or other healthcare providers to accept the Medicare-approved amount as the full cost for a covered service. Providers who "accept assignment" bill Medicare directly for Part B-covered services and cannot charge you more than the applicable deductible and ...
Once the insurance is purchased you complete a assignment of benefits, sharing ownership control with the bank. You must pay the insurance premiums and cannot make any decisions affecting the ...
With a homeowners, renters, or auto insurance claim, the third party could be a contractor, auto repair shop, or other facility. Assignment of benefits is legal, thanks to a concept known as freedom of contract, which says two parties may make a private agreement, including the forfeiture of certain rights, and the government may not interfere.
An anti-assignment clause is intended to prevent the insurer from unwittingly assuming risks it never intended to take on. Commercial insurers review business insurance applicants carefully. Before they issue policies, underwriters consider the knowledge and experience of a company's owners and managerial staff. If a business is sold to someone else, the new owners may not be as skilled or ...
An AOB is a legal agreement that allows your insurance company to directly pay a third party for services performed on your behalf. In the case of health care, it could be your doctor or another ...
An Assignment of Benefits, or an AOB, is an agreement signed by a policyholder that allows a third party—such as a water extraction company, a roofer or a plumber—to act on behalf of the insured and seek direct payment from the insurance company. An AOB can be a useful tool for getting repairs done, as it allows the repair company to deal ...
Assignment of benefits is a document that directs payment to a third party at the insured's request. It becomes legitimate once both the insured party and their insurer have signed the AOB form. AOB is used in a number of insurance contexts, such as paying physicians or clinics through health insurance or paying contractors for repairs ...
Medicare assignment is a fee schedule agreement between the federal government's Medicare program and a doctor or facility. When Medicare assignment is accepted, it means your doctor agrees to the payment terms of Medicare. Doctors that accept Medicare assignment fall under one of three designations: a participating doctor, a non ...
An assignment of benefits form (AOB) is a crucial document in the healthcare world. It is an agreement by which a patient transfers the rights or benefits under their insurance policy to a third-party - in this case, the medical professional who provides services. This way, the medical provider can file a claim and collect insurance payments.
Assignment of benefits is a fundamental concept in healthcare revenue cycle management. It enables healthcare providers to receive payment directly from the insurance company, reducing the financial burden on patients and streamlining the billing process. By understanding the assignment of benefits, patients can make informed decisions about ...
Nonassignment of Benefits. The second reimbursement method a physician/supplier has is choosing to not accept assignment of benefits. Under this method, a non-participating provider is the only provider that can file a claim as non-assigned. When the provider does not accept assignment, the Medicare payment will be made directly to the beneficiary.
The term assignment of benefits (AOB) may be referred to as an agreement that transfers the health insurance claims benefits of the policy from the patient to the health care provider. This agreement is signed by the patient as a request to pay the designated amount to the health care provider for the health benefits he/she may have received.
An Assignment of Benefits is essential for a medical provider - whether the physician, facility, or ancillary service provider - to have a right to payment from the Insurance Carrier or Third-Party Administrator (TPA). A medical provider or the administrative staff for the medical provider may feel overwhelmed by the number of forms that ...
An assignment of benefits is the act of signing documentation authorizing a health insurance company to pay a physician directly. In other words, the insurance company can pay claims without the direct involvement of the patient in the process. There are other situations where AOBs can be helpful, but we'll focus on their use in relation to ...
Out-of network health-care providers continue to face challenges in attempting to bring claims to recover from health insurers on behalf of their patients. While anti-assignment provisions my pose a recovery hurdle, awareness of legal constraints on how these provisions operate, and knowing that other mechanisms for seeking recovery exist, is critical, K&L Gates LLP attorneys write.
As used in this section, "assignment of benefits" means the transfer of dental care coverage reimbursement benefits or other rights under an insurance policy, subscription contract, or dental services plan by an insured, subscriber, or enrollee to a dentist or oral surgeon. 627.638.
An "assignment" is defined as the "relinquishment of control over both the subject matter and the power to revoke the assignees authority which creates an assignment." Gingold v. State Farm Ins. Co., 168 Misc. 2d 62, 64, 642 N.Y.S.2d 812, 814 (Civ. Ct. Queens County 1996). The New York Court of Appeals determined that " [n]o particular words ...
Study with Quizlet and memorize flashcards containing terms like The monthly amount an individual pays for a health insurance plan is called a:, The amount an individual must pay annually for healthcare services before the insurance company begins to pay is called a:, An individual visit a doctor for a routine check up. The visit most likely will require the individual to pay a and more.
Dr. Smith is a participating provider (PAR) for the ABC Health Insurance Plan. Mary Talley is treated by Dr. Smith in the office for which a $100 fee is charged. Given the information in the table located below, calculate the PAR provider write-off moment. $20. Dr. Jones is a nonparticipating provider (nonPAR) for the ABC Health Insurance Plan.
Vehicle insurance rose 20.3% for the 12 months ending in May, according to the latest Consumer Price Index data. Many factors are behind that trend, including rising car repair costs and more ...
Over the 2025-2034 period, subsidies are projected to total $27.5 trillion—with Medicare accounting for 46 percent; Medicaid and the Children's Health Insurance Program (CHIP), 25 percent; employment-based coverage, 21 percent; subsidies for coverage obtained through the Affordable Care Act's marketplaces or the Basic Health Program, 5 ...
Beyond the top three, people cited the cost of health insurance and Medicare (52%), and the cost of dental care (45%). Financial scams and fraud came in fourth place (53% very concerned).
Does your health insurance plan meet Penn State's recommendations? If you currently have health insurance coverage offered through a U.S. employer-sponsored program, or coverage that was purchased through the Health Insurance Marketplace (HealthCare.gov) there is a good chance that it will meet Penn State's recommended coverage. We recommend asking your health insurance company the following ...
This news for local employers provides 2025 health insurance rates, as well as information about the expansion of the State Maintenance Plan (SMP). The 2025 insurance benefits open enrollment period is September 30 - October 25, 2024. Rates. Wisconsin Public Employer's Group Health Insurance premium rates were approved at the Board meeting on ...
FILE - This Sept. 15, 2014, file photo shows part of the HealthCare,gov Website in Washington. A group of employers who challenged some federal health insurance requirements cannot be forced to provide no-cost coverage for certain types of preventive care, including HIV prep and some kinds of cancer screenings, a federal appeals court in New Orleans ruled Friday, June 21,2024.