Now that we’ve completed the basics of medical insurance, we need to talk about something related that is so, so important.  Do you keep track of your medical bills and compare them to what your insurance company says you owe before you make the payments?  This is especially important if you have a high deductible plan, as you will be personally covering most of your medical expenses and need to make sure that you’re paying the right amount.

WHEN SHOULD YOU PAY YOUR MEDICAL BILLS – COPAYMENTS & DEDUCTIBLES?

I recently saw another blogger give the tip that you should always pay your medical bill before you leave the doctor’s office, as medical bills seem to be the most common thing that gets sent to collections even without you knowing it and sometimes without you ever having received a bill.  Although I don’t agree with this statement, I have to say that medical billing can be the worst and I see why she might do this.

We had issues with our health insurance changing from an international to a U.S. plan when we first arrived back from our 4 years living in Asia, right at the time that we had appointments for the entire family (we were so excited to be able to see American doctors!).  It literally took months and months to resolve all the issues.  There was no way that I was going to pay what they said I owe based on no insurance coverage (the real amount in most cases was nothing because annual physicals and well-child checkups now legally have to be completely covered by health insurance companies) and try to get a refund for the bills later (no way!).  Unless you simply have a copay, which they generally require you to pay right then, you should wait until you receive a bill showing that your insurance company has paid its share before paying anything. Now that I have a high deductible medical insurance plan, I really don’t know what I am going to owe until I receive that bill, especially if I have additional lab fees and other tests in addition to the doctor’s fees.  However, I’ve never had a medical bill go to collections because I have a good system of tracking my medical appointments and expenses.

WHY SHOULD YOU TRACK ALL YOUR MEDICAL EXPENSES & CLAIMS?

First of all, let’s discuss the reasons why you SHOULD be tracking your medical expenses:

1. To make sure that you are paying only what you actually owe and not more.  I have a friend whose dentist’s office is trying to charge her an additional amount beyond the contracted payment that the insurance company has agreed on-watch out for this!  If a medical or dental office has a contract with a specific insurance company, they are agreeing to the fee limitations that they can charge for specific procedures and services.
2. To ensure that your records are the same as the insurance company for payments and amounts billed from medical providers.
3. To track how much you owe toward your insurance deductible and compare it to how much the insurance company says you owe toward your deductible  (similar to #2) and also your maximum out-of-pocket amount.  This ensures that all medical bills have gone through your insurance company first before you are making payment, which means lower costs for you and a limit to who how much you will be paying for the year if you have extensive medical needs.
4. For tax reasons, you may be able to take a deduction if your medical expenses are very high compared to your income.  Tax deductions always require good documentation to substantiate your numbers in the case of an IRS audit.
5. To make sure you receive all the bills that are due to you, specifically to make sure they don’t end up in collections as mentioned earlier.  In order to do this, you will need to write down every doctor appointment that you attend before you receive the bill, as explained below.

HOW SHOULD YOU TRACK YOUR EXPENSES? (HINT: A SPREADSHEET OF COURSE)

So, what has been my solution to making sure that all my medical expenses get paid every time and on time?  A spreadsheet of course.  Because you know I love my spreadsheets.

Download this spreadsheet for Excel | Google Docs.

Here’s an example of how the Smith family (from the free class financial plan class series) uses their medical expense tracker throughout the year:

To use the spreadsheet, you should copy and paste sections if needed to make sure that you are including one for every member of your family.  There are currently spaces for 4 family members, but of course, the great thing about using spreadsheets is that you can add as many as you need (or some subtract some).  Did I mention how much I like spreadsheets for this reason (and others?)?!

When you have a doctor’s appointment, simply add the information about the appointment including the doctor’s name and the reason for the visit.  Also include separately on the next line(s) if you had any lab fees or tests that may be billed separately to make sure these get included as well.  If you have something such as a hospital stay, there may be many additional bills other than just from the hospital, so just include what you are aware of at the time (for example, the anesthesiologist always bills separately).  If you have paid anything at the time of the appointment, enter it in the spreadsheet.  Most likely copays will be paid at that time, so enter them in the copay column.

When you get the explanation of benefits (EOB) from the insurance company, enter “yes” in the “EOB received?” column and make a note of the amount that the EOB says is due.  An explanation of benefits shows what the doctor or lab charged for the service, how much the insurance discount is and how much you personally owe based on your insurance coverage.  When you receive the bill from the provider, which can be before or after the EOB is received, enter the total amount due according to the medical provider.    When and only when you receive both of these documents AND if these two documents reconcile, pay the bill.  If not, you may need to contact either your insurance company or the provider, but I generally start with the medical provider as the most common reasons I’ve seen is that they have the wrong insurance on file or have billed the procedure incorrectly and the insurance company is denying the claim.

The most important thing to check is that an explanation of benefits (EOB) has been received by the insurance company BEFORE you pay any medical bill on a high deductible medical insurance plan.

After you pay your medical bills, include the method of payment and any notes that you might have about the bill.

WHAT ABOUT ORGANIZING MEDICAL DOCUMENTS?

There are great paper and digital methods for organizing your medical documents, although I definitely prefer paperless methods.  For tax purposes, these documents need to be kept for up to 7 years, so save yourself the hassle and scan them in as you go if you can.  The next time you move, you’ll thank me (right?). Otherwise, I find that just a file folder for each calendar year is fine for holding medical bills that are already paid.  Either way, you should organize your medical expenses by year and include the EOB statement, the bill from the medical provider and a copy of your payment if possible (receipt, cleared check, etc.).

As for medical bills that are currently due, I keep them in a pocket with my other unpaid bills in my Annual Budget Binder.

Any medical bills with discrepancies I keep with my immediate to-do list until they are resolved.

You are going to avoid a lot of headaches if you organize your medical bills and payments and keep track of them throughout the year.  But what I really hope for you is that you have few medical bills to organize!

Have you had to resolve any issues with medical payments going to collections?  How did you resolve them?