Laws on Waiving Copays & Deductibles

Most health insurance plans require patients to pay a copay for services. For example, the patient must pay $10 upfront for a doctor's visit and the insurance company pays the rest of the bill. In addition, patients may have to pay out-of-pocket all costs up to their deductible on their insurance policy. Some kindhearted health care providers waive co-pays and deductibles for patients who cannot afford them. However, if a physician does this routinely, he may fall afoul of federal and state insurance fraud laws.

Routine Waiving

• In most states, it is illegal to routinely waive copays and deductibles for patients. Health care providers who do this may be charged with the crime of health insurance fraud because they are claiming the wrong amount for services when they make insurance claims. For example, if a patient has a 10 percent co-pay, the insurance company pays $90 on a $100 bill. But if the health care provider waives the copay, the patient's bill is only $90 total, not $100.

Financial Hardship

• If a patient suffers financial hardship, physicians may choose not to collect debts from them without risking allegations of insurance fraud. For example, if the physician does not charge a copay to a patient during a period of severe hardship, the physician can choose not to pursue collection activity against the patient for the copay he owes. However, physicians cannot routinely forgive debt; they must reserve this only for patients who are suffering a financial crisis or emergency.

Public Insurance

• The same laws apply to Medicare and Medicaid patients as to patients with private insurance, and the risk is greater if a physician does not comply with these laws, as the physician may be charged with fraud against a government agency. In addition, physicians must apply hardship programs to all patients -- they cannot forgive copay debt or waive copays for patients with public health insurance during times of crisis but require patients with private insurance to pay full copays regardless of their financial circumstances.

What to Do

• If a physician has a good reason for waiving a copay or failing to pursue debt collection against a patient, she should keep records of her conversations with the patient regarding this issue as evidence that she made a good faith effort to comply with the law and made exceptions only for specific reasons. In addition, health care providers should keep track of all payments and note any payment where the copay was waived as evidence that they do not waive copayments routinely.