Don’t Cash That Insurance Check; It May Not Be Yours

By Linsey Knerl on 14 October 2007 comments

Did you get an unexpected payment from your insurance company? Health insurance overpayments and mispayments make up for billions of dollars in wasted funds every year. And while the majority of the payments go directly from the insurance company to the medical provider (the doctor, hospital, ambulance service, etc.), there is still a large percentage of this money being paid to patients.


How do I know that a check is mine?

First of all, it is important to know the terms of your insurance contract before taking any action with the check. Some insurance policies (including many dental and self-employed health plans), require that the patient or policy-holder receive payment, and then the policy-holder will pay the physician. Contact the physician who provided services for the claim, and be sure that the account has been settled with the insurance company. If it hasn’t, you may own them this money.

If you have already paid the service provider out of your own pocket, than the money may very well be yours. Compare the amount of the payment with any line item bills you initially received from the physician. Make sure that you received the correct amount you were due under the terms of your insurance contract before accepting payment by deposit into your bank account.


What if I know this isn’t my money?

If it’s not yours, don’t spend it! While insurance companies make millions and even billions of dollars a year in mistaken medical overpayments, that doesn’t justify theft or fraud. Contact your insurance company immediately to verify the mistake and arrange for the return of the check.


What happens if I keep it?

Your contract with the insurance company most likely requires that you willfully return any known overpayments. And while the statute of limitations on how long the insurer has to notify you varies by state (see chart here), once they have notified you of the overpayment, they usually have no limitation on how long to pursue repayment. Failure to repay may result in garnishment, legal action, and termination of your insurance policy and coverage. (It is also important to understand that insurance companies devote a great deal of resource to find and pursue overpayments. It is usually just a matter of time before they are made aware of the mistaken payment.)

The reasons for medical overpayments are many. Whether it was a miscommunication between the doctor and insurance company, an error with dates of coverage, a change in the policy, or simply a processing error that resulted in you mistakenly receiving a check, the verdict is the same. Cashing any type of insurance check that doesn’t belong to you can result in a heap of trouble.

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