When should your deductible apply to your medical bills?
Many insurance carriers are applying a deductible incorrectly to a medical bill involving personal injury protection (PIP) benefits. When applying for PIP insurance you have the option to have a deductible apply to either the named insured under the policy and/or dependent resident relatives. The deductible option chosen by the insured must be clearly stated on the declarations page. The application of the deductible can be something that is overlooked but can have a HUGE effect on the medical provider or insured that may wrongly become subject to one.
Insurance companies are required to apply the deductible to the full amount of the medical bill prior to any reductions that they later choose to apply. This means that if a medical provider, who accepted an assignment of benefits, bills the insurance carrier for a service to a patient at a cost of $1,200 and there is a $500 deductible that should be applied to the bill, the provider should be reimbursed at 80% of $700. Insurance carriers think that they can reduce the total bill by 80% and then apply the deductible to the reduced amount when this is clearly against current Florida law. If there is a deductible to be applied to a bill, the insurance carrier is to subtract from the total bill and then apply any necessary reductions.
The order in which the insurance carrier receives bills is very important to the application of the deductible. The insurer is not entitled to pick and choose which bills they would like to apply to the deductible but rather is required to apply the deductible to the bills in the order in which they were first received. An example would be, if a hospital’s bill of $2,500 is received by an insurance company on March 1, 2011 and a chiropractor’s bill is received on March 15, 2011, the $500 deductible is to be applied to the hospital’s bill of $2,500 since it was the first bill received. This may not seem like a big deal unless of course you are the party who is wrongly paying money out of pocket that is not owed by you.
