If you have health insurance, chances are you’ve signed an assignment of benefits (AOB) document, especially if you have used out-of-network providers. Using AOBs is the norm in the healthcare industry, and it’s becoming popular among home and auto repair contractors. An AOB offers lots of benefits, but some of its disadvantages should make you carefully consider whether you should sign one. We answered some AOB frequently asked questions to help you make an informed decision.
What Is an Assignment of Benefits (AOB)?
An assignment of benefits is a legal document that allows a third party to receive payment for a service they provided you directly from your insurance company. When you sign an AOB, you transfer the right to have your insurance company cover some expenses to another person, usually a service provider.
What Is the Effect of an Assignment of an Insurance Policy?
An AOB can work slightly differently depending on the type of insurance, the terms of the insurance policy, the service provider, and state law. But the fundamentals are similar. For instance, in the healthcare industry, an AOB is one of the routine documents you sign when you visit an out-of-network provider for medical services.
Because you have signed an AOB, you’ll only have to pay deductibles or co-pays depending on your insurance policy. Armed with your AOB, the provider will submit a claim for reimbursement with your insurance company to receive payment for the rest of your medical bill. Without an AOB, you would have to cover your medical bills and then file a reimbursement claim with your insurer.
Pros of AOB: Should I Sign an Assignment of Benefits Document?
Yes. If you exercise due diligence before signing an AOB, especially when you hire contractors, an AOB offers some benefits:
- You don’t have to wait for reimbursement from your insurers after you’ve paid for services.
- It can save you the stress of contacting your insurance company directly.
Does Signing an AOB Have Any Disadvantages?
Yes. An AOB can lead to negative outcomes, including:
- Some contractors may inflate the cost of their services, which can make your insurance company refuse to pay or increase your premium after it pays the claim.
- Signing an AOB gives your provider the right to claim reimbursement, and it may decide to sue your insurer without giving you notice, which can drive up your premium.
How Can I Protect Myself Before Signing an AOB?
Here are some tips provided by the National Association of Insurance Commissioners (NAIC) to help you avoid AOB fraud and abuse:
- Contact your insurance company and file a claim before you hire a contractor. This is so your insurer will verify the repairs that need to be made.
- Ensure you hire a legitimate contractor. Research it online and look out for bad reviews and complaints against the company.
- Know that a reputable business will not pressure you to act quickly or to pay money upfront.
- Contact at least three contractors and get an estimate from each before choosing one.
- Get a detailed written contract that includes every planned task and repair and their prices. Also, read the contract carefully before signing.
- Don’t be pressured into signing an AOB. Remember, signing an AOB is not compulsory.
Sometimes, you need to have a lawyer review an AOB before you sign it, especially where the service cost may be substantial. If you contact our attorneys at Morris & Dewett Injury Injury Lawyers, we can help you review your AOB to ensure there’s no loophole the contractor can exploit against you.
Sources:
NAIC: 10 Things You Can Do to Avoid Contractor Fraud and Abuse
