What if the Insurance Company Makes a Mistake in Calculating My Deductible?
Your deductible is the yearly amount you have to pay out-of-pocket for medical costs before your insurance benefits really start to kick in. The deductible is a key feature of a health insurance policy, and generally speaking, the lower deductible you choose, the higher your premiums, and vice versa.
When you go to the doctor’s office, you typically only pay a very small amount, like ten or fifteen dollars. This amount is known as a co-pay. While co-pays don’t count toward your deductible, they are a great cost savings to you. If the insurance company misapplies your deductible to these visits, you would have to pay a much higher amount for the visit out-of-pocket and then go through a long process to get reimbursed. If additional services are provided during a visit covered by a co-pay, those services might get billed extra, and those extra amounts would apply toward your deductible. Once your annual deductible is met, coinsurance kicks in, and the insurance company will pay anywhere from 20% – 90% of your medical bills, depending on your plan and whether the services are in or out of network.
While no one likes paying hefty doctor bills, knowing that this amount counts toward your deductible and hastens the day when your insurance will start covering 80% of your medical costs does provide some comfort as you slide over your credit card to the billing receptionist. So, finding out weeks or months after you paid for a service that the cost was not applied to your deductible can be discouraging, to say the least. Just as bad or worse, though, is having the deductible applied to a service when it should have been waived.
Now, a mistake regarding your deductible could just be a simple billing error, such as the doctor’s office using the wrong billing code, delays caused by a third-party biller, or using an out-of-network provider that doesn’t bill the insurer on your behalf. We have talked about billing errors like these in a previous post (see Billing Problems: Who’s to Blame). Resolving billing errors can be frustrating and time-consuming, but what is especially important to watch out for are intentional claim denials. For these, you need an insurance law attorney on your side to pursue your claim correctly without making mistakes that could prejudice your ability to get an important medication or procedure covered.
Insurance Errors Can Lead to Civil Lawsuits for Money Damages
What if your insurance company is going against their own policy and improperly applying the deductible? What recourse do you have? In at least one instance we know about, a policyholder sued her insurance company (Anthem Blue Cross) in Los Angeles County Superior Court for repeatedly applying a health policy deductible to services the deductible did not apply to. The lawsuit sought money damages for loss of benefits, loss of treatment, and emotional distress, as well as punitive damages. The complaint alleged that Anthem repeatedly applied the plaintiff’s doctor’s office visits toward her deductible, despite the policy (a PPO Share $5,000) expressly stating that no deductible was required for covered office visits, including office visits to a primary doctor or specialist. By applying the deductible to these visits, the plaintiff was forced to pay out of pocket and then spend countless hours on the backend getting Anthem to correct their errors, only to have to go through the whole routine again after the next office visit.
The plaintiff instituted her civil lawsuit against Anthem for these repeated mistakes and Anthem’s failure to correct their systemic problem of ignoring and not properly addressing policyholder complaints. The lawsuit alleged breach of contract and breach of the implied covenant of good faith and fair dealing, otherwise known as insurance bad faith. The breach of contract allegation was based on the fact that Anthem repeatedly applied the policy’s deductible incorrectly, in violation of its obligations under the contract. The bad faith component of the lawsuit alleged bad faith on the part of Anthem for:
- Failing to properly and thoroughly investigate claims
- Ignoring its own policy
- Misrepresenting facts and contract provisions
- Failing to address complaints properly
If you encounter insurance billing errors that you can’t resolve informally over the phone or email, document your efforts and call an experienced insurance lawyer to see if they can help. Most attorneys taking these cases will offer a free initial consultation and only charge a fee if they are successful in recovering financial benefits on your behalf.
