What is Insurance Reimbursement?

R. Kimball

Insurance reimbursement is when one is reimbursed in accordance with an insurance policy for expenses that have been incurred and are covered under the policy. These policies might be for medical or dental insurance, homeowners insurance, automobile insurance or other types of insurance. Some types of insurance reimbursement are paid to the insured person under the insurance policy. Other types of reimbursements are paid directly to the provider of a certain good or service after the provider has submitted an assignment of benefits document to the insurance company.

An individual's insurance policy may have specific items for which expenses are covered, not covered, or covered in part.
An individual's insurance policy may have specific items for which expenses are covered, not covered, or covered in part.

Each insurance policy has specific items for which expenses are covered, not covered or covered in part. It is the insured or the assignee’s responsibility to provide the insurance company with the appropriate information so that the insurance company can determine what is or is not covered under the particular policy. The insurance company will provide an explanation of benefits that documents how reimbursed expenses were calculated. This explanation of benefits document is the insurance company’s response to the insured or its assignee’s request for reimbursement.

A homeowner who pays out-of-pocket to repair damage caused by a burglar may be reimbursed by her insurance company.
A homeowner who pays out-of-pocket to repair damage caused by a burglar may be reimbursed by her insurance company.

It is imperative that the insured or the insured’s assignee, such as a doctor’s office, complete the insurance company’s forms accurately in order to receive the largest available insurance reimbursement from the insurance company. As an insured selects a medical provider, for example, it is a good idea for him or her to learn whether this provider has previously worked with his or her insurance company. Each insurance company has specific pieces of information that it looks for in an insurance reimbursement application. If one’s application is missing this information, then his or her initial request for reimbursement might be denied. One can always appeal the denial, but doing so takes more time.

If a selected medical provider does not work with a specific insurance company, the insured is likely to have to pay for said medical services at the time services are rendered. It is then up to the insured to file with the insurance company for insurance reimbursement. Each policy has different requirements for co-payments and annual minimums to be met prior to reaching eligibility for reimbursement. When the insured pays for medical services out of pocket and then receives reimbursement, it can be several months before the insured receives the amounts due based on the insured’s policy.

When a specific medical provider works directly with an insurance company, the insured is required to sign an assignment of benefits document with the medical provider. The insured might be required to make a co-payment for services rendered on the date such services are provided. The medical provider is then responsible for working with the insurance company to receive its insurance reimbursement payment.

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I know I should know more about my medical insurance, but it is all too complex for me. When I go to the doctor I just show them my insurance card, and the bookkeepers in the office do the rest. Occasionally, I will receive a bill from the doctor's office with a note saying that my insurance company doesn't offer an insurance reimbursement for a particular procedure.

Fortunately, this doesn't happen often, and I bite the bullet and pay the charge when it does.


My sister and I had a small cleaning service for a few years. Mostly we cleaned people's houses at first, but once word of mouth began getting around we were offered a few cleaning jobs at local stores. Then one of the local banks needed someone to clean its offices in the evenings, so the manager offered us a contract to do the job.

Before we could get the contract, the bank manager said we had to get insurance so that if anything happened to the bank's property then the insurance would pay to replace or repair what was damaged. We had been working without insurance up to that point.

Anyway, we found an affordable insurance policy. It was the cheapest insurance we could find that would satisfy the bank manager. I didn't read the fine print as they say. I was mostly concerned with getting the cheapest policy possible, so we could get the bank job and start making money.

After we had been cleaning the bank for three or four months, the bank manager asked us to start shampooing the carpets as part of the contract. We agreed to do the carpets even though neither one of us had any experience doing this.

We put too much water on the carpet and didn't get in sucked back out, and the carpet molded. The insurance company refused to pay for the damage because it was not included in the original policy, and we didn't update the policy before we cleaned the carpet. We got no insurance reimbursement. The bank manager got in trouble, and we loss the contract.

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