Reclaim your health with us! This article helps you understand your medical bill and covers:
- How to read medical bills
- An overview of medical billing
- What part of the medical bill shows the remaining balance after insurance pays
- An explanation of the individual line items on your medical bill
It can be stressful to be on the receiving end of a medical bill--not just because it means you owe money but because the bill itself often seems to require a professional translator! Not all medical bills are created equal, either. Each bill can look very different depending on the provider and their standard practices. Thankfully, however, most bills contain many of the same elements. We’ll guide you through how to read your medical bill and interpret it as best you can:
1. Patient name & address: Believe it or not, you should double-check to make sure this information is correct. Healthcare systems can have multiple patients with the exact same name, and billing mix-ups happen! We also recommend checking that your date of birth is correct. If your family has a “John Smith, Sr.” and a “John Smith, Jr.,” for example, you could be accidentally receiving your dad’s medical bill. Above all else, make sure the bill you’ve received is indeed for you.
2. Account number: This number corresponds to the specific services you’ve received, not to your overall billing account with the provider. In other words, if you see your Primary Care Physician for flu symptoms in October and then for a regular check-up in January, these two appointments will have separate account numbers. *The only exception to this is if services are grouped; for example, if you go in for the same lab test every week, then you may have one Recurring Account Number for those appointments.
3. Service date: This will be a single date or range of dates for the associated account number (or service). If you had to go to the hospital, it will be for your admission date through your discharge date. If it’s for a recurring item, like the weekly lab test mentioned above, it will cover the entire range of those dates.
4. Balance: Perhaps the most important item on your medical bill! This is the outstanding amount on the account, or for these particular services. It’s the amount left over from the medical bill after your insurance pays or has already paid their share, so it is the final amount that you owe.
5. Service: This is the classification of your care, whether it’s outpatient, inpatient, emergency, etc. Some hospitalizations are still categorized as outpatient, which will impact the costs. Emergency room visits are billed differently. A medical billing code is assigned to a diagnosis, medical test, treatment, or procedure from clinical documentation so that the government or commercial payers can be billed for physician reimbursement. Make sure that this information is correct and that you understand the medical billing code being used to represent the service you received. There are frequently errors with medical billing codes. If you spot a medical billing code error, you may be able to appeal your medical bill. A full searchable list of medical billing codes can be found here.
6. Statement Print Date: If you’ve made any payments for these services since the bill was printed, call your provider to make sure that your balance is up to date in their system--or simply wait for their billing system to catch up with your payments. This is risky! If you spot a mismatch in what you’ve paid and what is being shown as paid, it’s best to be proactive and call the provider.
7. Guarantor: This is the person responsible for paying the bill. Usually it’s the patient, but in the case of a minor or adult with a disability, it could be a parent or legal guardian instead.
8. Previous balance: This can be one of the more confusing elements of a medical bill. It’s to account for carryover from previously owed bills. It’s helpful to keep any bills you receive so
you can refer back to them in trying to understand this section. We also recommend organizing your previous bills chronologically, first by provider and then by service date. This often makes more sense than organizing them by statement or billing date, since the time it takes to bill can vary greatly. You might receive a bill for one service within a week and then a bill for another service months later. How long should you keep copies of your medical bills? We would encourage you to keep all your documentation for tax purposes. If you’re able to use them as a deduction, you should keep proof of this for seven years. If it’s less complicated, you can discard any bills after one year or when the bill has been paid and resolved completely.
9. Billed charges: This accounts for the total amount of charges billed, or the amount due before any payment is made by your insurance. It doesn’t include any copays you made at the time of service.
10. Adjustments: This amount represents the insurance carrier’s allowed amount. For example, a clinic may bill you $150 for a urinalysis, and Insurance Company A allows $45 for this test, which is what they will pay. Insurance Company B may allow $50. What your insurance allows depends on the contract arrangements the clinic has with your insurance company.
11. Patient payments: Any amount you have paid towards the bill, including your copay at the time of service.
12. Insurance payments: The amount of money your insurance carrier paid for the service.
13. Payable to: This is where you can send the payment for your outstanding balance.
We hope this guide makes understanding your medical bills easier.
While you may not have the cash in hand to pay these bills, there are some other financial options available, depending on your situation. Evaluate these options carefully along with Step 7 (Negotiate a Payment Plan).
- HSA/FSA accounts: Health Savings Accounts and Flexible Spending Accounts are typically offered through an employer. These accounts differ in several ways, but both offer great options for paying for medical expenses--with tax benefits as a bonus! If you have either of these, use this money before considering other payment methods.
- Refinance other debt: Evaluate other debt to see if it can be refinanced or a different payment arrangement can be made. One example would be student loans, which often offer flexible repayment based upon your ability to pay. If you have significant medical expenses, your ability may have changed. You may have other types of debt that offer some flexibility as well.
- 401K loans: Lots of companies have 401K loan programs, and medical bills often qualify. In order to utilize this option, you would essentially borrow money from your account and then pay it back. Assess this option carefully because you will lose the interest you would have gained on that money during the time you’re paying it back. However, depending on your situation, it may be your best option to avoid further debt.
- IRA early withdrawal: Most of us know that taking retirement money out early incurs some hefty tax penalties. Most of the time, this is a “last resort” option. However, if that money is spent on medical bills, you can sometimes avoid those penalties. Familiarize yourself with the rules or consult a tax professional before you make the move, but this can be a helpful way to avoid hardship.
