Richard Weaver's write up on tracking medical expenses with Quicken

I'm reposting Richard's write-up here because I'd like to make
reference to it with some questions I have and I can't seem to find a
copy googling for it to refer people to who might be able to help me.
Thanks again Richard for writing this up!
Part 1 of 2
Using Quicken to Track Medical Expense and Insurance
Reimbursements

-------------------------------------------------------------------
R Weaver
snipped-for-privacy@ix.netcom.com
2002.11.21
editorial
2002.07.28
Added: medical expenses paid with pre-tax money are not
deductable.
(a generalization of the 2001.5.6 MSA edit)
2001.12.11
Added: more detail re. secondary carrier
2001.10.21
Revised categories.
"exp" and "ins" categories have been revised, "supp"
categories were deleted. Thus insurance coverage on
non-deductable medical expense can be recorded in the same
way as for deductable expense.
Added: "When There Are Individual Limits"
2001.6.20
Added: interest to federal tax refund example
Added: "sequence of submissions" to secondary carrier
2001.5.6
Added: medical expenses paid from MSA account are not deductable
2001.3.21
Added: Secondary carrier
Added: Medicare
Added: determining itemized medical tax deduction, see "T A X E S"
N O T E S
--------------------------------------------------------------
The word "deductable" is used in two contexts: "tax deductable"
(reportable on tax forms) and "insurer deductable" (what you must pay
before insurance reimbursements begin).
And "tax deductable" means only reportable on tax forms; a tax
deduction may or may not result.
Minor editorial improvements are not noted in the list of edits above.
S U M M A R Y
----------------------------------------------------------
Medical expenses can be substantial; my requirements are to:
-- Easily verify a service provider's billings
-- Verify that medical providers are being correctly paid, either by
insurers or by myself
-- By inspection (i.e, by sight and without any, or with very
little,
work) of Quicken registers and reports, determine that
anticipated
insurance reimbursements are, eventually, correctly paid, either
to
the provider or myself. My insurance carriers reimburse 100%,
80%,
or some random %, depending on the service.
Tracking insurance reimbursements is not just a favor to medical
providers, there are financial implications for yourself. 1)
insurance companies may have cutoff dates past which claims will
not be accepted; you want to be sure that all claims are filed
and
prompt less efficient providers to correct and refile when claims
are rejected. 2) tax reporting is dependent on the year
copayments
are paid and can be dependent on the year insurance
reimbursements
are received. 3) Medicare imposes a fee on late filings. 4)
and,
of course, if the insurance carrier doesn't pay - you likely
will.
-- Verify that insurance deductible (the amount that must be paid
each
year before any insurance reimbursements will be made) is
correctly
calculated (yes, one of my carriers has even gotten that wrong).
-- Identify the medical expenses reportable on income tax forms
("tax
deductable"). See IRS Publication 502 "Medical and Dental
Expenses".
If your medical transactions are few and the above is but a few
minutes
work, then what follows is not necessary for you (although my method
does not add significant work when entering medical transactions).
Should you, however, have many medical transactions each year,
involving
multiple doctors, hospitals, and labs, then you may find my method of
some interest.
I've developed this method from 1995 through today (late 2001).
Medical
expenses tracked for those years have ranged from $22,000 to $42,000
per
year. My Quicken medical liability accounts have over 4,000 entries
for
those years; an average of 700/year. It usually takes 4 entries for a
service (expense, insurance write-off, insurance payment, my payment)
so
that's 175 medical services/year. Every other day, right?
Success has not been 100%; there are billing errors I've never gotten
corrected, insurance reimbursements I've never received, charges I've
never understood - but I've come close.
My method is:
1. For recording medical transactions:
-- a liability account for each medical provider
"account for each" is the principal. Pragmatics are otherwise.
Whatever is easiest, while still able to answer questions by
inspection. I keep El Camino Hospital, El Camino Radiologists,
El Camino GI, ... all in the same account. I also have a "Various
Medical" account for providers that are used only a few times
each
year (and to which I move entries for providers no longer used,
keeping the number of accounts down).
trivial hint: In the description field for each medical account,
put the billing phone number (and hours) so that it's on your
screen when you want to call about the account.
-- recording, as expense, the total cost of a medical service on the
service date (as opposed to recording the amount billed to me on
the date billed)
-- recording all payments to a provider with the service date (as
opposed to the date payment was made)
-- recording all activity for a provider in the provider's account
(for example: an insurance reimbursement sent to me is recorded
in
the provider's account, followed by a transfer to the account I
deposited the reimbursement in)
-- categorizing insured medical expenses by the expected insurance
reimbursement percentage. Insurance reimbursements are
categorized
matching the expense categorizations.
categorizing medical expenses as tax deductible or not.
Examples of categories are (my complete list is in the later
details)
expN expense not insured, not deductible
expT tax expense not insured, tax deductible
expT80 tax exp. insured, anticipated 80% insurance
reimburse.
insT80 tax insurance reimbursement, 80% of expense less
any write-off
Note: Insurance reimbursements are "expense", not "income".
categories. They are not part of taxable income (if you
are
careful; see the later section on taxes), they serve only
to
offset expense. They are "negative expense", if you will.
-- using class to identify tax deductable amounts that are paid in a
different year than the service date year.
2. Utilizing the register for a providers account to verify the
provider's statement.
This can be done by inspection as each service date will, when all
transactions have been entered, show a zero balance in the Quicken
register. Well, usually by inspection -- some provider's statements
are
so convoluted (and so infrequent) that verification is a major
project.
(Verification is an important step; we have been billed for services
on
dates when we were out of town, we have been billed for -- and our
insurance initially reimbursed for -- services performed on other
people. Noting medical services in your calendar, diary, Day-
Timer, ...
provides a good reference)
An example of the entries in Dr. Bones register for one service is:
date category Payee memo Increase Decrease
Balance
1/01 expT80 Dr Bones 300
300
1/01 insT80wo Dr Bones 100
200
1/01 insT80 Dr Bones 2/10 160
40
1/01 [check] Dr Bones 3/05 1234 40
0
On 1/01 there was a service, tax deductable, cost $300, for which an
80%
insurance reimbursement was anticipated. On 2/10 the insurer:
accepted
only $200 of cost ($100 write-off) and processed a $160 reimbursement
(80%) to Dr Bones. On 3/05, I wrote check 1234 for $40, the balance
for
that service, to Dr Bones.
3. Utilizing Quicken reports (examples later) to:
-- check insurance reimbursements
-- identify and age unpaid services
T H E A C C O U N T R E G I S T E R
-------------------------------
I begin with a small scenario and, in a series of steps, refine the
Quicken entries to what I find to be an adequate methodology. I
actually went through a similar process, revising my early medical
entries three times. The steps presented here are intended to be a
logical progression; my own experience was less organized.
--------------------------
The scenario (year omitted from dates, mm/dd):
1/01 see Dr Bones, charges are $300. Anticipate 80% insurance.
1/31 receive stmt from Bones
1/01 service $300
balance $300
2/01 see Dr Bones, charges are $100. Anticipate 80% insurance.
2/02 see Dr Bones, no charge
2/10 letter from insurance company re 1/01: $200 of expense meets
annual deductible. For remaining $100, 80% ($80) payment has
been sent to Dr Bones.
2/28 receive stmt from Dr Bones
prior bal $300
2/01 service 100
2/12 ins pay 80-
balance 320
3/05 send Dr Bones $220 payment (the balance of 1/01 service)
3/07 see Dr Bones, charges are $150. Bones asks for immediate payment
so I use Visa credit card to pay $150. Anticipate 80% insurance.
3/09 letter from insurance company re 2/01: Insurer's rate for service
is $90 and is covered at 100%. Doctor has to absorb $10
reduction.
Check for $90 enclosed and made out to me (not Doctor). Deposit
check to my checking account.
3/10 stop at Dr Bones office to pick up WhoopeeVit, expense $10.
Bones
recommends for hangnails. Pay immediately, using credit card.
3/15 see Dr Bones, charges are $200. Anticipate 80% insurance.
3/31 receive stmt from Dr Bones
prior balance $320
3/06 paid 220-
3/07 service 150
3/07 paid 150-
3/09 writeoff 10- (Bones got the EOB and knows about the
$10 reduction, but I got the $90
check)
3/10 WhoopeeVit 10
3/10 paid 10-
3/15 service 200
balance 290
--------------------------
I know that I must have a liability account for each provider,
recording
both the provider's charges and all payments to meet my goal of using
the Quicken register to verify the provider's billing.
Now I can record the scenario's transactions. I will use only one
category, "expense: medical". The posts are to a liability account
for
Dr Bones (I've not shown the other side of transfer entries). "Date"
is
the date of service or payment. This is about how I first started
using
Quicken for medical services.
date category Payee memo Increase Decrease
Balance
1/01 medical Dr Bones 300
300
2/01 medical Dr Bones 100
400
2/02 medical Dr Bones 0
400
2/10 medical Insurance 80
320
3/05 [check] transfer fr chk 220
100
3/07 medical Dr Bones 150
250
3/07 [visa] transfer fr visa 150
100
3/09 medical Insurance write-off 10
90
3/09 medical Insurance 90
0
3/09 [check] transfer to chk 90
90
3/10 medical Dr Bones WhoopVit 10
100
3/10 [dis] transfer fr dis 10
90
3/15 medical Dr Bones 200
290
Well, it is all there. But I can only answer one question, "Is the
provider's statement correct?". To answer questions about "have
insurance reimbursements been made?", "how much is tax deductible",
and
"have we paid our part", by inspection, I need to make some changes.
Instead of using transaction date to record entries, I will record all
entries by service date.
The memo field is used for an audit trail. For expense and insurance
entries, record the date of the source document (usually the EOB or
provider's statement). For check payments, record the check date and
the check number (the check number field is visible in the check
register but not in the medical account side of the Quicken transfer;
having the check number in the memo field is convenient when comparing
a
medical account register to a provider's statement or when printing a
copy of the medical account register to send to the providers billing
dept. - sometimes an easy way to resolve problems). For credit card
payments, record the date of payment. And, of course, record anything
else that might help.
Use a consistent style for memo date entries: mm/dd if the year is
the
same as the service date year, mm/dd/yy, if the year is different.
Makes it easy when reviewing services where payment was made in a
different year (see Taxes, below).
The revised entries, recorded by service date, are:
date category Payee memo Increase Decrease
Balance
1/01 medical Dr Bones 2/10 300
300
1/01 medical Insurance 2/10 80
220
1/01 [check] transfer fr chk 3/05 1234 220
0
2/01 medical Dr Bones 3/09 100
100
2/01 medical Insurance 3/09 write-off 10
90
2/01 medical Insurance 3/09 90
0
2/01 [check] transfer to chk 3/09 90
90
2/02 medical Dr Bones 2/02 0
90
3/07 medical Dr Bones 3/07 150
240
3/07 [visa] transfer fr visa 3/07 150
90
3/10 medical Dr Bones WhoopVit 10
100
3/10 [dis] transfer fr dis 3/10 10
90
3/15 medical Dr Bones 3/15 200
290
I can now determine the service dates contributing to final account
balances by inspection. Eventually every service date will end with a
zero balance. Service dates that have a different balance than at the
end of the prior service, have an outstanding balance that is part of
the final balance.
- 1/01 is what I want each service date to eventually look like:
service followed by payments, ending with a zero balance.
- 2/01 has not been fully paid; the 90 ending balance is not the
same
as the prior (0) balance.
- 3/07 is paid; the 90 ending balance is the same as the prior
(2/02) balance.
So, by inspection I can see that for 2/01 I owe Dr Bones $90 (the
insurance reimbursement that was sent to me) and for 3/15 I am waiting
for the insurance reimbursement.
But have all the anticipated insurance reimbursements been made? For
example: while 3/07 is paid from the providers view, does the insurer
owe me money? And how much is tax deductible?
Now I am ready to discuss categories. Instead of just "medical", I
will
categorize medical expense entries by the kind of insurance
reimbursement expected and whether or not tax deductible. Similar
categories will be used for insurance reimbursements.
Some "exp" and "ins" category names are constructed from 3 parts:
"exp" or "ins" - expense or insurance reimbursement
"T" or "N" - tax deductable or not
blank, 80, 100, var
- the 80,100,var indicate insurance percentages
(var=various). You should choose percentages
meaningful for your particular carriers.
Just add to your category list the combinations you are likely to use.
My list of "expense:medical" subcategories is:
Expense
Medical
empcon tax employee "contribution" to company medical
plan
expTdedA tax insurer A deductible (replace "A" with name)
expTdedB tax insurer B deductible (replace "B" with name)
expTdedoffset tax Offsets any duplicate expTded...
milageT tax milage deduction. See 1040 for rate/mile
milageoffset offsets milage deduction
LTHC tax Long Term Health Care Insurance premium
LTHCReimbu tax LTHC premium reimbursement
MedicareB tax Medicare B insurance premium
MedicareBReim tax Medicare B reimbusement (some employers do)
otherreimb tax other reimbursements (provider write-offs of
small balances are an example)
rxcopay tax Rx copayments, there is no insurance
reimburse.
expT tax not insured, tax deductible
expN not insured, not deductible
expT80 tax exp. insured, anticipated 80% ins. reimburse.
insT80 tax insurance reimbursement, 80% of expense
insT80wo tax insurance write-off, remainder will be at 80%
insT80Estimat tax ins to be paid, we hope (see tax section)
expN100 not deduct., anticipated 100% ins. reimburse.
insN100 insurance reimbursement, 100% of expense
expT100 tax exp. insured, anticipated 100% ins.
reimburse.
insT100 tax insurance reimbursement, 100% of expense
insT100wo tax insurance write-off, remainder will be at
100%
ins100Estimat tax ins to be paid, we hope (see tax section)
expTvar tax exp. insured, anticipated various% ins. pmnt
insTvar tax insurance reimbursement, various% of expense
insTvarwo tax insurance write-off, remainder will be at var
%
insTvarEstimat tax ins to be paid, we hope (see tax section)
Not as long a list as it appears - once you understand the pattern for
"exp" and "ins" categories - and that your category list need include
only those you will use.
You may have additional or different medical categories, taxable or
not,
depending on your particular case and your insurer's reimbursement
schedules. The "tax" indication of some of the above may not be
correct
for your particular case. Read IRS pub 502. For some plans LTHC
reimbursement may be classified for tax purposes as Miscellaneous
Income
(1040 line 21). Read IRS pub 502 again. Read your 1099s. Read this
paragraph again.
While some categories are coded as tax deductible, what is really
deductible is the net - what you pay, expense minus insurance
reimbursements minus other payments. And it is deductable in the year
paid, not the service year (Quicken classes are used to get correct
tax
totals for a year, see below)
In the revised example below the 1/01 entry has been divided into two
entries, one for the insurance deductible part and one for the 80%
paid
part. This division would be done when the insurance EOB is received,
not at the time of service (at the time of service, or from the
medical
provider's statement, it would not be known which submitted claims
would be used to satisfy the insurance deductible).
All entries now have "Dr Bones" as Payee. This is necessary for the
summary reports by payee that will be used when matching expense to
insurance reimbursements. We still still know which entries are
insurance reimbursements (from category) and can, if ever necessary,
determine which insurer by reference to the EOB (we did put the
statement date in the memo field).
The revised entries, with new categories, are:
date category Payee memo Increase Decrease
Balance
1/01 expTdedA Dr Bones 2/10 200
200
1/01 expT80 Dr Bones 2/10 100
300
1/01 insT80 Dr Bones 2/10 80
220
1/01 [check] Dr Bones 3/05 1234 220
0
2/01 expT80 Dr Bones 3/09 100
100
2/01 insT100wo Dr Bones 3/09 10
90
2/01 insT100 Dr Bones 3/09 90
0
2/01 [check] Dr Bones 3/09 90
90
2/02 expT80 Dr Bones 2/02 0
90
3/07 expT80 Dr Bones 3/07 150
240
3/07 [visa] Dr Bones 3/07 150
90
3/10 expN Dr Bones WhoopVit 10
100
3/10 [dis] Dr Bones 3/10 10
90
3/15 expT80 Dr Bones 3/15 200
290
That's the final register, the basis for everything that follows.
C H E C K I N G I N S U R A N C E R E I M B U R S M E N T
--------
How do I check, other than by going through each provider's account
service date by service date, that all insurance reimbursements have
been made? I use three (memorized) Quicken Summary reports (for 100%,
80%, various%)
-- Select all accounts
-- For the 100% report: categories expN100, expT100, insT100wo,
insT100, insN100
For the 80% report: categories expT80, insT80wo, and
insT80.
For the various% report: categories expTvar, insTvarwo, insTvar,
and otherreimb
-- define rows to be payee
-- define columns to be category
If you have been making ins...Estimat entries in anticipation of tax
calculations, you likely want to include those categories as well.
Assume today's date is 5/31. I expect most services through 3/31 to
have been processed by the primary insurer.
The 100% report for the example, through 3/31, shows
INC/EXP INC/EXP INC/EXP ... INC/
EXP
EXPENSE EXPENSE EXPENSE ...
EXPENSE
Medical Medical Medical ...
Medical
Payee Desc expT100 insT100 insT100wo...
total
Dr Bones 0 90 10
100
Curiously there is a 100% insurance reimbursement but no corresponding
expense. Looking at Dr Bones register, above, for insT100entries I
find
2/01
2/01 expT80 Dr Bones 3/09 100
100
2/01 insT100wo Dr Bones 3/09 10
90
2/01 insT100 Dr Bones 3/09 90
0
2/01 [check] transfer to chk 3/09 100
100
where I anticipated 80%, but payment was actually 100%. I should have
caught that when entering the insurance reimbursement (but this
example
is better since I didn't). Deciding that I agree with the insurer
(else
I would call), 2/01 is corrected to
2/01 expT100 Dr Bones 3/09 100
100
2/01 insT100wo Dr Bones 3/09 10
90
2/01 insT100 Dr Bones 3/09 90
0
2/01 [check] transfer to chk 3/09 100
100
Running the 100% report again
INC/EXP INC/EXP INC/EXP ... INC/
EXP
EXPENSE EXPENSE EXPENSE ...
EXPENSE
Medical Medical Medical ...
Medical
Payee Desc expT100 insT100 insT100wo...
total
Dr Bones 100 90 10
0
and I now know that, through 3/31, all expected 100% insurance
reimbursements have been made for all medical accounts.
Running the 80% report, through 3/31 (and after the correction of the
2/01 entry):
INC/EXP INC/EXP INC/EXP ... INC/
EXP
EXPENSE EXPENSE EXPENSE ...
EXPENSE
Medical Medical Medical ...
Medical
Account Desc expT80 insT80 insT80wo...
total
Dr A 100 72 10
18
Dr B 0 0 0
0
Dr Bones 450 80
0 ...
For the time period covered by this report, 80% of Dr. A's expenses
(those expenses less write-off for which 80% insurance reimbursements
were anticipated) have been reimbursed by the insurer. Dr B had no
"80%" expenses.
For Dr. Bones I expect insT80 to be ($450 - 0) x 80%, or $360, but I
only have $80. There are $360 - $80, or $280, of anticipated
insurance
reimbursements. This report would prompt me to make some inquiries
about the aging insurance obligation for Dr. Bones.
The various% report does not have a simple test; its results must be
accepted or investigated on a claim by claim basis.
W H E N T H E R E A R E I N D I V I D U A L L I M I T S
-------
Insurance carrier's plan can contain limits/maximums, such as:
250/750 deductable for individual/family
2000/5000 maximum out-of-pocket for individual/family
If you choose to track these limits/maximums, you will need:
- separate accounts for each doctor/patient combination. For
example, instead of "Dr Bones" account, you will need
"Dr Bones His" and "Dr Bones Hers" accounts.
- separate categories for transactions not recorded in an
individuals
medical accounts. Principally "rxcopay" becomes "rxcopayhers",
"rxcopayhis", "rxcopayson", etc.
The obvious reports, selecting accounts and categories, can then be
used
to track limits.
"Class" can be used instead. I choose to use separate
accounts/categories as, for me, it is the minimal effort when entering
transactions.
C H E C K I N G A G I N G U N P A I D S E R V I C E S
------------
Use a Quicken Summary report, select medical accounts, payee (rows),
months (columns), and all categories, to identify aging unpaid
services
For example:
Medical Payees: net by Month
1/1/96 Through 4/14/96
4/14/96 Page
1
Selected Accounts

OVERALL
Payee Description 1/1/96 2/1/96 3/1/96 4/1/96
TOTAL
Dr Dear -15 15 0 0
0
Dr Doe 0 -20 0 0
-20
Dr Cat 0 0 -238 -1,500
-1,738
For Dr Dear it appears that $15 in 1/96 expenses was recorded as paid
in
2/96, an error in not using the service date for the payment.
Inspection of the register for Dr Dear's account will verify this.
The
payment entry dates can then be corrected.
Dr Doe, for 2/96, had $20 more in expenses than in payments. At 3
months old and a small amount it is likely a service partially paid by
insurance with the balance not yet paid by me.
Dr Cat shows "in progress", recent services likely have not yet been
billed to me or processed by the insurer. No action is required.
A useful Quicken Graph: select net worth graph
medical accounts
This graph shows medical account balances for the selected range of
months. Current, and recent, months have large "in progress" balances
while older months have smaller, eventually zero, balances (an effect
of
recording payments by service date). That account balances are, or
are
not, aging is easy to see.
M E D I C A R E
-------------------------------------------------------
Assume a service of $60, Medicare allowed amount $50, Medicare
payment of 80% of 50 = $40. The entries depend on whether or not the
provider accepts Medicare Assignment (shown on the EOB).
Accepts Assignment (and Medicare sends check to provider):
date category Payee memo Increase Decrease
Balance
7/17 expT80 Dr Skull 8/11 60
60
7/17 insT80wo Dr Skull 8/11 10
50
7/17 insT80 Dr Skull 8/11 40
10
7/17 [check] Dr Skull 8/18 1234 10
0
Does Not Accept Assignment, paid in full at time of service (and
Medicare sends check to you):
7/17 expTvar Dr Skull 7/17 60
60
7/17 [check] Dr Skull 7/17 1234 60
0
7/17 insTvar Dr Skull 8/11 40
40
7/17 [check] Dr Skull 8/11 40
0
Part 2 of 2
S E C O N D A R Y I N S U R A N C E C A R R I E R S
----------------
For a specific claim the primary carrier is the carrier that processes
the claim first, the secondary carrier processes it second. We think
of
our carrier "ABC HMO" as our primary carrier, or "DEF Co" as our
secondary - but those designations are for a specific time and not
fixed
for the year (and that is why the "expded..." categories are for
specific carriers rather than labeled expdedPri, expdecSec). Suppose
ABC HMO is your only, thus primary carrier, and you turn 65 in June.
June and after Medicare is your primary and ABC HMO is now your
secondary. But if your spouse is not yet 65, then ABC HMO is still
primary on spouse's claims.
For a secondary carrier, record:
- amounts applied to that carrier's deductible (expded...). It is
important to submit claims to both carriers until deductibles are
met, even when the secondary carrier will make no reimbursement on
the claim, so that when there is a later claim that should result
in
reimbursement, that claim does not go to meet deductible instead.
Also enter an expTdedoffset for the same amount as the second
carrier's expded... entry duplicates expense already recorded for
the primary carrier.
- any additional insurance reimbursement for the claim. Useing the
"insTvar" category, or other categories as appropriate.
Examples:
For use in the following examples, the original Dr Bones 1/01 exp...
and
ins... transactions are:
date category Payee memo Increase Decrease
Balance
1/01 expTdedA Dr Bones 2/10 200
200
1/01 expT80 Dr Bones 2/10 100
300
1/01 insT80 Dr Bones 2/10 80
220
Suppose we submit that 1/01 $300 claim as the 1st claim of the year to
a
secondary carrier with a $250 deductible. That carrier applies $250
to
deductible and makes no other reimbursement. We record the 2nd
carriers
deductible and offset it so as not to affect Dr Bones totals. The
additional entries are:
1/01 expTdedB Dr Bones 4/20 250
470
1/01 expTdedoffset Dr Bones 4/20 250
220
Suppose we submit that 1/01 claim as the 1st claim of the year to a
secondary carrier with a $150 deductible and that carrier calculates a
$120 benefit, reduces it by the $80 already paid by Medicare, makes a
$40 reimbursement. As before, we record the deductible and offset.
The
additional insurance reimbursement is recorded as "insvar" (we have
already recorded all of the expense with the entries for the primary
carrier). The additional entries are:
1/01 expTdedB Dr Bones 4/20 150
370
1/01 expTdedoffset Dr Bones 4/20 150
220
1/01 insTvar Dr Bones 4/20 2nd carrier 40
180
Later in the year, after deductibles have been met, a $40
reimbursement
from a secondary carrier could be entered with just:
4/01 insTvar Dr Bones 9/04 2nd carrier 40
180
My secondary states "If a doctor doesn't accept assignement, we allow
a
charge of up to 115% of the Medicare allowed charge and will pay the
difference between the Medicare payment and 80% of the allowed charge"
(so that my copayment is at most 20%). Consider a doctor office vist,
$100, doesn't accept Medicare assignment, and I pay $100 at the
office.
Medicare allows $87 and reimburses me $71. In this example, 115% of
87
is more than 100 so the full amount is allowed, and my secondary will
reimburse $9 for a total reimbursement of $80 and copayment of $20.
After the office visit I enter:
1/01 expT80 Dr Bones 1/01 100
100
1/01 [check] Dr Bones 1/01 1234 100
0
When the Medicare EOB is received:
1/01 insT80 Dr Bones 2/12 Medicare 71
-70
1/01 [check] Dr Bones 2/17 71
0
When the secondary's EOB is received:
1/01 insT80 Dr Bones 3/18 Secondary 9
-9
1/01 [check] Dr Bones 3/24 9
0
Sequence of claims submitted to secondary re carrier deductables:
In general (I've not surveyed how all secondary carriers work - thus
the
weasel words) the secondary calculates what the secondary would
reimburse and then reduces that by the amount reimbursed by the
primary.
Suppose that both carriers have a $100 deductable and you have January
and February claims of $100 each. If claims are submitted in calendar
sequence to both carriers, then
1. Jan claim to primary: applies deductable, reimburses $0
2. Jan claim to secondary: applies deductable, reimburses $0
3. Feb claim to primary: reimburses $80
4. Feb claim to secondary: reimburses $0 (as primary has reimbursed
$80)
But change the sequence, submitting the February claim as the first
claim to the secondary:
1. Jan to primary: applies deductable, reimburses $0
2. Feb to primary: reimburses $80
3. Feb to secondary: applies deductable, reimburses $0
4. Jan to secondary: reimburses $80 (as primary has reimbursed $0)
Thus each carrier pays on claims the other carrier applied to
deductable.
To make this happen:
1. At the beginning of year tell providers not to submit to secondary
(better, tell them you have NO secondary).
2. When you have recieved EOBs from primary showing that deductable
has been met, tell providers to again submit to secondary.
3. When you have received EOBs from secondary showing that deductable
has been met, submit those claims withheld at step 1.
M I S C. S T U F F
---------------------------------------------------
That insurance deductibles have been correctly met can be checked with
category totals.
Milage for medical purposes is generally tax deductible. The register
provides a count of trips to Dr Bones (if you were curious why the
2/02
"no charge" was entered in the register, now you know) and at year end
I
make two entries in Dr Bones register (these could be in another
register, but I prefer to see them in the same register -- there is
less
chance for error).
date category Payee memo Increase Decrease
Balance
12/31 milageT Dr Bones 6 trips, 20m 10.80
10.80
12/31 milageoffset 10.80 0
With the two entries, Dr Bones account balance is unchanged yet tax
reports will show the 10.80 deduction. And when reviewing Dr Bones
register I know the milage deduction has been entered (I don't have to
search some other account).
What if I write one check for two or more service dates. Or one
insurance reimbursement covering two or more? I handle these in any
of
the following ways:
-- Suppose check number 1234 is for 5/15 and 5/25 services.
In the checking account, I record two entries with duplicate
check
numbers (Quicken allows this, after a warning). And in the
earliest date I put the total amount in the memo field.
date category Payee memo Inc Dec
Bal
5/15 [Bones] 1234 transfer 7/2 1234 total $a+b $a
5/25 [Bones] 1234 transfer 7/2 1234 $b
Thus each service date has a complete record of payments. At
check
reconciliation time, the two checks 1234 are listed together,
their total matching to 1234 on the bank statement.
-- If a medical account regularly has multiple transactions in one
month and a single billing (example: an allergy doctor) then I
enter a monthly payment using the last service date for each
month
and indicate in the memo field both the service dates and the
transaction date "6/10 1234 5/1,8,15,23,30". Such an account
shows a zero balance only at the last transaction of each month.
-- If an account has an immediate payment for every service
(example:
an account used for prescriptions) then I submit one insurance
claim for each month and, as before, enter the insurance
reimbursement using the last service date and recording both the
range of service dates and the transaction date in the memo
field.
The prescription account register is different from most other
registers: each service is immediately followed by a credit card
transfer payment and each insurance reimbursement is immediately
followed by a transfer of that reimbursement to checking.
Note: the prior paragraph was written when I paid the full
amount
for prescriptions and submitted insurance claims. Now I make
only a copayment. That payment is recorded in the appropriate
charge, cash, or checking account, category:RxCoPay, and no
other
entries are needed.
T A X E S
--------------------------------------------------------------
I AM NOT A TAX PROFESSIONAL (so I might/likely have it wrong).
I am not a tax professional (SO I MIGHT/LIKELY HAVE IT WRONG).
THIS IS MY READING OF IRS PUBLICATIONS AND HOW I DO IT.
THIS IS NOT COMPLETE; THERE ARE TOPICS NOT ADDRESSED
-- THE AUTHORITATIVE SOURCE IS THE IRS --
There is a lot here about taxes rather than about Quicken. I can't
separate the two; the Quicken entries are because of taxes so I end up
describing both.
If you are not itemizing deductions because the standard deduction is
"better" read the "Comment on Grouping Deductions".
If you are not itemizing medical deductions because of the 7.5% AGI
restriction, read the "Comment on Grouping Medical Deductions".
If after reading those sections you are still not itemizing medical
expense then skip the rest.
If you, or your spouse, will be age 65 next year, observe that
checking
boxes on 1040 line 37 increases your standard deduction; thus in the
current year you need to be comparing next year's estimated itemized
deductions to next year's increased standard deduction as you may want
to begin grouping deductions this year.
Excerpts from IRS pub 502:
What Expenses Can You Include This Year?
You can include only the medical and dental expenses you paid
this
year, regardless of when the services were provided.
You can include medical expense your charge to your credit card
in
the year the charge is made. It does not matter when you
actually
pay the amount charged.
You cannot deduct qualifed medical expenses as an itemized
deduction if you pay for them with a tax-free distribution
(Cafeteria plans) (also see Medical Savings Account, MSA,
Pub 969)
Insurance Reimbursement
You must reduce your total medical expense for the year by all
reimbursements for medical expense that you receive from
insurance or other sources during the year.
If you are reimbursed in a later year for a medical expense you
deducted in an earlier year, you must report as income [1040
line
21] the amount you received from insurance or other sources that
is equal to, or less than, the amount you previously deducted as
medical expense. However do not report as income the amount ...
that did not reduce your tax for the earlier year. ...
So, medical payments for tax deductions are determined by the year
payment is made, while, using Quicken as I do, medical payments are
recorded by service date.
I use a class to identify a medical payment where the tax year is
different than the service date year. Indeed, I use the tax year for
the class. That class must be used on all entries for that service.
It
is the exp... and ins... categories that carry the taxable, or not,
indicator (and it's those categories that we have so carefully managed
in the sections above). When class is added to payments entries as
well, Quicken reports can be used to verify that all records for a
service have the same class (the class total will be zero - I've been
know to make a mistake and like to be able to check my work). Most
medical entries will not need a class as the service date and payment
dates are for the same year (i.e., I don't have to do much work to get
it right).
Should there be insurance reimbursements to report on line 21, assign
a
class such as taxyearL21, "2001L21" for example, to that insurance
reimbursement entry.
To help calculate the medical tax deductable for a year use a summary
report, row=class, column=year, of medical tax deductible categories
for
all years. That report looks something like
transaction-year
class description 1998 1999 2000 2001
1998 0 0 0 0
1999 -55 0 0 0
2000 0 -123 0 0
2001 0 0 -234 0
2001L21 0 0 55 0
9999 0 0 -10 0
other ... ... ... ...
OVERALL TOTAL -4567 -4789 -5432 -678
The tax deductable medical expense for the year 2000 tax filing is:
5432 tax deductible total for the calendar year 2000 service dates
+ 123 tax deductible for 1999 service dates paid in the year 2000
- 234 tax deductible for 2000 service dates paid in the year 2001
+ 55 insurance payment received in 2001 for expense paid in 2000
and deducted on 2000 tax return
- 10 tax deductible for 2000 service dates paid in the year 2000
that we choose to not deduct (see Example 6 below)
- ? year 2000 medical expense paid with pre-tax money. Look at
the Quicken account for your FSA or MSA to determine
distributions you received for year 2000 medical expense.
(this assumes you didn't make Quicken entries to
reclassify the FSA distribution amount as non-deductable)
-----
? total tax deductable medical expense for 2000
The 2001L21, $55, must be reported as income on 1040 line 21 for the
2001 tax year.
Just a little detail left - getting those classes on the appropriate
entries.
Tax free distributions that must reduce tax deductable amounts can be
accomodated by including in the calculation of your medical tax
deduction for the year (above), or by making two entries that
effectively recategorize deductable to non-deductable. For example:
12/31 expT FSA reimbursements -800
12/31 expN FSA reimbursements 800
Please read the following cases and examples in sequence, even if the
particular case or example doesn't apply to you, as text in examples
is
not repeated in later examples.
Case 1: Medical deductions itemized every year; the only concern is
getting it right and not having to record insurance reimbursements on
1040 line 21.
Example 1: On 1/20/01 we receive an EOB, stmt date 12/28/00, for a
service dated 12/10/00. Having made no previous payment for this
service we write a check to the provider (a 2001 payment) for the
copayment and make the following entries:
date category Payee memo Increase Decrease
Balance
12/10 expT80/2001 Dr Bones 12/28 300
300
12/10 insT80/2001 Dr Bones 12/28 240
60
12/10 [check]/2001 Dr Bones 1/20/01 1234 60
0
While the tax deductible expense (exp minus ins, 300 - 240 = 60) will
be
in the calendar year 2000 totals, it will also be in the class 2001
totals and thus we subtract it when calculating the tax year 2000
medical deduction (and will add it when calculating the year 2001).
Example 2. Saw the doctor 12/10/00, made a copayment at that time
expecting 80% insurance, now its April 15 and time to file taxes, but
the insurance reimbursement hasn't arrived. Entries, from 12/10/00
are:
12/10 expT80 Dr Bones 12/10 300
300
12/10 [check] Dr Bones 12/10 1234 60
240
Make the following entry
12/10 insT80Estimat Dr Bones 4/15/01 240
0
ins...Estimat entries are temporary; they will be replaced by actual
insurance reimbursements (you can check with an itemized category
report). With the ins...Estimat entry, the medical deduction
calculated
for this service is 300-240=60, which is the payment that was made.
If you have no idea as to what, if any, insurance reimbursement will
be
made, see Example 6 below.
With the ins...Estimat entries:
-- the exp... less ins... totals match the amount paid, which is
the
correct medical deduction amount.
-- the year's totals (which you use as you work on tax filing and
budget planning for this year) don't keep changing as those last
insurance payments dribble in.
-- you've identified all outstanding insurance claims and just might
choose to call providers/insurers if processing lags.
When insurance is later received, revise the ins...Estimat entry to
12/10 insT80 Dr Bones 6/01/01 240
0
Example 3: Saw the doctor 12/10/00, didn't make a copayment, did enter
the expense, and now its April 15 and time to file taxes. The entry
made 12/10 looks like:
12/10 expT80 Dr Bones 12/10 300
300
Since payment will be in the year 2001, change this entry to:
12/10 expT80/2001 Dr Bones 12/10 300
300
Thus it will be subtracted when the year 2000 medical expense is
calculated. Later entries for this service must include the 2001
class.
Example 4: Saw the doctor 12/10/00, paid in full and now its April 15
and time to file taxes. The entries made 12/10 looks like:
12/10 expT80 Dr Bones 12/10 300
300
12/10 [check] Dr Bones 12/10 1234 300
0
Make the following entry
12/10 insT80Estimat Dr Bones 4/15/01 240
-240
This is the same as example 2 except for paying the full amount
instead
of just the copayment. With the addition of the insT80Estimatthe
medical deduction calculated remains $60, even though $300 was paid,
thus avoiding having to report $240 on 1040 line 21 for the 2001 tax
year filing. (tax codes specify the maximum you can deduct, tax codes
do not require you to deduct anything, we choose to not deduct the
$240
- even though it was paid in 2000 and qualifes as medical expense - so
that we do not have to report next year's insurance reimbursment as
line
21 income).
Case summary: When making a payment for a prior year service include
payment year class on the entries for that service. Prior to tax
calculation, examine accounts with nonzero balances and use reports to
find providers service dates with missing payments or insurance
reimbursements in the tax calendar year. If payment was made but no
insurance reimbursement received, add an ins...Estimat entry (or class
"999") for tax deduction calculation. If payment was not made, add a
class to move expense and insurance (if any) to the next calendar
year.
Case 2: Grouping deductions.
Example 5: On 12/30/00 visit the allergy doctor for a shot. We know
charge will be $30, 24 paid by insurance and 6 by us. As this is a
year
we are deducting medical, and will not deduct next year, we want the
payment made this year. So we write the doctor the $6 check before
leaving the office and make the following entries:
12/30 expT80 Dr Bones 12/30 30 30
12/30 insT80Estimat Dr Bones 12/30 24 6
12/30 [check] Dr Bones 12/30 1235 6 0
When an EOB is received, stmt date 2/5/01, the insT80Estimatentry is
revised to:
12/30 insT80 Dr Bones 2/5/01 24 6
Example 6: On 12/30/00 visit the doctor, charge $30. We have no idea
how much, if any, will be paid by insurance. As this is a year we are
deducting medical, and will not deduct next year, we want the payment
made this year. So we write the doctor a $30 check before leaving the
office and make the following entries:
12/30 exp80/9999 Dr Bones 12/30 30 30
12/30 [check] Dr Bones 12/30 1235 30 0
When, eventually, an insurance reimbursement is received for $24,
remove
the 9999 class and make the following entry:
12/30 insT80 Dr Bones 6/5/01 24 -24
12/10 [check] Dr Bones 6/25/01 refund 24 0
Why the "9999" class? What's going on here? To keep the deduction in
2000, we paid the full amount. Suppose tax filing time arrives
before
the EOB is received. If the "9999" class had been omitted, the $30
expense, paid in 2000, would be claimed as a deduction and the
insurance
reimbursement received in 2000 would have to be reported as Line 21
income. To avoid that, the "9999" class identifies this as expense
that
is not to be claimed until the EOB is received.
If the EOB is received before tax filing, the result is a normal case
and expense less insurance is included in medical deductable.
If the EOB is received after tax filing, then you must file an amended
return to claim the expense less insurance as a deductable (we've
taken
advantage of IRS rules that you can file an amended return for a
missed
deduction - and avoided having to list the insurance reimbursement as
line 21 income).
Example 7: On 12/30/00 visit the allergy doctor for a shot. We know
charge will be $30, 24 paid by insurance and 6 by us. As this is a
year
we are not deducting medical, and will deduct next year, we want the
payment made next year. So we do nothing until the EOB is received
next
year and then make the following entries
12/30 expT80/2001 Dr Bones 2/5/01 30 30
12/30 insT80/2001 Dr Bones 2/5/01 24 6
12/30 [check]/2001 Dr Bones 2/5/01 1235 6 0
Case Summary: As you would expect, the entries are similiar to those
made by someone itemizing every year; the difference is that you are
deciding which year to make the payment.
When making a payment for a prior year service include payment year
class on the entries for that service. Prior to year end (while there
is still time to make payments), examine accounts with nonzero
balances
and use reports to find providers service dates with missing payments
or
insurance reimbursements in the tax calendar year. If payment was
made
but no insurance reimbursement received, add an ins...Estimat entry
for
correct tax deduction calculation. If payment was not made and
medical
expense is being deducted this year, make a payment, record the
payment
and, if no insurance reimbursement, add an ins...Estimat entry. If
payment was not made and medical expense will be deducted next year,
add
a class to move expense and insurance (if any) to the next calendar
year.
Case 3: A deduction not claimed. In December 2000, on a trip, saw a
doctor somewhere, paid $100 cash, and forgot about it (cash was likely
recorded as "misc"). Next year, June, after having filed taxes, you
receive an EOB and a check for $80. The entries are:
12/25 expT80 Dr OverThere 12/25 100 100
12/25 [cash] Dr OverThere 12/25 100 0
12/25 insT80 Dr OverThere 5/20/01 80 -80
12/25 [check] Dr OverThere 6/02/01 80 0
If you itemized deductions for 2000, or if you would have itemized
deductions with this additional $20 payment, and want a tax refund you
have to file an amended return for 2000.
Case 4: Moving income to next year. On 12/30/00 visit the allergy
doctor for a shot. We know charge will be $30, 24 paid by insurance
and
6 by us. And we are deducting medical expense for the year 2000. Pay
the full $30 charge 12/30; the entries are:
12/30 expT80 Dr Bones 12/30 30 30
12/30 [check] Dr Bones 12/30 1234 30 0
When the insurance reimbursement is received, enter:
12/30 insT80/2001L21 Dr Bones 2/5/01 24 -24
12/30 [check] Dr Bones 2/10/01 24 0
Sooooo the full $30 is year 2000 medical deductible. The $24
insurance
reimbursement in 2001 is for medical expense deducted in 2000 and,
thus,
goes on 1040 line 21, adding to your 2001 AGI. Hopefully you have a
good reason for doing this.
C O M M E N T S
--------------------------------------------------------
A comment on copayments: ---------
Medical providers offer prompt, professional services. For any
substantive copayment not paid at the time of service, unless you are
delaying payment to next year for tax purposes, send the copayment
when
you receive the insurer's EOB. It has already been a month since the
provider did their thing; don't require the cost of a billing and an
additional months delay before copayment.
A comment on "grouping" deductions: ----------
Schedule A itemized deductions can sometimes be increased by grouping
as
many deductions as possible into alternate years, or every third year,
and taking the standard deduction in the intervening years (this
strategy is not universally rewarding, but you should be aware of the
possibility).
Assume $8000 in itemized deductions each year and that the standard
deduction is $7000. Every two years your total deductions are 2 x
8000
= 16000. Now move $2000 of deductions from one year to the other:
one
year's deduction changes 8000+2000 = 10000, the other year's deduction
changes to 8000-2000 = 7000. Shouldn't that be 6000? No, for that
year
the standard deduction is taken. The two years deduction total is
10000+7000 = 17000; gaining $1000 in deductions.
Similar logic applies if itemized deductions are less than the
standard
deduction and enough deductions can be grouped into one year to exceed
the standard deduction for that year. Deductions that might be
grouped
include charitable, some state taxes (if you pay estimated taxes mail
the total estimated payment for next year the last day the post office
is open this year), some medical payments, and property taxes (if a
fee
is charged for a late payment and you save more than that fee on
federal
and state taxes - it's still a good deal).
A comment on Grouping Medical Deductions: ----------
Only allowable medical expense that is in excess of 7.5% of the AGI
can
be deducted. And then only if deductions are itemized, as opposed to
taking the standard deduction.
Suppose deductions are itemized every year; deductible medical expense
is $1200 each year, 7.5% of the AGI is $1000. Thus the medical
deduction is 1200-1000=200 each year. Moving $300 from one year to
the
other leaves no medical deduction for one year, but $500 for the
other;
the two year total has increased from 200+200=400, to 0+500=500.
Given the same medical expense and AGI, consider the case where
deductions are itemized every other year. Now the medical deduction
is
0+200=200, even though medical expense exceeded 7.5% AGI both years.
Any amount moved to the year deductions are itemized will increase the
total itemized deductions.
Similar logic applies if medical expenses are less than 7.5% of AGI.
If
deductable medical expense is grouped into one year to exceed 7.5% AGI
and deductions are itemized that year, then the itemized deductions
have
been increased.
Medical deductions are moved between years by selecting the payment
date. Paying at service date for this year's deduction or waiting for
the insurance cycle, then the providers billing cycle, then the time
till due, to delay till next year. Some medical procedures can be
scheduled for tax benefits, all other things being equal. For
example,
schedule annual exams for early January and late December, with no
exam
the following year - it's still an exam about every twelve months but
both exams are paid in the same year.
A comment on 1040 Line 21: ----------
Recording medical insurance reimbursements for medical expense
deducted
in a prior year on 1040 Line 21 can, in some cases, result in those
amounts being taxed at approximately double (DOUBLE) your marginal tax
rate. Think of it this way; the deduction last year that saved $100
of
taxes can add almost $200 to next year's taxes. Not good.
What happens is: Reporting such insurance reimbursements as income
increases the AGI on both state and federal returns. And increasing
the
AGI is only bad tax news. If Social Security is being received, there
are income levels where every dollar increase in AGI increases taxable
SS income by $.85. Report $1 of insurance and pay taxes on almost $2.
Even without Social Security, there are unfortunate tax consequences.
AGI is input to: IRA Deduction Worksheet, Student Loan Interest
Deduction Worksheet, Deductions for Exemptions Worksheet, Capital Gain
Tax Worksheet, ... Further, medical and some other deductions, are
reduced by percentages of your AGI. For many (most?) people, having
the AGI increased by medical insurance reimbursements is not a good
idea.
What to do about it? Don't claim medical expense as deductible that
will be reimbursed by insurance in a later year. Even if you paid it,
don't claim it. If you paid in full at time of service, $100 for
example, and expect an $80 insurance reimbursement next year, claim
only
a $20 deduction, not the full $100 that you paid.
--- end ---

Reply to
bearcat77070
Didn't read the whole thing, but caught the gist of the very extensive work done in Quicken.
TOO BAD! Why not use Quicken Medical Expense Manager (latest version 2.1.2.10 for Vista)?
Great record keeping. Easy reporting. Good query tools. Generates dispute letters. Allows for attachment of scanned documents. Holds all important text notes date/time stamped to record when I spoke with whom about what, both as to the financial side and the medical side.
See
formatting link

> I'm reposting Richard's write-up here because I'd like to make > reference to it with some questions I have and I can't seem to find a > copy googling for it to refer people to who might be able to help me. > > > Thanks again Richard for writing this up! > > > > > Part 1 of 2 > > Using Quicken to Track Medical Expense and Insurance > Reimbursements > > ------------------------------------------------------------------- > > R Weaver > snipped-for-privacy@ix.netcom.com > > > 2002.11.21 > editorial > 2002.07.28 > Added: medical expenses paid with pre-tax money are not > deductable. > (a generalization of the 2001.5.6 MSA edit) > 2001.12.11 > Added: more detail re. secondary carrier > 2001.10.21 > Revised categories. > "exp" and "ins" categories have been revised, "supp" > categories were deleted. Thus insurance coverage on > non-deductable medical expense can be recorded in the same > way as for deductable expense. > Added: "When There Are Individual Limits" > 2001.6.20 > Added: interest to federal tax refund example > Added: "sequence of submissions" to secondary carrier > 2001.5.6 > Added: medical expenses paid from MSA account are not deductable > 2001.3.21 > Added: Secondary carrier > Added: Medicare > Added: determining itemized medical tax deduction, see "T A X E S" > > N O T E S > -------------------------------------------------------------- > > The word "deductable" is used in two contexts: "tax deductable" > (reportable on tax forms) and "insurer deductable" (what you must pay > before insurance reimbursements begin). > > And "tax deductable" means only reportable on tax forms; a tax > deduction may or may not result. > > Minor editorial improvements are not noted in the list of edits above. > > S U M M A R Y > ---------------------------------------------------------- > > Medical expenses can be substantial; my requirements are to: > > -- Easily verify a service provider's billings > > -- Verify that medical providers are being correctly paid, either by > insurers or by myself > > -- By inspection (i.e, by sight and without any, or with very > little, > work) of Quicken registers and reports, determine that > anticipated > insurance reimbursements are, eventually, correctly paid, either > to > the provider or myself. My insurance carriers reimburse 100%, > 80%, > or some random %, depending on the service. > > Tracking insurance reimbursements is not just a favor to medical > providers, there are financial implications for yourself. 1) > insurance companies may have cutoff dates past which claims will > not be accepted; you want to be sure that all claims are filed > and > prompt less efficient providers to correct and refile when claims > are rejected. 2) tax reporting is dependent on the year > copayments > are paid and can be dependent on the year insurance > reimbursements > are received. 3) Medicare imposes a fee on late filings. 4) > and, > of course, if the insurance carrier doesn't pay - you likely > will. > > -- Verify that insurance deductible (the amount that must be paid > each > year before any insurance reimbursements will be made) is > correctly > calculated (yes, one of my carriers has even gotten that wrong). > > -- Identify the medical expenses reportable on income tax forms > ("tax > deductable"). See IRS Publication 502 "Medical and Dental > Expenses". > > If your medical transactions are few and the above is but a few > minutes > work, then what follows is not necessary for you (although my method > does not add significant work when entering medical transactions). > Should you, however, have many medical transactions each year, > involving > multiple doctors, hospitals, and labs, then you may find my method of > some interest. > > I've developed this method from 1995 through today (late 2001). > Medical > expenses tracked for those years have ranged from $22,000 to $42,000 > per > year. My Quicken medical liability accounts have over 4,000 entries > for > those years; an average of 700/year. It usually takes 4 entries for a > service (expense, insurance write-off, insurance payment, my payment) > so > that's 175 medical services/year. Every other day, right? > > Success has not been 100%; there are billing errors I've never gotten > corrected, insurance reimbursements I've never received, charges I've > never understood - but I've come close. > > My method is: > > 1. For recording medical transactions: > > -- a liability account for each medical provider > > "account for each" is the principal. Pragmatics are otherwise. > Whatever is easiest, while still able to answer questions by > inspection. I keep El Camino Hospital, El Camino Radiologists, > El Camino GI, ... all in the same account. I also have a "Various > Medical" account for providers that are used only a few times > each > year (and to which I move entries for providers no longer used, > keeping the number of accounts down). > > trivial hint: In the description field for each medical account, > put the billing phone number (and hours) so that it's on your > screen when you want to call about the account. > > -- recording, as expense, the total cost of a medical service on the > service date (as opposed to recording the amount billed to me on > the date billed) > > -- recording all payments to a provider with the service date (as > opposed to the date payment was made) > > -- recording all activity for a provider in the provider's account > (for example: an insurance reimbursement sent to me is recorded > in > the provider's account, followed by a transfer to the account I > deposited the reimbursement in) > > -- categorizing insured medical expenses by the expected insurance > reimbursement percentage. Insurance reimbursements are > categorized > matching the expense categorizations. > > categorizing medical expenses as tax deductible or not. > > Examples of categories are (my complete list is in the later > details) > > expN expense not insured, not deductible > expT tax expense not insured, tax deductible > expT80 tax exp. insured, anticipated 80% insurance > reimburse. > insT80 tax insurance reimbursement, 80% of expense less > any write-off > > Note: Insurance reimbursements are "expense", not "income". > categories. They are not part of taxable income (if you > are > careful; see the later section on taxes), they serve only > to > offset expense. They are "negative expense", if you will. > > -- using class to identify tax deductable amounts that are paid in a > different year than the service date year. > > 2. Utilizing the register for a providers account to verify the > provider's statement. > > This can be done by inspection as each service date will, when all > transactions have been entered, show a zero balance in the Quicken > register. Well, usually by inspection -- some provider's statements > are > so convoluted (and so infrequent) that verification is a major > project. > (Verification is an important step; we have been billed for services > on > dates when we were out of town, we have been billed for -- and our > insurance initially reimbursed for -- services performed on other > people. Noting medical services in your calendar, diary, Day- > Timer, ... > provides a good reference) > > An example of the entries in Dr. Bones register for one service is: > > date category Payee memo Increase Decrease > Balance > > 1/01 expT80 Dr Bones 300 > 300 > 1/01 insT80wo Dr Bones 100 > 200 > 1/01 insT80 Dr Bones 2/10 160 > 40 > 1/01 [check] Dr Bones 3/05 1234 40 > 0 > > On 1/01 there was a service, tax deductable, cost $300, for which an > 80% > insurance reimbursement was anticipated. On 2/10 the insurer: > accepted > only $200 of cost ($100 write-off) and processed a $160 reimbursement > (80%) to Dr Bones. On 3/05, I wrote check 1234 for $40, the balance > for > that service, to Dr Bones. > > 3. Utilizing Quicken reports (examples later) to: > -- check insurance reimbursements > -- identify and age unpaid services > > > T H E A C C O U N T R E G I S T E R > ------------------------------- > > I begin with a small scenario and, in a series of steps, refine the > Quicken entries to what I find to be an adequate methodology. I > actually went through a similar process, revising my early medical > entries three times. The steps presented here are intended to be a > logical progression; my own experience was less organized. > > -------------------------- > > The scenario (year omitted from dates, mm/dd): > > 1/01 see Dr Bones, charges are $300. Anticipate 80% insurance. > > 1/31 receive stmt from Bones > 1/01 service $300 > balance $300 > > 2/01 see Dr Bones, charges are $100. Anticipate 80% insurance. > > 2/02 see Dr Bones, no charge > > 2/10 letter from insurance company re 1/01: $200 of expense meets > annual deductible. For remaining $100, 80% ($80) payment has > been sent to Dr Bones. > > 2/28 receive stmt from Dr Bones > prior bal $300 > 2/01 service 100 > 2/12 ins pay 80- > balance 320 > > 3/05 send Dr Bones $220 payment (the balance of 1/01 service) > > 3/07 see Dr Bones, charges are $150. Bones asks for immediate payment > so I use Visa credit card to pay $150. Anticipate 80% insurance. > > 3/09 letter from insurance company re 2/01: Insurer's rate for service > is $90 and is covered at 100%. Doctor has to absorb $10 > reduction. > Check for $90 enclosed and made out to me (not Doctor). Deposit > check to my checking account. > > 3/10 stop at Dr Bones office to pick up WhoopeeVit, expense $10. > Bones > recommends for hangnails. Pay immediately, using credit card. > > 3/15 see Dr Bones, charges are $200. Anticipate 80% insurance. > > 3/31 receive stmt from Dr Bones > prior balance $320 > 3/06 paid 220- > 3/07 service 150 > 3/07 paid 150- > 3/09 writeoff 10- (Bones got the EOB and knows about the > $10 reduction, but I got the $90 > check) > 3/10 WhoopeeVit 10 > 3/10 paid 10- > 3/15 service 200 > balance 290 > > -------------------------- > > I know that I must have a liability account for each provider, > recording > both the provider's charges and all payments to meet my goal of using > the Quicken register to verify the provider's billing. > > Now I can record the scenario's transactions. I will use only one > category, "expense: medical". The posts are to a liability account > for > Dr Bones (I've not shown the other side of transfer entries). "Date" > is > the date of service or payment. This is about how I first started > using > Quicken for medical services. > > date category Payee memo Increase Decrease > Balance > > 1/01 medical Dr Bones 300 > 300 > 2/01 medical Dr Bones 100 > 400 > 2/02 medical Dr Bones 0 > 400 > 2/10 medical Insurance 80 > 320 > 3/05 [check] transfer fr chk 220 > 100 > 3/07 medical Dr Bones 150 > 250 > 3/07 [visa] transfer fr visa 150 > 100 > 3/09 medical Insurance write-off 10 > 90 > 3/09 medical Insurance 90 > 0 > 3/09 [check] transfer to chk 90 > 90 > 3/10 medical Dr Bones WhoopVit 10 > 100 > 3/10 [dis] transfer fr dis 10 > 90 > 3/15 medical Dr Bones 200 > 290 > > Well, it is all there. But I can only answer one question, "Is the > provider's statement correct?". To answer questions about "have > insurance reimbursements been made?", "how much is tax deductible", > and > "have we paid our part", by inspection, I need to make some changes. > > Instead of using transaction date to record entries, I will record all > entries by service date. > > The memo field is used for an audit trail. For expense and insurance > entries, record the date of the source document (usually the EOB or > provider's statement). For check payments, record the check date and > the check number (the check number field is visible in the check > register but not in the medical account side of the Quicken transfer; > having the check number in the memo field is convenient when comparing > a > medical account register to a provider's statement or when printing a > copy of the medical account register to send to the providers billing > dept. - sometimes an easy way to resolve problems). For credit card > payments, record the date of payment. And, of course, record anything > else that might help. > > Use a consistent style for memo date entries: mm/dd if the year is > the > same as the service date year, mm/dd/yy, if the year is different. > Makes it easy when reviewing services where payment was made in a > different year (see Taxes, below). > > The revised entries, recorded by service date, are: > > date category Payee memo Increase Decrease > Balance > > 1/01 medical Dr Bones 2/10 300 > 300 > 1/01 medical Insurance 2/10 80 > 220 > 1/01 [check] transfer fr chk 3/05 1234 220 > 0 > 2/01 medical Dr Bones 3/09 100 > 100 > 2/01 medical Insurance 3/09 write-off 10 > 90 > 2/01 medical Insurance 3/09 90 > 0 > 2/01 [check] transfer to chk 3/09 90 > 90 > 2/02 medical Dr Bones 2/02 0 > 90 > 3/07 medical Dr Bones 3/07 150 > 240 > 3/07 [visa] transfer fr visa 3/07 150 > 90 > 3/10 medical Dr Bones WhoopVit 10 > 100 > 3/10 [dis] transfer fr dis 3/10 10 > 90 > 3/15 medical Dr Bones 3/15 200 > 290 > > I can now determine the service dates contributing to final account > balances by inspection. Eventually every service date will end with a > zero balance. Service dates that have a different balance than at the > end of the prior service, have an outstanding balance that is part of > the final balance. > > - 1/01 is what I want each service date to eventually look like: > service followed by payments, ending with a zero balance. > > - 2/01 has not been fully paid; the 90 ending balance is not the > same > as the prior (0) balance. > > - 3/07 is paid; the 90 ending balance is the same as the prior > (2/02) balance. > > So, by inspection I can see that for 2/01 I owe Dr Bones $90 (the > insurance reimbursement that was sent to me) and for 3/15 I am waiting > for the insurance reimbursement. > > But have all the anticipated insurance reimbursements been made? For > example: while 3/07 is paid from the providers view, does the insurer > owe me money? And how much is tax deductible? > > Now I am ready to discuss categories. Instead of just "medical", I > will > categorize medical expense entries by the kind of insurance > reimbursement expected and whether or not tax deductible. Similar > categories will be used for insurance reimbursements. > > Some "exp" and "ins" category names are constructed from 3 parts: > "exp" or "ins" - expense or insurance reimbursement > "T" or "N" - tax deductable or not > blank, 80, 100, var > - the 80,100,var indicate insurance percentages > (var=various). You should choose percentages > meaningful for your particular carriers. > Just add to your category list the combinations you are likely to use. > > My list of "expense:medical" subcategories is: > > Expense > Medical > empcon tax employee "contribution" to company medical > plan > expTdedA tax insurer A deductible (replace "A" with name) > expTdedB tax insurer B deductible (replace "B" with name) > expTdedoffset tax Offsets any duplicate expTded... > milageT tax milage deduction. See 1040 for rate/mile > milageoffset offsets milage deduction > LTHC tax Long Term Health Care Insurance premium > LTHCReimbu tax LTHC premium reimbursement > MedicareB tax Medicare B insurance premium > MedicareBReim tax Medicare B reimbusement (some employers do) > otherreimb tax other reimbursements (provider write-offs of > small balances are an example) > rxcopay tax Rx copayments, there is no insurance > reimburse. > > expT tax not insured, tax deductible > expN not insured, not deductible > > expT80 tax exp. insured, anticipated 80% ins. reimburse. > insT80 tax insurance reimbursement, 80% of expense > insT80wo tax insurance write-off, remainder will be at 80% > insT80Estimat tax ins to be paid, we hope (see tax section) > > expN100 not deduct., anticipated 100% ins. reimburse. > insN100 insurance reimbursement, 100% of expense > > expT100 tax exp. insured, anticipated 100% ins. > reimburse. > insT100 tax insurance reimbursement, 100% of expense > insT100wo tax insurance write-off, remainder will be at > 100% > ins100Estimat tax ins to be paid, we hope (see tax section) > > expTvar tax exp. insured, anticipated various% ins. pmnt > insTvar tax insurance reimbursement, various% of expense > insTvarwo tax insurance write-off, remainder will be at var > % > insTvarEstimat tax ins to be paid, we hope (see tax section) > > Not as long a list as it appears - once you understand the pattern for > "exp" and "ins" categories - and that your category list need include > only those you will use. > > You may have additional or different medical categories, taxable or > not, > depending on your particular case and your insurer's reimbursement > schedules. The "tax" indication of some of the above may not be > correct > for your particular case. Read IRS pub 502. For some plans LTHC > reimbursement may be classified for tax purposes as Miscellaneous > Income > (1040 line 21). Read IRS pub 502 again. Read your 1099s. Read this > paragraph again. > > While some categories are coded as tax deductible, what is really > deductible is the net - what you pay, expense minus insurance > reimbursements minus other payments. And it is deductable in the year > paid, not the service year (Quicken classes are used to get correct > tax > totals for a year, see below) > > In the revised example below the 1/01 entry has been divided into two > entries, one for the insurance deductible part and one for the 80% > paid > part. This division would be done when the insurance EOB is received, > not at the time of service (at the time of service, or from the > medical > provider's statement, it would not be known which submitted claims > would be used to satisfy the insurance deductible). > > All entries now have "Dr Bones" as Payee. This is necessary for the > summary reports by payee that will be used when matching expense to > insurance reimbursements. We still still know which entries are > insurance reimbursements (from category) and can, if ever necessary, > determine which insurer by reference to the EOB (we did put the > statement date in the memo field). > > The revised entries, with new categories, are: > > date category Payee memo Increase Decrease > Balance > > 1/01 expTdedA Dr Bones 2/10 200 > 200 > 1/01 expT80 Dr Bones 2/10 100 > 300 > 1/01 insT80 Dr Bones 2/10 80 > 220 > 1/01 [check] Dr Bones 3/05 1234 220 > 0 > 2/01 expT80 Dr Bones 3/09 100 > 100 > 2/01 insT100wo Dr Bones 3/09 10 > 90 > 2/01 insT100 Dr Bones 3/09 90 > 0 > 2/01 [check] Dr Bones 3/09 90 > 90 > 2/02 expT80 Dr Bones 2/02 0 > 90 > 3/07 expT80 Dr Bones 3/07 150 > 240 > 3/07 [visa] Dr Bones 3/07 150 > 90 > 3/10 expN Dr Bones WhoopVit 10 > 100 > 3/10 [dis] Dr Bones 3/10 10 > 90 > 3/15 expT80 Dr Bones 3/15 200 > 290 > > That's the final register, the basis for everything that follows. > > > C H E C K I N G I N S U R A N C E R E I M B U R S M E N T > -------- > > How do I check, other than by going through each provider's account > service date by service date, that all insurance reimbursements have > been made? I use three (memorized) Quicken Summary reports (for 100%, > 80%, various%) > > -- Select all accounts > > -- For the 100% report: categories expN100, expT100, insT100wo, > insT100, insN100 > For the 80% report: categories expT80, insT80wo, and > insT80. > For the various% report: categories expTvar, insTvarwo, insTvar, > and otherreimb > -- define rows to be payee > -- define columns to be category > > If you have been making ins...Estimat entries in anticipation of tax > calculations, you likely want to include those categories as well. > > Assume today's date is 5/31. I expect most services through 3/31 to > have been processed by the primary insurer. > > The 100% report for the example, through 3/31, shows > > INC/EXP INC/EXP INC/EXP ... INC/ > EXP > EXPENSE EXPENSE EXPENSE ... > EXPENSE > Medical Medical Medical ... > Medical > Payee Desc expT100 insT100 insT100wo... > total > > Dr Bones 0 90 10 > 100 > > Curiously there is a 100% insurance reimbursement but no corresponding > expense. Looking at Dr Bones register, above, for insT100entries I > find > 2/01 > > 2/01 expT80 Dr Bones 3/09 100 > 100 > 2/01 insT100wo Dr Bones 3/09 10 > 90 > 2/01 insT100 Dr Bones 3/09 90 > 0 > 2/01 [check] transfer to chk 3/09 100 > 100 > > where I anticipated 80%, but payment was actually 100%. I should have > caught that when entering the insurance reimbursement (but this > example > is better since I didn't). Deciding that I agree with the insurer > (else > I would call), 2/01 is corrected to > > 2/01 expT100 Dr Bones 3/09 100 > 100 > 2/01 insT100wo Dr Bones 3/09 10 > 90 > 2/01 insT100 Dr Bones 3/09 90 > 0 > 2/01 [check] transfer to chk 3/09 100 > 100 > > Running the 100% report again > > INC/EXP INC/EXP INC/EXP ... INC/ > EXP > EXPENSE EXPENSE EXPENSE ... > EXPENSE > Medical Medical Medical ... > Medical > Payee Desc expT100 insT100 insT100wo... > total > > Dr Bones 100 90 10 > 0 > > and I now know that, through 3/31, all expected 100% insurance > reimbursements have been made for all medical accounts. > > Running the 80% report, through 3/31 (and after the correction of the > 2/01 entry): > > INC/EXP INC/EXP INC/EXP ... INC/ > EXP > EXPENSE EXPENSE EXPENSE ... > EXPENSE > Medical Medical Medical ... > Medical > Account Desc expT80 insT80 insT80wo... > total > > Dr A 100 72 10 > 18 > Dr B 0 0 0 > 0 > Dr Bones 450 80 > 0 ... > > For the time period covered by this report, 80% of Dr. A's expenses > (those expenses less write-off for which 80% insurance reimbursements > were anticipated) have been reimbursed by the insurer. Dr B had no > "80%" expenses. > > For Dr. Bones I expect insT80 to be ($450 - 0) x 80%, or $360, but I > only have $80. There are $360 - $80, or $280, of anticipated > insurance > reimbursements. This report would prompt me to make some inquiries > about the aging insurance obligation for Dr. Bones. > > The various% report does not have a simple test; its results must be > accepted or investigated on a claim by claim basis. > > > W H E N T H E R E A R E I N D I V I D U A L L I M I T S > ------- > > Insurance carrier's plan can contain limits/maximums, such as: > 250/750 deductable for individual/family > 2000/5000 maximum out-of-pocket for individual/family > > If you choose to track these limits/maximums, you will need: > - separate accounts for each doctor/patient combination. For > example, instead of "Dr Bones" account, you will need > "Dr Bones His" and "Dr Bones Hers" accounts. > - separate categories for transactions not recorded in an > individuals > medical accounts. Principally "rxcopay" becomes "rxcopayhers", > "rxcopayhis", "rxcopayson", etc. > > The obvious reports, selecting accounts and categories, can then be > used > to track limits. > > "Class" can be used instead. I choose to use separate > accounts/categories as, for me, it is the minimal effort when entering > transactions. > > > C H E C K I N G A G I N G U N P A I D S E R V I C E S > ------------ > > Use a Quicken Summary report, select medical accounts, payee (rows), > months (columns), and all categories, to identify aging unpaid > services > For example: > > Medical Payees: net by Month > 1/1/96 Through 4/14/96 > 4/14/96 Page > 1 > Selected Accounts > > OVERALL > Payee Description 1/1/96 2/1/96 3/1/96 4/1/96 > TOTAL > > Dr Dear -15 15 0 0 > 0 > Dr Doe 0 -20 0 0 > -20 > Dr Cat 0 0 -238 -1,500 > -1,738 > > For Dr Dear it appears that $15 in 1/96 expenses was recorded as paid > in > 2/96, an error in not using the service date for the payment. > Inspection of the register for Dr Dear's account will verify this. > The > payment entry dates can then be corrected. > > Dr Doe, for 2/96, had $20 more in expenses than in payments. At 3 > months old and a small amount it is likely a service partially paid by > insurance with the balance not yet paid by me. > > Dr Cat shows "in progress", recent services likely have not yet been > billed to me or processed by the insurer. No action is required. > > > A useful Quicken Graph: select net worth graph > medical accounts > > This graph shows medical account balances for the selected range of > months. Current, and recent, months have large "in progress" balances > while older months have smaller, eventually zero, balances (an effect > of > recording payments by service date). That account balances are, or > are > not, aging is easy to see. > > > M E D I C A R E > ------------------------------------------------------- > > Assume a service of $60, Medicare allowed amount $50, Medicare > payment of 80% of 50 = $40. The entries depend on whether or not the > provider accepts Medicare Assignment (shown on the EOB). > > Accepts Assignment (and Medicare sends check to provider): > date category Payee memo Increase Decrease > Balance > > 7/17 expT80 Dr Skull 8/11 60 > 60 > 7/17 insT80wo Dr Skull 8/11 10 > 50 > 7/17 insT80 Dr Skull 8/11 40 > 10 > 7/17 [check] Dr Skull 8/18 1234 10 > 0 > > Does Not Accept Assignment, paid in full at time of service (and > Medicare sends check to you): > > 7/17 expTvar Dr Skull 7/17 60 > 60 > 7/17 [check] Dr Skull 7/17 1234 60 > 0 > 7/17 insTvar Dr Skull 8/11 40 > 40 > 7/17 [check] Dr Skull 8/11 40 > 0 > > > Part 2 of 2 > > S E C O N D A R Y I N S U R A N C E C A R R I E R S > ---------------- > > For a specific claim the primary carrier is the carrier that processes > the claim first, the secondary carrier processes it second. We think > of > our carrier "ABC HMO" as our primary carrier, or "DEF Co" as our > secondary - but those designations are for a specific time and not > fixed > for the year (and that is why the "expded..." categories are for > specific carriers rather than labeled expdedPri, expdecSec). Suppose > ABC HMO is your only, thus primary carrier, and you turn 65 in June. > June and after Medicare is your primary and ABC HMO is now your > secondary. But if your spouse is not yet 65, then ABC HMO is still > primary on spouse's claims. > > For a secondary carrier, record: > > - amounts applied to that carrier's deductible (expded...). It is > important to submit claims to both carriers until deductibles are > met, even when the secondary carrier will make no reimbursement on > the claim, so that when there is a later claim that should result > in > reimbursement, that claim does not go to meet deductible instead. > > Also enter an expTdedoffset for the same amount as the second > carrier's expded... entry duplicates expense already recorded for > the primary carrier. > > - any additional insurance reimbursement for the claim. Useing the > "insTvar" category, or other categories as appropriate. > > Examples: > > For use in the following examples, the original Dr Bones 1/01 exp... > and > ins... transactions are: > > date category Payee memo Increase Decrease > Balance > > 1/01 expTdedA Dr Bones 2/10 200 > 200 > 1/01 expT80 Dr Bones 2/10 100 > 300 > 1/01 insT80 Dr Bones 2/10 80 > 220 > > > Suppose we submit that 1/01 $300 claim as the 1st claim of the year to > a > secondary carrier with a $250 deductible. That carrier applies $250 > to > deductible and makes no other reimbursement. We record the 2nd > carriers > deductible and offset it so as not to affect Dr Bones totals. The > additional entries are: > > 1/01 expTdedB Dr Bones 4/20 250 > 470 > 1/01 expTdedoffset Dr Bones 4/20 250 > 220 > > Suppose we submit that 1/01 claim as the 1st claim of the year to a > secondary carrier with a $150 deductible and that carrier calculates a > $120 benefit, reduces it by the $80 already paid by Medicare, makes a > $40 reimbursement. As before, we record the deductible and offset. > The > additional insurance reimbursement is recorded as "insvar" (we have > already recorded all of the expense with the entries for the primary > carrier). The additional entries are: > > 1/01 expTdedB Dr Bones 4/20 150 > 370 > 1/01 expTdedoffset Dr Bones 4/20 150 > 220 > 1/01 insTvar Dr Bones 4/20 2nd carrier 40 > 180 > > Later in the year, after deductibles have been met, a $40 > reimbursement > from a secondary carrier could be entered with just: > > 4/01 insTvar Dr Bones 9/04 2nd carrier 40 > 180 > > My secondary states "If a doctor doesn't accept assignement, we allow > a > charge of up to 115% of the Medicare allowed charge and will pay the > difference between the Medicare payment and 80% of the allowed charge" > (so that my copayment is at most 20%). Consider a doctor office vist, > $100, doesn't accept Medicare assignment, and I pay $100 at the > office. > Medicare allows $87 and reimburses me $71. In this example, 115% of > 87 > is more than 100 so the full amount is allowed, and my secondary will > reimburse $9 for a total reimbursement of $80 and copayment of $20. > > After the office visit I enter: > 1/01 expT80 Dr Bones 1/01 100 > 100 > 1/01 [check] Dr Bones 1/01 1234 100 > 0 > > When the Medicare EOB is received: > 1/01 insT80 Dr Bones 2/12 Medicare 71 > -70 > 1/01 [check] Dr Bones 2/17 71 > 0 > > When the secondary's EOB is received: > 1/01 insT80 Dr Bones 3/18 Secondary 9 > -9 > 1/01 [check] Dr Bones 3/24 9 > 0 > > > Sequence of claims submitted to secondary re carrier deductables: > > In general (I've not surveyed how all secondary carriers work - thus > the > weasel words) the secondary calculates what the secondary would > reimburse and then reduces that by the amount reimbursed by the > primary. > Suppose that both carriers have a $100 deductable and you have January > and February claims of $100 each. If claims are submitted in calendar > sequence to both carriers, then > > 1. Jan claim to primary: applies deductable, reimburses $0 > 2. Jan claim to secondary: applies deductable, reimburses $0 > 3. Feb claim to primary: reimburses $80 > 4. Feb claim to secondary: reimburses $0 (as primary has reimbursed > $80) > > But change the sequence, submitting the February claim as the first > claim to the secondary: > > 1. Jan to primary: applies deductable, reimburses $0 > 2. Feb to primary: reimburses $80 > 3. Feb to secondary: applies deductable, reimburses $0 > 4. Jan to secondary: reimburses $80 (as primary has reimbursed $0) > > Thus each carrier pays on claims the other carrier applied to > deductable. > > To make this happen: > > 1. At the beginning of year tell providers not to submit to secondary > (better, tell them you have NO secondary). > > 2. When you have recieved EOBs from primary showing that deductable > has been met, tell providers to again submit to secondary. > > 3. When you have received EOBs from secondary showing that deductable > has been met, submit those claims withheld at step 1. > > > M I S C. S T U F F > --------------------------------------------------- > > That insurance deductibles have been correctly met can be checked with > category totals. > > Milage for medical purposes is generally tax deductible. The register > provides a count of trips to Dr Bones (if you were curious why the > 2/02 > "no charge" was entered in the register, now you know) and at year end > I > make two entries in Dr Bones register (these could be in another > register, but I prefer to see them in the same register -- there is > less > chance for error). > > date category Payee memo Increase Decrease > Balance > > 12/31 milageT Dr Bones 6 trips, 20m 10.80 > 10.80 > 12/31 milageoffset 10.80 0 > > With the two entries, Dr Bones account balance is unchanged yet tax > reports will show the 10.80 deduction. And when reviewing Dr Bones > register I know the milage deduction has been entered (I don't have to > search some other account). > > What if I write one check for two or more service dates. Or one > insurance reimbursement covering two or more? I handle these in any > of > the following ways: > > -- Suppose check number 1234 is for 5/15 and 5/25 services. > In the checking account, I record two entries with duplicate > check > numbers (Quicken allows this, after a warning). And in the > earliest date I put the total amount in the memo field. > > date category Payee memo Inc Dec > Bal > 5/15 [Bones] 1234 transfer 7/2 1234 total $a+b $a > 5/25 [Bones] 1234 transfer 7/2 1234 $b > > Thus each service date has a complete record of payments. At > check > reconciliation time, the two checks 1234 are listed together, > their total matching to 1234 on the bank statement. > > -- If a medical account regularly has multiple transactions in one > month and a single billing (example: an allergy doctor) then I > enter a monthly payment using the last service date for each > month > and indicate in the memo field both the service dates and the > transaction date "6/10 1234 5/1,8,15,23,30". Such an account > shows a zero balance only at the last transaction of each month. > > -- If an account has an immediate payment for every service > (example: > an account used for prescriptions) then I submit one insurance > claim for each month and, as before, enter the insurance > reimbursement using the last service date and recording both the > range of service dates and the transaction date in the memo > field. > The prescription account register is different from most other > registers: each service is immediately followed by a credit card > transfer payment and each insurance reimbursement is immediately > followed by a transfer of that reimbursement to checking. > > Note: the prior paragraph was written when I paid the full > amount > for prescriptions and submitted insurance claims. Now I make > only a copayment. That payment is recorded in the appropriate > charge, cash, or checking account, category:RxCoPay, and no > other > entries are needed. > > > T A X E S > -------------------------------------------------------------- > > I AM NOT A TAX PROFESSIONAL (so I might/likely have it wrong). > I am not a tax professional (SO I MIGHT/LIKELY HAVE IT WRONG). > THIS IS MY READING OF IRS PUBLICATIONS AND HOW I DO IT. > THIS IS NOT COMPLETE; THERE ARE TOPICS NOT ADDRESSED > -- THE AUTHORITATIVE SOURCE IS THE IRS -- > > There is a lot here about taxes rather than about Quicken. I can't > separate the two; the Quicken entries are because of taxes so I end up > describing both. > > If you are not itemizing deductions because the standard deduction is > "better" read the "Comment on Grouping Deductions". > > If you are not itemizing medical deductions because of the 7.5% AGI > restriction, read the "Comment on Grouping Medical Deductions". > > If after reading those sections you are still not itemizing medical > expense then skip the rest. > > If you, or your spouse, will be age 65 next year, observe that > checking > boxes on 1040 line 37 increases your standard deduction; thus in the > current year you need to be comparing next year's estimated itemized > deductions to next year's increased standard deduction as you may want > to begin grouping deductions this year. > > Excerpts from IRS pub 502: > > What Expenses Can You Include This Year? > > You can include only the medical and dental expenses you paid > this > year, regardless of when the services were provided. > > You can include medical expense your charge to your credit card > in > the year the charge is made. It does not matter when you > actually > pay the amount charged. > > You cannot deduct qualifed medical expenses as an itemized > deduction if you pay for them with a tax-free distribution > (Cafeteria plans) (also see Medical Savings Account, MSA, > Pub 969) > > Insurance Reimbursement > > You must reduce your total medical expense for the year by all > reimbursements for medical expense that you receive from > insurance or other sources during the year. > > If you are reimbursed in a later year for a medical expense you > deducted in an earlier year, you must report as income [1040 > line > 21] the amount you received from insurance or other sources that > is equal to, or less than, the amount you previously deducted as > medical expense. However do not report as income the amount ... > that did not reduce your tax for the earlier year. ... > > So, medical payments for tax deductions are determined by the year > payment is made, while, using Quicken as I do, medical payments are > recorded by service date. > > I use a class to identify a medical payment where the tax year is > different than the service date year. Indeed, I use the tax year for > the class. That class must be used on all entries for that service. > It > is the exp... and ins... categories that carry the taxable, or not, > indicator (and it's those categories that we have so carefully managed > in the sections above). When class is added to payments entries as > well, Quicken reports can be used to verify that all records for a > service have the same class (the class total will be zero - I've been > know to make a mistake and like to be able to check my work). Most > medical entries will not need a class as the service date and payment > dates are for the same year (i.e., I don't have to do much work to get > it right). > > Should there be insurance reimbursements to report on line 21, assign > a > class such as taxyearL21, "2001L21" for example, to that insurance > reimbursement entry. > > To help calculate the medical tax deductable for a year use a summary > report, row=class, column=year, of medical tax deductible categories > for > all years. That report looks something like > > transaction-year > class description 1998 1999 2000 2001 > 1998 0 0 0 0 > 1999 -55 0 0 0 > 2000 0 -123 0 0 > 2001 0 0 -234 0 > 2001L21 0 0 55 0 > 9999 0 0 -10 0 > other ... ... ... ... > OVERALL TOTAL -4567 -4789 -5432 -678 > > The tax deductable medical expense for the year 2000 tax filing is: > 5432 tax deductible total for the calendar year 2000 service dates > + 123 tax deductible for 1999 service dates paid in the year 2000 > - 234 tax deductible for 2000 service dates paid in the year 2001 > + 55 insurance payment received in 2001 for expense paid in 2000 > and deducted on 2000 tax return > - 10 tax deductible for 2000 service dates paid in the year 2000 > that we choose to not deduct (see Example 6 below) > - ? year 2000 medical expense paid with pre-tax money. Look at > the Quicken account for your FSA or MSA to determine > distributions you received for year 2000 medical expense. > (this assumes you didn't make Quicken entries to > reclassify the FSA distribution amount as non-deductable) > > ----- > ? total tax deductable medical expense for 2000 > > The 2001L21, $55, must be reported as income on 1040 line 21 for the > 2001 tax year. > > Just a little detail left - getting those classes on the appropriate > entries. > > Tax free distributions that must reduce tax deductable amounts can be > accomodated by including in the calculation of your medical tax > deduction for the year (above), or by making two entries that > effectively recategorize deductable to non-deductable. For example: > > 12/31 expT FSA reimbursements -800 > 12/31 expN FSA reimbursements 800 > > Please read the following cases and examples in sequence, even if the > particular case or example doesn't apply to you, as text in examples > is > not repeated in later examples. > > Case 1: Medical deductions itemized every year; the only concern is > getting it right and not having to record insurance reimbursements on > 1040 line 21. > > Example 1: On 1/20/01 we receive an EOB, stmt date 12/28/00, for a > service dated 12/10/00. Having made no previous payment for this > service we write a check to the provider (a 2001 payment) for the > copayment and make the following entries: > > date category Payee memo Increase Decrease > Balance > > 12/10 expT80/2001 Dr Bones 12/28 300 > 300 > 12/10 insT80/2001 Dr Bones 12/28 240 > 60 > 12/10 [check]/2001 Dr Bones 1/20/01 1234 60 > 0 > > While the tax deductible expense (exp minus ins, 300 - 240 = 60) will > be > in the calendar year 2000 totals, it will also be in the class 2001 > totals and thus we subtract it when calculating the tax year 2000 > medical deduction (and will add it when calculating the year 2001). > > Example 2. Saw the doctor 12/10/00, made a copayment at that time > expecting 80% insurance, now its April 15 and time to file taxes, but > the insurance reimbursement hasn't arrived. Entries, from 12/10/00 > are: > > 12/10 expT80 Dr Bones 12/10 300 > 300 > 12/10 [check] Dr Bones 12/10 1234 60 > 240 > > Make the following entry > > 12/10 insT80Estimat Dr Bones 4/15/01 240 > 0 > > ins...Estimat entries are temporary; they will be replaced by actual > insurance reimbursements (you can check with an itemized category > report). With the ins...Estimat entry, the medical deduction > calculated > for this service is 300-240`, which is the payment that was made. > If you have no idea as to what, if any, insurance reimbursement will > be > made, see Example 6 below. > > With the ins...Estimat entries: > -- the exp... less ins... totals match the amount paid, which is > the > correct medical deduction amount. > > -- the year's totals (which you use as you work on tax filing and > budget planning for this year) don't keep changing as those last > insurance payments dribble in. > > -- you've identified all outstanding insurance claims and just might > choose to call providers/insurers if processing lags. > > When insurance is later received, revise the ins...Estimat entry to > > 12/10 insT80 Dr Bones 6/01/01 240 > 0 > > > Example 3: Saw the doctor 12/10/00, didn't make a copayment, did enter > the expense, and now its April 15 and time to file taxes. The entry > made 12/10 looks like: > > 12/10 expT80 Dr Bones 12/10 300 > 300 > > Since payment will be in the year 2001, change this entry to: > > 12/10 expT80/2001 Dr Bones 12/10 300 > 300 > > Thus it will be subtracted when the year 2000 medical expense is > calculated. Later entries for this service must include the 2001 > class. > > Example 4: Saw the doctor 12/10/00, paid in full and now its April 15 > and time to file taxes. The entries made 12/10 looks like: > > 12/10 expT80 Dr Bones 12/10 300 > 300 > 12/10 [check] Dr Bones 12/10 1234 300 > 0 > > Make the following entry > > 12/10 insT80Estimat Dr Bones 4/15/01 240 > -240 > > This is the same as example 2 except for paying the full amount > instead > of just the copayment. With the addition of the insT80Estimatthe > medical deduction calculated remains $60, even though $300 was paid, > thus avoiding having to report $240 on 1040 line 21 for the 2001 tax > year filing. (tax codes specify the maximum you can deduct, tax codes > do not require you to deduct anything, we choose to not deduct the > $240 > - even though it was paid in 2000 and qualifes as medical expense - so > that we do not have to report next year's insurance reimbursment as > line > 21 income). > > Case summary: When making a payment for a prior year service include > payment year class on the entries for that service. Prior to tax > calculation, examine accounts with nonzero balances and use reports to > find providers service dates with missing payments or insurance > reimbursements in the tax calendar year. If payment was made but no > insurance reimbursement received, add an ins...Estimat entry (or class > "999") for tax deduction calculation. If payment was not made, add a > class to move expense and insurance (if any) to the next calendar > year. > > > Case 2: Grouping deductions. > > Example 5: On 12/30/00 visit the allergy doctor for a shot. We know > charge will be $30, 24 paid by insurance and 6 by us. As this is a > year > we are deducting medical, and will not deduct next year, we want the > payment made this year. So we write the doctor the $6 check before > leaving the office and make the following entries: > > 12/30 expT80 Dr Bones 12/30 30 30 > 12/30 insT80Estimat Dr Bones 12/30 24 6 > 12/30 [check] Dr Bones 12/30 1235 6 0 > > When an EOB is received, stmt date 2/5/01, the insT80Estimatentry is > revised to: > > 12/30 insT80 Dr Bones 2/5/01 24 6 > > Example 6: On 12/30/00 visit the doctor, charge $30. We have no idea > how much, if any, will be paid by insurance. As this is a year we are > deducting medical, and will not deduct next year, we want the payment > made this year. So we write the doctor a $30 check before leaving the > office and make the following entries: > > 12/30 exp80/9999 Dr Bones 12/30 30 30 > 12/30 [check] Dr Bones 12/30 1235 30 0 > > When, eventually, an insurance reimbursement is received for $24, > remove > the 9999 class and make the following entry: > > 12/30 insT80 Dr Bones 6/5/01 24 -24 > 12/10 [check] Dr Bones 6/25/01 refund 24 0 > > Why the "9999" class? What's going on here? To keep the deduction in > 2000, we paid the full amount. Suppose tax filing time arrives > before > the EOB is received. If the "9999" class had been omitted, the $30 > expense, paid in 2000, would be claimed as a deduction and the > insurance > reimbursement received in 2000 would have to be reported as Line 21 > income. To avoid that, the "9999" class identifies this as expense > that > is not to be claimed until the EOB is received. > > If the EOB is received before tax filing, the
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