[GNC] Where to charge? Ins pays us, we pay vendor. Resolved

[Stephen M. Butler]

On 2/13/20 8:34 AM, Fran_3 via gnucash-user wrote:
>  This question was in regards to an individual recording a trip to the doctor in their personal GC system.What was somewhat unusual here was the medial insurance paid the patient instead of directly paying the doctor
> Here is the original scenario:1 - Doctor billed patient2 - Insurance paid patient3 - Patient paid doctor
> The attached picture shows how is was recorded in GC.Problem solved... right?
> (And yes, this probably should have been posted to some account forum for US accounting procedures. Can anyone suggest one?)

Wouldn't this be just like any other reimbursable expense?  Normally the
insurance is billed by the doctor and pays the doctor.  In some cases
the doctor may not have a relationship with the insurance company (out
of network) and may feel they need to bill the patient.  However, the
patient may have an agreement (approved referral) to have those expenses
reimbursed.

Therefore, this wouldn't be an expense to that patient.  Like any
expense you pay in relationship to your job for which you know you will
get reimbursed, you don't book it as an expense but rather put that
"split" against an asset account for reimbursement.  When paid, it
offsets that reimbursement account with the other "split" going back to
checking (for both transactions).

In cases when I don't know in advance that it will be reimbursed, I then
enter the original transaction as an expense.  When it is reimbursed
then I offset that expense account by the amount of the reimbursement. 
The net effect is that the expense account doesn't really have that
expense when all the transactions are done.


Normally when the doctor bills the insurance and is paid by them, that
portion paid by the insurance is never entered into a personal set of
books.  It is a transaction between the doctor and the insurance
company.  There may be co-pays involved in which the patient pays a
portion (10% or 20% or ...).  That portion would be booked as a medical
expense in the personal set of accounting books.

>
>     On Tuesday, February 11, 2020, 10:52:52 PM EST, Christopher Lam <christopher.lck at gmail.com> wrote:  
>  
>  Search archives for "trust accounts"
> On Wed, 12 Feb 2020, 7:34 am Fran_3 via gnucash-user, <gnucash-user at gnucash.org> wrote:
>
>  In the case at hand...The initial expanse was medical billed and billed to the patient.The insurance company sent the money for the medical bill to the patient.The patient aid the medical provider.
> So we have 3 transactions to record...1- The Medical Bill charged to AP & Med Exp2 - The Ins reimbursement charged to ?? & ??3 - The Bill Pmt charged to AP & Checking
> or what?
> Thanks for any help.
>
>     On Tuesday, February 11, 2020, 05:38:10 PM EST, Michael or Penny Novack <stepbystepfarm at comcast.net> wrote:  
>
>  On 2/11/2020 11:47 AM, Fran_3 via gnucash-user wrote:
>> When an insurance claim occurs the insurance pays us and we pay the vendor.
>> How to we charge the deposit from the insurance company and the payment to the vendor?
>> I considered setting up an Expense Account named Insurance Transactions or Insured Events or whatever...
>> Then allocating the insurance payment to that "Expense" account
>> and then allocating the vendor payment to the same "Expense" account
>> Or would you suggest just using the Insurance Payments Account where you record payments for the policy?
>> How would you guys handle such an instance?
>> Thanks for any help.
> This is an accounting question, not a gnucash question, and to really 
> know how to answer your question would need to know what conditions (or 
> lack of conditions) were attached to the payment from the insurance company.
>
> I'll perhaps need to give an example? In 2006 we had a house fire, and 
> our insurance had "replacement" coverage. So each covered thing (or 
> category) had TWO amounts associated with it. One amount was for the 
> current depreciated value assigned, the other (far higher) was if we 
> were choosing to replace. For what we opted to replace, they would give 
> us the higher amount but we had to later submit proof/receipts that we 
> had made the replacement purchase. For what we accepted the depreciated 
> value, no conditions attached to the money.
>
> And let me back off a bit. How did you do the accounting for the loss 
> for which this insurance payment is made?
>
> Michael D Novack
>

-- 
Stephen M Butler, PMP, PSM
Stephen.M.Butler51 at gmail.com
kg7je at arrl.net
253-350-0166
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