With patients, insurance subscribers, and policyholders all involved, medical billing is already pretty confusing. Add to that terms like a guarantor or the responsible party, and it becomes a lot to keep up with.
The result could be billing disputes, and the provider might have to chase payments, wasting its time and resources.
Therefore, this blog clearly explains a guarantor in medical billing, its roles, and when it is decided. Keep reading for clarity on a guarantor’s JD for efficient revenue cycle management.
Guarantor in Healthcare or Medical Billing
The guarantor in medical billing is the person responsible for covering expenses/costs that are left by the insurance company. When someone avails healthcare services and they are insured, the insurance policy will cover most of the costs, but there will be deductibles, co-pays, and co-insurance left. The patient will cover these expenses out-of-pocket to close their account with the provider.
Now, the person who takes responsibility for that payment is called a guarantor in medical billing, almost like how you take a loan and sign someone close as the responsible party if you can’t pay.
However, in medical billing, the guarantor doesn’t necessarily come in after you fail to pay; they pay for you from the start because they take up that responsibility.
Expenses that Insurance Won’t Cover and the Guarantor Might Have to
Since a guarantor covers what insurance doesn’t, knowing those expenses is crucial. Here are the main categories that a guarantor might have to cover:
| Deductibles | A deductible is a set yearly amount you pay before insurance kicks in to cover the rest of the expenses. For example, if you get healthcare services worth $5000 in a year and your yearly deductible is $1000, you’ll pay that first, and insurance will cover the remainder (terms and conditions apply). |
| Co-pays | Co-pays are flat fees you pay for the treatment services you get. In a clinic visit, you might pay $20 for a doctor's fee, $10 for bloodwork, and $30 for therapy. Co-pays always go out of the guarantor’s pocket. |
| Co-insurance | After a patient meets their yearly deductible and insurance starts paying, they still share a % of that cost with the insurance company, called co-insurance. That cost is mostly a % of the total amount (like 80/20, with 80% coming from the insurance provider) or a set fee (like in Medicare Part A). |
| Non-covered Services | Non-covered services are what an insurance provider won’t pay for under any conditions. If someone decides to get these services (like a facelift, teeth whitening, etc), the guarantor will be clearing the bill at the provider. |
| Balance-billing | Insurance companies have certain allowed amounts they agree to pay providers (which is always lower than what a provider asks for in a claim). If a provider agrees to charge only what the insurance sees as enough, the guarantor won’t pay anything besides deductibles, co-pays, and co-insurance (when they apply). However, if a healthcare provider isn’t part of that agreement network, they’ll charge the guarantor with whatever is left, and that is called balance-billing. Notably, the No Surprise Act prevents balance-billing in some cases, and some people are exempt from it by law. In that case, even if the insurance doesn’t pay the provider enough, the latter won’t charge the guarantor for it. |
Guarantor vs. Patient vs. Subscriber
These three terms might look the same to someone who hasn’t had to deal with medical billing, but they can be very different. Let’s break them down:
Patient
This is the person receiving medical attention, but not necessarily responsible for covering the expenses. For example, a child admitted to the hospital won’t be handling the bills.
Guarantor
The guarantor is someone taking responsibility for paying for things that insurance won’t cover. Continuing the same example, the guarantor could be the admitted child’s mother, who will later clear the bills.
Subscriber
The subscriber or policyholder is the person who owns the insurance plan. This person isn’t always the guarantor, but the bills are settled under their policy name. For example, if the dad has employer’s insurance from his workplace (that covers family) and is away, the mother might sign as the guarantor while the child is getting treated.
Here is a simpler version of these roles:
| Role | Definition | Example |
| Patient | Receives care | Child visiting doctor |
| Subscriber | Owns an insurance policy | Parent with employer insurance |
| Guarantor | Responsible for bill payment | Parent paying child’s bill |
When is a Guarantor Decided?
The guarantor is not a set designation in medical bills or insurance records; it’s simply the one stepping up to clear the matters with the provider. The healthcare practice’s staff usually asks at the time of registration/intake, ‘who will pay besides the insurance?’ and the patient or someone accompanying them will answer the question.
The staff will record the guarantor’s details, like name, DOB, and relation with the patient, and have them sign a document before proceeding with the treatment. And if the patient is also the guarantor, they’ll tell the front desk staff so.
Notably, the guarantor in medical billing can change with circumstances. For example, when the child turns 18, custody changes, or a new legal guardian is appointed for the minor.
Who Can Be a Guarantor in Medical Billing?
In most cases, the patient is also the guarantor, provided that they are an adult and own an insurance policy. They’ll inform the front desk staff and receive the bills themselves. For minors, a parent or legal guardian is listed as the guarantor, and they’ll sign on their behalf.
However, if the patient is an elder and owns health insurance but cannot sign for themselves (if they are too sick, unconscious, or have a memory problem), their spouse, children, or someone else with the Power of Attorney can sign as the guarantor. Also, the person claiming responsibility as the guarantor must be aware of the costs coming their way because this is not a formality only.
What is a Guarantor Responsible for?
As explained earlier, the guarantor in medical billing pays for everything that the insurance provider won’t cover. That includes deductibles, co-pays, co-insurance, and balance-billing where it applies.
The guarantor’s contact details are on file, and the provider (or the medical biller) sends billing statements and payment reminders directly to them. The guarantor should keep their details, like address, legal authority, and insurance details, when signing on someone’s behalf.
Can There Be Multiple Guarantors for a Patient?
There can only be one guarantor for one patient at a time in medical billing, since it helps maintain accuracy and timely revenue collection. However, the guarantor can change from medical visit to visit.
For example, if a child visits the doctor with the mother, she can be the guarantor for that visit. But if they come with the grandfather for the next visit, the guarantor will change and will be billed for only that visit/treatment.
Even if divorced parents or children decide to split the costs between themselves, that’s a private settlement, and the provider will have only one guarantor on record.
Conclusion
Medical billing becomes less stressful when all roles are defined and clearly recorded in the system. But despite categorizing everyone according to their responsibility, sending claims and chasing payments can become overwhelming for practice managers.
That’s why BilNow offers end-to-end medical billing services to handle all aspects of a practice’s revenue cycle management. We ensure that claims are filed correctly and payments are tracked without errors.
If your goal is fewer billing errors and money showing up in your account fast, let us help. Our medical billing services will give you a 25% revenue increase within 3 months, along with an incredible clean claim rate.
Get a quote for your medical practice today and let us handle all money matters for you with proven accuracy.
FAQs
Can a guarantor refuse responsibility?
After signing for financial responsibility at the clinic/hospital, the guarantor is legally accountable for clearing all dues. So they cannot simply refuse that responsibility, which is why families must clarify who should take on the guarantor role to prevent disputes.
Does the guarantor get the insurance Explanation of Benefits (EOB)?
No, the EOB is sent to the person owning the insurance policy, not to someone who steps up to pay for the treatment(s). The guarantor only receives the bill that they have to clear with the provider, outlining what remains for them to pay after the insurance is processed.
What happens if a guarantor doesn’t pay?
If a guarantor doesn’t pay after receiving the bill from a provider, they’ll get constant reminders about that. In case the situation lingers, the provider might even suggest a payment plan to get the dues cleared. However, if the guarantor outright refuses or keeps delaying the payments, the provider will send their account to collections.
