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Medicare Assignment: Everything You Need to Know

Medicare assignment.

  • Providers Accepting Assignment
  • Providers Who Do Not
  • Billing Options
  • Assignment of Benefits
  • How to Choose

Frequently Asked Questions

Medicare assignment is an agreement between Medicare and medical providers (doctors, hospitals, medical equipment suppliers, etc.) in which the provider agrees to accept Medicare’s fee schedule as payment in full when Medicare patients are treated.

This article will explain how Medicare assignment works, and what you need to know in order to ensure that you won’t receive unexpected bills.

fizkes / Getty Images

There are 35 million Americans who have Original Medicare. Medicare is a federal program and most medical providers throughout the country accept assignment with Medicare. As a result, these enrollees have a lot more options for medical providers than most of the rest of the population.

They can see any provider who accepts assignment, anywhere in the country. They can be assured that they will only have to pay their expected Medicare cost-sharing (deductible and coinsurance, some or all of which may be paid by a Medigap plan , Medicaid, or supplemental coverage provided by an employer or former employer).

It’s important to note here that the rules are different for the 29 million Americans who have Medicare Advantage plans. These beneficiaries cannot simply use any medical provider who accepts Medicare assignment.

Instead, each Medicare Advantage plan has its own network of providers —much like the health insurance plans that many Americans are accustomed to obtaining from employers or purchasing in the exchange/marketplace .

A provider who accepts assignment with Medicare may or may not be in-network with some or all of the Medicare Advantage plans that offer coverage in a given area. Some Medicare Advantage plans— health maintenance organizations (HMOs) , in particular—will only cover an enrollee’s claims if they use providers who are in the plan's network.

Other Medicare Advantage plans— preferred provider organizations (PPOs) , in particular—will cover out-of-network care but the enrollee will pay more than they would have paid had they seen an in-network provider.

Original Medicare

The bottom line is that Medicare assignment only determines provider accessibility and costs for people who have Original Medicare. People with Medicare Advantage need to understand their own plan’s provider network and coverage rules.

When discussing Medicare assignment and access to providers in this article, keep in mind that it is referring to people who have Original Medicare.

How to Make Sure Your Provider Accepts Assignment

Most doctors, hospitals, and other medical providers in the United States do accept Medicare assignment.

Provider Participation Stats

According to the Centers for Medicare and Medicaid Services, 98% of providers participate in Medicare, which means they accept assignment.

You can ask the provider directly about their participation with Medicare. But Medicare also has a tool that you can use to find participating doctors, hospitals, home health care services, and other providers.

There’s a filter on that tool labeled “Medicare-approved payment.” If you turn on that filter, you will only see providers who accept Medicare assignment. Under each provider’s information, it will say “Charges the Medicare-approved amount (so you pay less out-of-pocket).”

What If Your Provider Doesn’t Accept Assignment?

If your medical provider or equipment supplier doesn’t accept assignment, it means they haven’t agreed to accept Medicare’s approved amounts as payment in full for all of the services.

These providers can still choose to accept assignment on a case-by-case basis. But because they haven’t agreed to accept Medicare assignment for all services, they are considered nonparticipating providers.

Note that "nonparticipating" does not mean that a provider has opted out of Medicare altogether. Medicare will still pay claims for services received from a nonparticipating provider (i.e., one who does not accept Medicare assignment), whereas Medicare does not cover any of the cost of services obtained from a provider who has officially opted out of Medicare.

If a Medicare beneficiary uses a provider who has opted out of Medicare, that person will pay the provider directly and Medicare will not be involved in any way.

Physicians Who Have Opted Out

Only about 1% of all non-pediatric physicians have opted out of Medicare.

For providers who have not opted out of Medicare but who also don’t accept assignment, Medicare will still pay nearly as much as it would have paid if you had used a provider who accepts assignment. Here’s how it works:

  • Medicare will pay the provider 95% of the amount they would pay if the provider accepted assignment.
  • The provider can charge the person receiving care more than the Medicare-approved amount, but only up to 15% more (some states limit this further). This extra amount, which the patient has to pay out-of-pocket, is known as the limiting charge . But the 15% cap does not apply to medical equipment suppliers; if they do not accept assignment with Medicare, there is no limit on how much they can charge the person receiving care. This is why it’s particularly important to make sure that the supplier accepts Medicare assignment if you need medical equipment.
  • The nonparticipating provider may require the person receiving care to pay the entire bill up front and seek reimbursement from Medicare (using Form CMS 1490-S ). Alternatively, they may submit a claim to Medicare on behalf of the person receiving care (using Form CMS-1500 ).
  • A nonparticipating provider can choose to accept assignment on a case-by-case basis. They can indicate this on Form CMS-1500 in box 27. The vast majority of nonparticipating providers who bill Medicare choose to accept assignment for the claim being billed.
  • Nonparticipating providers do not have to bill your Medigap plan on your behalf.

Billing Options for Providers Who Accept Medicare

When a medical provider accepts assignment with Medicare, part of the agreement is that they will submit bills to Medicare on behalf of the person receiving care. So if you only see providers who accept assignment, you will never need to submit your own bills to Medicare for reimbursement.

If you have a Medigap plan that supplements your Original Medicare coverage, you should present the Medigap coverage information to the provider at the time of service. Medicare will forward the claim information to your Medigap insurer, reducing administrative work on your part.

Depending on the Medigap plan you have, the services that you receive, and the amount you’ve already spent in out-of-pocket costs, the Medigap plan may pay some or all of the out-of-pocket costs that you would otherwise have after Medicare pays its share.

(Note that if you have a type of Medigap plan called Medicare SELECT, you will have to stay within the plan’s network of providers in order to receive benefits. But this is not the case with other Medigap plans.)

After the claim is processed, you’ll be able to see details in your MyMedicare.gov account . Medicare will also send you a Medicare Summary Notice. This is Medicare’s version of an explanation of benefits (EOB) , which is sent out every three months.

If you have a Medigap plan, it should also send you an EOB or something similar, explaining the claim and whether the policy paid any part of it.

What Is Medicare Assignment of Benefits?

For Medicare beneficiaries, assignment of benefits means that the person receiving care agrees to allow a nonparticipating provider to bill Medicare directly (as opposed to having the person receiving care pay the bill up front and seek reimbursement from Medicare). Assignment of benefits is authorized by the person receiving care in Box 13 of Form CMS-1500 .

If the person receiving care refuses to assign benefits, Medicare can only reimburse the person receiving care instead of paying the nonparticipating provider directly.

Things to Consider Before Choosing a Provider

If you’re enrolled in Original Medicare, you have a wide range of options in terms of the providers you can use—far more than most other Americans. In most cases, your preferred doctor and other medical providers will accept assignment with Medicare, keeping your out-of-pocket costs lower than they would otherwise be, and reducing administrative hassle.

There may be circumstances, however, when the best option is a nonparticipating provider or even a provider who has opted out of Medicare altogether. If you choose one of these options, be sure you discuss the details with the provider before proceeding with the treatment.

You’ll want to understand how much is going to be billed and whether the provider will bill Medicare on your behalf if you agree to assign benefits (note that this is not possible if the provider has opted out of Medicare).

If you have supplemental coverage, you’ll also want to check with that plan to see whether it will still pick up some of the cost and, if so, how much you should expect to pay out of your own pocket.

A medical provider who accepts Medicare assignment is considered a participating provider. These providers have agreed to accept Medicare’s fee schedule as payment in full for services they provide to Medicare beneficiaries. Most doctors, hospitals, and other medical providers do accept Medicare assignment.

Nonparticipating providers are those who have not signed an agreement with Medicare to accept Medicare’s rates as payment in full. However, they can agree to accept assignment on a case-by-case basis, as long as they haven’t opted out of Medicare altogether. If they do not accept assignment, they can bill the patient up to 15% more than the Medicare-approved rate.

Providers who opt out of Medicare cannot bill Medicare and Medicare will not pay them or reimburse beneficiaries for their services. But there is no limit on how much they can bill for their services.

A Word From Verywell

It’s in your best interest to choose a provider who accepts Medicare assignment. This will keep your costs as low as possible, streamline the billing and claims process, and ensure that your Medigap plan picks up its share of the costs.

If you feel like you need help navigating the provider options or seeking care from a provider who doesn’t accept assignment, the Medicare State Health Insurance Assistance Program (SHIP) in your state may be able to help.

A doctor who does not accept Medicare assignment has not agreed to accept Medicare’s fee schedule as payment in full for their services. These doctors are considered nonparticipating with Medicare and can bill Medicare beneficiaries up to 15% more than the Medicare-approved amount.

They also have the option to accept assignment (i.e., accept Medicare’s rate as payment in full) on a case-by-case basis.

There are certain circumstances in which a provider is required by law to accept assignment. This includes situations in which the person receiving care has both Medicare and Medicaid. And it also applies to certain medical services, including lab tests, ambulance services, and drugs that are covered under Medicare Part B (as opposed to Part D).

In 2021, 98% of American physicians had participation agreements with Medicare, leaving only about 2% who did not accept assignment (either as a nonparticipating provider, or a provider who had opted out of Medicare altogether).

Accepting assignment is something that the medical provider does, whereas assignment of benefits is something that the patient (the Medicare beneficiary) does. To accept assignment means that the medical provider has agreed to accept Medicare’s approved fee as payment in full for services they provide.

Assignment of benefits means that the person receiving care agrees to allow a medical provider to bill Medicare directly, as opposed to having the person receiving care pay the provider and then seek reimbursement from Medicare.

Centers for Medicare and Medicaid Services. Medicare monthly enrollment .

Centers for Medicare and Medicaid Services. Annual Medicare participation announcement .

Centers for Medicare and Medicaid Services. Lower costs with assignment .

Centers for Medicare and Medicaid Services. Find providers who have opted out of Medicare .

Kaiser Family Foundation. How many physicians have opted-out of the Medicare program ?

Center for Medicare Advocacy. Durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) updates .

Centers for Medicare and Medicaid Services. Check the status of a claim .

Centers for Medicare and Medicaid Services. Medicare claims processing manual. Chapter 26 - completing and processing form CMS-1500 data set .

Centers for Medicare and Medicaid Services. Ambulance fee schedule .

Centers for Medicare and Medicaid Services. Prescription drugs (outpatient) .

By Louise Norris Louise Norris has been a licensed health insurance agent since 2003 after graduating magna cum laude from Colorado State with a BS in psychology.

What is an assignment of benefits?

Three people in an office talking over a pile of papers.

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.

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.

Does your provider accept Medicare as full payment?

You can get the lowest cost if your doctor or other health care provider accepts the Medicare-approved amount  as full payment for a covered service. This is called “accepting assignment.” If a provider accepts assignment, it’s for all Medicare-covered Part A and Part B services.

Using a provider that accepts assignment

Most doctors, providers, and suppliers accept assignment, but always check to make sure that yours do.

If your doctor, provider, or supplier accepts assignment:

  • Your out-of-pocket costs may be less.
  • They agree to charge you only the Medicare deductible and coinsurance amount, and usually wait for Medicare to pay its share before asking you to pay your share.
  • They have to submit your claim directly to Medicare and can't charge you for submitting the claim.

How does assignment impact my drug coverage?

Using a provider that doesn't accept Medicare as full payment

Some providers who don’t accept assignment still choose to accept the Medicare-approved amount for services on a case-by-case basis. These providers are called "non-participating."

If your doctor, provider, or supplier doesn't accept assignment:

  • You might have to pay the full amount at the time of service.
  • They should submit a claim to Medicare for any Medicare-covered services they give you, and they can’t charge you for submitting a claim. If they refuse to submit a Medicare claim, you can submit your own claim to Medicare. Get the Medicare claim form .
  • They can charge up to 15% over the Medicare-approved amount for a service, but no more than that. This is called "the limiting charge."  

Does the limiting charge apply to all Medicare-covered services?

Using a provider that "opts-out" of Medicare

  • Doctors and other providers who don’t want to work with the Medicare program may "opt out" of Medicare.
  • Medicare won’t pay for items or services you get from provider that opts out, except in emergencies.
  • Providers opt out for a minimum of 2 years. Every 2 years, the provider can choose to keep their opt-out status, accept Medicare-approved amounts on a case-by-case basis ("non-participating"), or accept assignment.

Find providers that opted out of Medicare.

Private contracts with doctors or providers who opt out

  • If you choose to get services from an opt-out doctor or provider you may need to pay upfront, or set up a payment plan with the provider through a private contract.
  • Medicare won’t pay for any service you get from this doctor, even if it’s a Medicare-covered service.

What are the rules for private contracts?

You may want to contact your  State Health Insurance Assistance Program (SHIP) for help before signing a private contract with any doctor or other health care provider.

What do you want to do next?

  • Next step: Get help with costs
  • Take action: Find a provider
  • Get details: How to get Medicare services

What Is Medicare Assignment?

Written by: Rachael Zimlich, RN, BSN

Reviewed by: Eboni Onayo, Licensed Insurance Agent

Key Takeaways

Medicare assignment describes the fee structure that your doctor and Medicare have agreed to use.

If your doctor agrees to accept Medicare assignment, they agree to be paid whatever amount Medicare has approved for a service.

You may still see doctors who don’t accept Medicare assignment, but you may have to pay for your visit up front and submit a claim to Medicare for reimbursement.

You may have to pay more to see doctors who don’t accept Medicare assignment.

How Does Medicare Assignment Work?

What is Medicare assignment ?

Medicare assignment simply means that your provider has agreed to stick to a Medicare fee schedule when it comes to what they charge for tests and services. Medicare regularly updates fee schedules, setting specific limits for what it will cover for things like office visits and lab testing.

When a provider agrees to accept Medicare assignment, they cannot charge more than the Medicare-approved amount. For you, this means your out-of-pocket costs may be lower than if you saw a provider who did not accept Medicare assignment. The provider acknowledges that the amount Medicare set for a particular service is the maximum amount that will be paid.

You may still have to pay a Medicare deductible and coinsurance, but your provider will have to submit a claim to Medicare directly and wait for payment before passing any share of the costs onto you. Doctors who accept Medicare assignment cannot charge you to submit these claims.

Can I bundle multiple benefits into one plan?

How Do I Know if a Provider Accepts Medicare Assignment?

There are a few levels of commitment when it comes to Medicare assignment.

  • Providers who have agreed to accept Medicare assignment sign a contract with Medicare.
  • Those who have not signed a contract with Medicare can still accept assignment amounts for services of their choice. They do not have to accept assignment for every service provided. These are called non-participating providers.
  • Some providers opt out of Medicare altogether. Doctors who have opted out of Medicare completely or who use private contracts will not be paid anything by Medicare, even if it’s for a covered service within the fee limits. You will have to pay the full cost of any services provided by these doctors yourself.

You can check to see if your provider accepts Medicare assignment on Medicare’s website .

Billing Arrangement Options for Providers Who Accept Medicare

Doctors that take Medicare can sign a contract to accept assignment for all Medicare services, or be a non-participating provider that accepts assignment for some services but not all.

A medical provider that accepts Medicare assignment must submit claims directly to Medicare on your behalf. They will be paid the agreed upon amount by Medicare, and you will pay any copayments or deductibles dictated by your plan.

If your doctor is non-participating, they may accept Medicare assignment for some services but not others. Even if they do agree to accept Medicare’s fee for some services, Medicare will only pay then 95% of the set assignment cost for a particular service.

If your provider does plan to work with Medicare, either the provider or you can submit a claim to Medicare, but you may have to pay the entire cost of the visit up front and wait for reimbursement. They can’t charge you for more than the amount approved by Medicare, but they can charge you above the Medicare-approved amount. This is called the limiting charge, and can be up to 15% more than Medicare-approved amount for non-participating providers.

What Does It Mean When a Provider Does Not Accept Medicare Assignment?

Providers who refuse Medicare assignment can still choose to accept Medicare’s set fees for certain services. These are called non-participating providers.

There are a number of providers who opt out of participating in Medicare altogether; they are referred to as “opt-out doctors”. This means they have signed an opt-out agreement with Medicare and can’t be paid by Medicare at all — even for services normally covered by Medicare. Opt-out contracts last for at least two years. Some of these providers may only offer services to patients who sign contracts.

You do not need to sign a contract with a private provider or use an opt-out provider. There are many options for alternative providers who accept Medicare. If you do choose an opt-out or private contract provider, you will have to pay the full cost of services on your own.

What Medicare coverage is right for my specific situation?

Do providers have to accept Medicare assignment?

No. Providers can choose to accept a full Medicare assignment, or accept assignment rates for some services as a non-participating provider. Doctors can also opt out of participating in Medicare altogether.

How much will I have to pay if my provider doesn't accept Medicare assignment?

Some providers that don’t accept assignment as a whole will accept assignment for some services. These are called non-participating providers. For these providers and providers who have completely opted out of Medicare, you will pay the majority of or the full amount for your care.

How do I submit a claim?

If you need to submit your own claim to Medicare, you can call 1-800-MEDICARE or use Form CMS-1490S .

Can my provider charge to submit a claim?

No. Providers are not allowed to charge to submit a claim to Medicare on your behalf.

Lower Costs with Assignment. Medicare.gov.

Fee Schedules . CMS.gov.

This website is operated by GoHealth, LLC., a licensed health insurance company. The website and its contents are for informational and educational purposes; helping people understand Medicare in a simple way. The purpose of this website is the solicitation of insurance. Contact will be made by a licensed insurance agent/producer or insurance company. Medicare Supplement insurance plans are not connected with or endorsed by the U.S. government or the federal Medicare program. Our mission is to help every American get better health insurance and save money. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all of your options.

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Assignment of Benefits: What You Need to Know

  • August 17, 2022
  • Steven Schwartzapfel

Assignment of Benefits: What You Need to Know

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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What Is the Assignment of Insurance Benefits?

An assignment of insurance benefits shares the ownership interest of an insurance policy with another party.

An assignment of insurance benefits shares the ownership interest of an insurance policy with another party.

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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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Health Insurance for College Students: How It Works

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If you’re heading off to college, think of how you’ll pay for your healthcare. Most college students rely on their parents’ health insurance, according to surveys. But coverage from a parent’s plan might not be the best way to cover your bills and not everyone has this option. There are a few possibilities to set up health insurance for college students. Learn how students interact with the healthcare system and can stay protected.

Key Takeaways

  • College students need health insurance to cover their medical bills in the United States, the same as anyone else.
  • The majority of universities provide student health insurance plans.
  • Students could also get coverage from a parent’s insurance plan, by buying their own individual plan, through a part-time job, or with government programs.
  • Some schools require students to buy health insurance but many do not.
  • Even if a student isn’t required to buy health insurance, they should still strongly consider it. The cost of medical care in the United States is extremely high and many doctors won’t see someone who doesn’t have insurance. 

Why College Students Need Health Insurance 

"Having insurance is tantamount to access to care," said Stephen L. Beckley, who has been working on college health programs since 1982. Since the early 1990s, he's been with the firm Hodgkins Beckley & Lyon, helping colleges and universities develop and refine college health programs for students. 

 "If you don't have insurance, you don't have access,” he said. “Even if you have financial resources, providers can be dubious about taking somebody on as a new patient without insurance the provider participates in and recognizes."

Healthcare costs are very high in the United States. A 2023 Federal Reserve report found that 23% percent of U.S. adults had unexpected medical expenses with a median cost between $1,000 and $1,999 over the previous 12 months. Thousands of dollars in expensive medical bills and medical debt could impact your ability to focus on your studies and stay in college. 

Around 28% of adults reported skipping medical treatment due to cost, according to the Federal Reserve report. Without health insurance, you might skip dental cleanings, prescription medications, mental healthcare, immunizations, and checkups, exposing yourself to more severe illnesses. If you become very ill while in school, you may miss classes or worsen due to healthcare costs. 

"It's vital for students to have good insurance to stay in school because they can withstand the huge financial circumstances," Beckley said. 

According to a 2023 American College Health Association (ACHA) report, around 2% of students don’t have health insurance.  

Whether health insurance is required for college students depends on the state the school is in and several other factors.

Many colleges require insurance or automatically enroll medical students and/or health science students under certain circumstances. But Massachusetts is the only state requiring all students to have health insurance, Beckley said. 

In other states, requirements vary by school—for example, the University of North Carolina and the University of California systems mandate health insurance for students attending school. Twenty-eight states have one or more public universities requiring health insurance for domestic students in the 2023-2024 academic year, according to Beckley’s research.

Generally, most schools with health insurance requirements also offer a health insurance plan. If the school requires mandatory coverage and you have another health insurance plan that qualifies, you can apply for a waiver from your school.  

Some states' public colleges and universities don't have any requirements at all, including Alaska, New Mexico, North Dakota, South Dakota, Washington, and Wyoming, according to Hodgkins Beckley & Lyon's research.

International students may have different requirements. Beckley said that international students with a J Visa need proof of health insurance, but F Visa students do not. However, "most schools apply the same health insurance coverage requirements to all international students," he said.

Student Health Insurance Plans: How They Work 

As many as three million students are covered by college, university, or other higher-ed institution student health insurance plans (SHIPs). However, the particulars of these student health insurance plans vary by institution, including costs, benefits offered, coverage areas, and how they work.   

A college or university-sponsored SHIP is the primary insurance source for almost 21% of students, according to 2023 research from the American College Health Association. Student plans are provided by 91% of public universities and 77% of private institutions.

The average annual cost of a public university student health insurance plan is $2,924, while a private school health plan averaged $3,874 annually for undergraduates in the 2023-24 plan year, according to Beckley.

“Public institution plans often have slightly lower benefits than private institution health plans, but still usually offer gold or platinum-level coverage ," Beckley said. On the Affordable Care Act (ACA) Marketplace, this metal level means that your copays and other out-of-pocket expenses will be low.

Some public universities offer very broad coverage. Beckley points to the University of California's system, which offers dental, vision, and a mini- COBRA students can use to keep health insurance after leaving the school. 

The plans are designed to work with the needs of a local student, as well as coverage for internships around the country, study-abroad stays, or spring break.

“Student health plans have integration with on-campus health and counseling services, plus networks of providers that are easy to access and familiar with a student insurance plan," Beckley said. 

The plans often use a health insurance company’s existing network , such as Cigna or Blue Cross Blue Shield. These may come with extra benefits such as virtual or app-based mental health sessions.

Other surprising features of student health insurance plans are that financial aid awards can include SHIP premiums to reduce monthly costs; coverage is available for spouses and children for an extra premium; and international coverage includes emergency medical evacuation, repatriation of remains, and accidental death and dismemberment.

Other Options for College Health Insurance 

Parent plan.

Students can stay on a parent’s insurance plan through age 26, and most do. According to ACHA, the primary source of health insurance for 54% of students is a parent’s or guardian’s plan.  

But if you’re moving to a different state or region, it’s essential to understand the plan rules and call beforehand (if possible) to understand your coverage. 

"Many parent plans tend to offer a narrow network in the local area, whether you're across the state or out of state," Beckley said—even if that plan isn’t designated as an HMO (health maintenance organization) . This is true for a parent’s ACA plan too, he noted.

Insurance policies typically feature provider networks and may only cover care within that network, including care provided by your student health center. Depending on your plan, visits to an out-of-network doctor or hospital may not be covered . 

So if you attend school in a different state or a region outside what your parents’ plan covers, you may not have coverage for anything beyond emergency care. 

While you could wait until you go home in the summer or on breaks to schedule preventive checkups and immunizations, you’d go without most urgent care and more regular needs such as mental health services.  

Other parent plans may offer a regional or national network of providers you can access. You can also call a consulting nurse or your provider, or connect with a provider by email or online. 

According to ACHA, around 2.5% of students rely on a self-bought health insurance plan. This is likely a Marketplace health insurance plan , based in the state where the student will attend college.  If you’re older than 26 or your parents don’t have health insurance, you’ll likely want to enroll in a Marketplace plan. A primary advantage is that the policy will cover care in your new locale.  

If you’re under 30, you qualify for a low-premium catastrophic plan , which offers free preventive care and three doctor visits a year. These plans typically have a high deductible (the amount you pay before insurance begins paying).

One drawback: If you return home to another state for the summer, your ACA plan coverage may be limited to emergencies only. Review your policy plan for details, or call your company to determine how out-of-state care works. 

When you move to attend school, you may be eligible for a Marketplace special enrollment period . This period allows you to enroll immediately instead of waiting for the annual open enrollment period in late fall or early winter.

Workplace Plans

Around 9% of students’ primary source of health insurance comes from an employer’s group health insurance plan —whether their own or their spouse’s or partner’s employer.  

Employers don’t have to offer coverage to part-time workers (although some may). However, some states, such as Hawaii, require coverage for part-time employees working more than 20 hours per week. Still, working enough hours to earn healthcare insurance benefits could eat into your available hours for college attendance, assignments, and studying. 

If you’ve left a full-time job for college, you could also enroll in COBRA. However, this option may be costly, limited in geographic portability, and will only cover you temporarily.   

Other Government Health Insurance

For almost 10% of students, health insurance coverage comes from a government or public health source:

  • Medicare for those 65 and older and younger people with specific physical disabilities
  • Medicaid for those who qualify due to income or family status
  • Veterans Affairs for retired former members of the U.S. military
  • CHIP health insurance for those under 19 years of age  

Medicaid might work for some students, but many Medicaid programs present issues for switching designated primary care providers and plans if you’re moving to attend school. 

"It's a common problem that it's really hard to get mental healthcare access," Beckley said, and it may entail a significant wait. “In some states, it's easy and quick to enroll in Medicaid and get residency without burdensome proof, while in other states, it can take months to complete Medicaid enrollment.” 

How to Choose a Plan for Coverage in College

Increasingly, colleges are touting their health plans, and families face decisions when comparing plans. "If you can save money by going to a school with a built-in health insurance plan at a UC campus versus California State, it's an important consideration," Beckley said.  

If you’ve already accepted an offer for a school and are now trying to choose a health insurance option, consider the following: 

  • Medication: Can you receive your prescription by mail-order, or is there a local pharmacy you can access?
  • Primary care: Can you get a primary care physician who’s covered where you’ll attend school for most of the year? Is that physician accessible if you don’t have a car or primarily spend time on campus?
  • In-network care: Are there options for specialist providers, urgent care centers, and hospitals near your school?
  • On-campus coverage: Does your health plan (whether ACA, parent, spouse, employer, or COBRA) cover the on-campus health center and mental health services?
  • Portability : Does this plan move with you as you travel, work, or study abroad and when you return home?

Do Students in the U.S. Get Health Insurance?

Students in the U.S. may be automatically enrolled in their college health insurance plan, depending on the institution and state where the college or university is located. However, there is a quarterly or semester-based fee for this insurance. It is not free. 

Why Do Some Colleges Require Students to Have Health Insurance?

Typically, the colleges requiring health insurance also offer health plans. Colleges require students to have health insurance to help them get care while attending college and avoid burdensome debt that could result from unexpected medical emergencies. In addition, some states make health insurance mandatory for all adults. 

Is Health Insurance Mandatory for International Students in the US?

Health insurance is mandatory for some international students as well as domestic students. Check with your college or university for details.  

Can I Go to the Student Health Center Instead of Getting Health Insurance?

On-campus student health centers can offer affordable services, but good health insurance is still necessary. Student health centers have limited hours, may not be able to manage your complex chronic condition or mental health concern, and are only located on campus—not much help if you’re traveling abroad or taking an internship in a nearby city.

Finding the right health insurance that covers you as a college student is important for your long-term physical and financial health. A health plan should offer enough coverage that you won’t be left destitute if you slip and break your arm while skiing—or just crossing the quad. Your school’s student health insurance plan, your parents’ plan, an ACA plan, part-time work, or government programs are all possible ways to get coverage so you stay safe during your studies. 

The Federal Reserve. “ Report on the Economic Well-Being of U.S. Households in 2022 - May 2023 .”

American College Health Association. “ Spring 2023 Reference Group Executive Study .”

Centers for Medicare and Medicaid Services. “ Student Health Plans .”

American College Health Association. “ Why SHIPs Matter .”

California Senate Office of Research. “ Health Insurance Coverage for California’s College Students .” Page 12.

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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

Anthony P.  La Rocco

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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As a Medical Biller, the better you understand the medical insurance payment process, the better you can care for your patients. Your understanding of what a patient will owe and what will be covered can help them navigate the confusing world of medical insurance.

One term that can be very confusing for patients (and for doctors as well) is ‘Accepting Assignment’.

Essentially, ‘assignment’ means that a doctor, (also known as provider or supplier) agrees (or is required by law) to accept a Medicare-approved amount as full payment for covered services.

This amount may be lower or higher than an individual’s insurance amount, but will be on par with Medicare fees for the services.

If a doctor participates with an insurance carrier, they have a contract and agree that the provider will accept the allowed amount, then the provider would check “yes”.  

If they do not participate and do not wish to accept what the insurance carrier allows, they would check “no”.   It is important to note that a provider who does not participate can still opt to accept assignment on just a particular claim by checking the “yes” box just for those services.

In other words by saying your office will accept assignment, you are agreeing to the payment amount being covered by the insurer, or medicare, and the patient has no responsibility.

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Insurance claims, why do nj medical providers need the patient to sign an assignment of benefits, callagy law: medical provider attorneys.

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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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.

Boost patient experience and your bottom line by automating patient cost estimates, payer underpayment detection, and contract optimization in one place.

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.

Improve your financial performance while providing a more transparent patient experience

Related terms, practice expense (pe) element.

Practice expense (PE) element is the portion of healthcare service cost that encompasses non-physician clinical staff, medical supplies, equipment, and other overhead expenses.

Compliance is adherence to legal and regulatory requirements, industry standards, and internal policies to ensure ethical and lawful practices.

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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 Assignment of Benefits in Medical Billing?

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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

doctor at desk filling out forms on clipboard

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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Use Experimentation to Design Better Health Care Benefits

assignment in health insurance

A Walmart pilot shows the efficacy of a test-and-learn approach.

U.S. employers face enormous challenges in designing their employee health care benefits that effectively address the myriad problems confronting them, including rising health care costs, employee burnout and obesity. At the same time, health and wellness options abound. By applying a test-and-learn approach, Walmart has succeeded in finding those that are the most effective in achieving multiple goals.

With the cost of health care in the United States continuing to outpace inflation, reducing health care spending is a burning issue for employers — especially large self-funded employers who assume financial risk for their employees’ health care. At the same time, employee well-being is more important than ever. Health risks — ranging from burnout to obesity — are widespread in the workforce, impacting health outcomes, costs, and productivity. Meeting the current and emerging health care needs of today’s dynamic and diverse workforce requires an institutional agility that employers historically lack.

  • Lisa Woods is Walmart Inc.’s vice president of physical and emotional wellbeing.
  • Owen Tripp is the cofounder and CEO of Included Health, which provides a combination of virtual care, navigation, and communities-based health care to help organizations deliver an improved health care experience to millions of people across the United States.

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Why Schools—and Teachers—May Need to Brace for Higher Health Insurance Costs

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Health insurance is expensive, stressful, and confusing to navigate for the common customer. For school districts, it’s not much different.

Many districts are dealing with skyrocketing costs of providing health insurance to staff, thanks to a wide range of recent developments in health, medicine, and the labor market.

Roughly 3 in 4 district leaders who answered an EdWeek Research Center survey between Jan. 31 and March 4 said health insurance costs had increased since the 2022-23 school year. Slightly less than a quarter saw no change in health care costs for staff, and only 1 percent saw a slight decline.

More than a third of district leaders saw health care costs increase by more than 10 percent, according to the survey, which included responses from 239 district leaders. Seven percent saw costs increase by more than 25 percent.

The Forest school district in rural northwestern Pennsylvania, for instance, saw a modest increase of 2.3 percent in health insurance costs between 2022 and 2023. Staff health insurance this year cost $1.4 million, or roughly 10 percent of the district’s annual operating budget of $15 million.

But Superintendent Amanda Hetrick has seen preliminary numbers that suggest the next increase for the upcoming school year could be as high as 10 to 12 percent. She’s not counting on much help from the state to make up the difference for her district, which she describes as “rural beyond rural.”

“We’re one of 500 some districts, and population-wise we are the smallest county in the state,” Hetrick said. “We don’t have a lot of big swing.”

The vast majority of school district budgets—between 80 and 90 percent—go towards compensation and benefits for staff. Health insurance is a significant and unpredictable part of that sum.

Here are a few reasons why some districts are sweating the health care bill this year.

The long tail of the pandemic hasn’t gone away

In the Forest district, many staff members have resumed medical appointments or pursued procedures that they had put off during the height of the COVID-19 pandemic. That means a few years of relatively limited cost increases has given way to steeper increases, Hetrick said.

Hetrick’s district has also seen an uptick in respiratory viruses during the school year: not just COVID and the flu, but RSV as well. The sicker the staff, the higher the medical bills the district’s insurance plan has to cover.

Meanwhile, the health insurance provider for all of Vermont’s school districts is raising premiums because hospitals and other medical facilities have invested in salary increases to help address the ongoing pandemic-era shortage of nurses and other skilled medical workers.

Emerging drugs are driving up prescription costs

Doctors can prescribe medications like Ozempic to help diabetes patients manage blood sugar levels. In recent years, bolstered by endorsements from the Food and Drug Administration, many doctors have been prescribing the Ozempic relative Wegovy to help non-diabetic patients lose weight.

These medications are expensive, in part because of short supply and high demand . Some previously reluctant insurance providers have started covering them even for weight loss, though others have backed off as costs have risen.

Some districts are feeling the pinch in their budgets. In Schoharie, N.Y., the school district is exploring the option of switching to a health care provider that sources Ozempic and other weight-loss drugs from Canada and other countries, where the costs for weight-loss drugs are significantly cheaper.

One plan with international shipments would cost the district $40,000 a year on prescriptions for staff, compared with the current cost of $320,000 per year.

“The costs that districts are incurring because people are using these medications more readily is quite drastic,” said David Blanchard, the district’s superintendent.

This image provided by Novo Nordisk in January 2023, shows packaging for the company's Wegovy medication. The popular weight-loss drug, which has helped millions of Americans shed pounds, can now be used to reduce the risk of stroke, heart attacks and other serious cardiovascular problems in patients who are overweight or who have obesity, the U.S. Food and Drug Administration said Friday, March 8, 2024.

This isn’t a universal problem, though. In Iowa, the state health insurance plan for school district employees doesn’t cover weight-loss medications for non-diabetic patients, said Shashank Aurora, chief financial officer of the Des Moines school district, the largest in the state. As a result, those medications haven’t cost the district much, he said.

Workers have the upper hand in negotiating better coverage

High health insurance costs often lead to bigger expenses for staffers who are covered. Schools have struggled with staffing in recent years, giving labor unions and other advocates for school staff more leverage in negotiations over benefits.

Teachers in Rochester, Minn., are negotiating with the school district there on a proposed increase to the district’s contribution to their health insurance costs. Union members say rising premiums are eating into their salaries, the Post Bulletin reported .

The Caddo school district in Shreveport, La., recently proposed a 15 percent increase to the portion of health insurance premiums employees have to pay, drawing consternation from many employees. The school board there eventually compromised on a 7.5 percent increase instead .

Meanwhile, schools’ options for health insurance coverage, and the policies that dictate how they offer it, vary considerably across the country.

In New Jersey, for instance, districts are legally prohibited from increasing property taxes by more than 2 percent in a single year—except to cover a list of qualified expenses, including health insurance. In other states, schools all use the same health insurance provider, or coalitions of districts create their own self-insurance pools.

The New Jersey policy often leads to discussions about the trade-offs between asking voters to approve higher taxes and making sure staff are adequately taken care of, said Christopher Mullins, the business administrator and board secretary for the Monmouth Ocean Educational Services Commission, which provide services to several school districts in the Monmouth County area.

Districts in the state often have to convince property owners to chip in if they want to to cover rising insurance health costs. But pitching tax increases to property owners, Mullins said, is particularly challenging because he and his colleagues don’t always know the details of how school staff use their health care plans.

“I don’t know what my staff are using, I don’t know what’s actually driving up costs,” Mullins said. “There’s very little data to build off of.”

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IMAGES

  1. Free Insurance Assignment Agreement

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  2. FREE 9+ Health Proposal Forms in PDF

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  3. FREE 10+ Sample Health Insurance Forms in PDF

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  4. FREE 11+ Assignment of Insurance Policy Samples in PDF

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  5. Insurance Assignment Form

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  6. Ch 09: Assignment

    assignment in health insurance

VIDEO

  1. COMMERCIAL LAW GROUP ASSIGNMENT

  2. Auto Insurance Assignment

  3. Week 07

  4. week 07-Task: Assignment -health problems

  5. task: Assignment

  6. Week 06

COMMENTS

  1. Medicare Assignment: What It Is and How It Works

    Here's how it works: Medicare will pay the provider 95% of the amount they would pay if the provider accepted assignment. The provider can charge the person receiving care more than the Medicare-approved amount, but only up to 15% more (some states limit this further). This extra amount, which the patient has to pay out-of-pocket, is known as ...

  2. What is Medicare Assignment

    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.

  3. Medicare Assignment

    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 ...

  4. An assignment of benefits (AOB) can streamline the insurance process

    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 ...

  5. Does your provider accept Medicare as full payment?

    You can get the lowest cost if your doctor or other health care provider accepts the. Medicare-approved amount. as full payment for a covered service. This is called "accepting assignment.". If a provider accepts assignment, it's for all Medicare-covered Part A and Part B services.

  6. Medicare Assignment and How Doctors Accept It Explained

    A medical provider that accepts Medicare assignment must submit claims directly to Medicare on your behalf. They will be paid the agreed upon amount by Medicare, and you will pay any copayments or deductibles dictated by your plan. If your doctor is non-participating, they may accept Medicare assignment for some services but not others.

  7. Assignment of Benefits: What You Need to Know

    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.

  8. What does it mean if your doctor doesn't accept assignment?

    A: If your doctor doesn't "accept assignment," (ie, is a non-participating provider) it means he or she might see Medicare patients and accept Medicare reimbursement as partial payment, but wants to be paid more than the amount that Medicare is willing to pay. As a result, you may end up paying the difference between what Medicare will ...

  9. Assignment and Nonassignment of Benefits

    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.

  10. What is an Assignment of Benefits?

    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.

  11. What Is the Assignment of Insurance Benefits?

    An assignment of insurance benefits shares the ownership interest of an insurance policy with another party. ... Health Insurance. When you require medical care, it's important to have health ...

  12. Health Insurance for College Students: How It Works

    The average annual cost of a public university student health insurance plan is $2,924, while a private school health plan averaged $3,874 annually for undergraduates in the 2023-24 plan year ...

  13. INSIGHT: An Ounce of Prevention—The Importance of Early Review of

    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.

  14. What is assignment of benefits, and how does it impact insurers?

    Mar 06, 2020. 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 decisions ...

  15. What does 'Accept Assignment' mean in Medical Billing Terms?

    Essentially, 'assignment' means that a doctor, (also known as provider or supplier) agrees (or is required by law) to accept a Medicare-approved amount as full payment for covered services. This amount may be lower or higher than an individual's insurance amount, but will be on par with Medicare fees for the services. If a doctor ...

  16. The Importance of the Assignment of Benefits

    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 ...

  17. Assignment of benefits

    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.

  18. Health Care Providers Should Review Assignment of Benefit ...

    Anthem Blue Cross Life & Health Insurance Co. Both cases involved reimbursement disputes between providers and health benefit plan administrators, which culminated in the providers suing in federal court for declaratory, injunctive and monetary relief under ERISA. In both cases, the Ninth Circuit said neither ERISA, nor any written assignment ...

  19. Health Insurance ASSIGNMENT Flashcards

    Every month, the individual pays a $50—-to an insurance company to have health insurance plan. The visit to the doctor cost $125. The individual has to make a payment called—— directly to the doctors office. During the visit, the doctor determines the individual require a procedure costing $4500. Before the individual agrees to the ...

  20. Can You Assign Your Insurance Benefits 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 ...

  21. PDF CONSENT TO TREATMENT, ASSIGNMENT OF BENEFITS AND ...

    An assignment of benefits is an arrangement where you, the beneficiary, request that your insurance company pay the health benefit payment(s) directly to your health care providers. When you sign the assignment of benefits form, you are essentially entering into a contract with your health care provider to transfer your right of reimbursement ...

  22. 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 ...

  23. Use Experimentation to Design Better Health Care Benefits

    Summary. U.S. employers face enormous challenges in designing their employee health care benefits that effectively address the myriad problems confronting them, including rising health care costs ...

  24. Unit 5 written ASSignment, health system

    Written assignment unit 5 Course Title: Health system and structure Course Code" HS Instructor: Torchessa, West-Jackson Introduction The Affordable Care Act is the most significant legislative change to the US healthcare system in over four decades. According to this analysis, the act will give health insurance to an additional

  25. Why Schools—and Teachers—May Need to Brace for Higher Health Insurance

    The vast majority of school district budgets—between 80 and 90 percent—go towards compensation and benefits for staff. Health insurance is a significant and unpredictable part of that sum.

  26. Alignment Health Plan

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