Can a Texas doctor waive your copay or deductible if they take an insurance assignment?

Plain-English summary

When you have health insurance, you usually owe a copay or a deductible, and your insurer pays the rest. Texas lets you "assign" your benefits, meaning you tell the insurer to pay your doctor directly instead of reimbursing you. A 1991 statute, Insurance Code article 21.24-1, set the ground rules for those assignments. One sentence in it, section 4(c), said a provider "may not waive copayments or deductibles by acceptance of an assignment." A state senator asked the Attorney General whether that sentence meant a doctor can never waive a copay or deductible whenever there is an assignment.

The Attorney General said no, the sentence is narrower than that. The whole statute is about sorting out who owes what once benefits are assigned, not about banning waivers outright. Section 3(a) protects your right to assign your benefits, section 4(a) says the insurer pays the provider directly on a proper assignment, and other parts spell out the limits and the insurer's position. Section 4(c) fits that pattern. Its first sentence reminds the patient that assigning benefits does not erase the patient's responsibility for the copay or deductible. The second sentence does the mirror image for the provider: taking an assignment does not erase the provider's duty to bill for and collect that copay or deductible. In other words, the assignment alone is not a waiver.

The opinion was careful about what it was not deciding. Exactly what a provider has to do to meet its billing and collection obligations comes from the insurance policy that was assigned, or from other law, not from section 4, so the Attorney General did not address it. But the opinion added a practical warning: a provider would be ill advised to tell a patient or prospective patient that a deductible or copay will be waived as a way to get the person to use the provider's services. It pointed to a federal decision and other authorities treating routine copayment waivers as a problem, sometimes as an unfair trade practice.

Currency note

This opinion was issued in 1993. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. Insurance Code article 21.24-1 has since been recodified into the Texas Insurance Code, so confirm the current section numbers and text before relying on anything described here.

Background and statutory framework

Senator O. H. "Ike" Harris, as chairman of the Senate Jurisprudence Committee, asked whether the second sentence of section 4(c) of Insurance Code article 21.24-1 prohibits a physician or other health care provider from waiving a copayment or deductible in any instance where there is an assignment of benefits. Section 4(c) provides: "The payment of benefits under an assignment does not relieve the covered person of any contractual responsibility for the payment of deductibles and copayments. A physician or other health care provider may not waive copayments or deductibles by acceptance of an assignment." The AG concluded the language generally operates only to clarify that the assignment of benefits does not relieve the provider of any obligation to bill for or collect the copayment or deductible.

Reading section 4(c) in context. Article 21.24-1, added in 1991, contains several provisions that define the rights and obligations of the parties to an assignment of benefits. Section 3(a) protects an insured's right to assign benefits, providing that a health insurance policy may not contain language prohibiting or restricting the written assignment of benefits by a "covered person" (the insured) to a provider who furnishes covered services. Acts 1991, 72d Leg., ch. 242, § 11.87(a). Section 4(a) defines how payment is made on certain assignments delivered to or obtained by the insurer, directing that "the benefit payment shall be made directly to the physician or other health care provider." Ins. Code art. 21.24-1, § 4(a); see also §§ 1 (definitions, including "covered person," "health care provider," "health care service," "health insurance policy," and "insurer"), 2 (application to employee benefit plans and to the Texas Employees Uniform Group Insurance Benefits Act and the Texas State College and University Employees Uniform Insurance Benefits Act). Section 3(b) provides the article does not create benefits unavailable under a particular policy, does not authorize assignment to recipients or providers of services not covered or not legally entitled to receive them, and does not prohibit an insurer's verification that services were provided. Section 4(b) provides that where the insurer pays the provider directly under an assignment, the insurer is relieved of the obligation to pay those benefits to the covered person.

The clarifying reading. All of those provisions serve to define the rights and obligations of the parties affected by an assignment. The AG read the second sentence of section 4(c) as having a similar purpose. Just as the first sentence of section 4(c) clarifies a covered person's obligations once he or she makes an assignment, the second sentence makes a similar provision for the provider: an assignment of benefits by an insured does not relieve the physician or provider who receives the benefits from any contractual responsibility regarding billing or collecting copayments or deductibles. That reading comports with the clarificatory tenor of the rest of section 4 and of section 3(b).

What the opinion did not decide, and a caution. The AG concluded the second sentence of section 4(c) is intended to clarify that acceptance of an assignment does not relieve the provider of obligations regarding billing for or collecting a copayment or deductible. What a provider must do to satisfy those contractual obligations is not addressed by section 4 and was beyond the opinion's scope; such obligations may arise from the insurance policy assigned or other applicable law. The AG cautioned, however, that a provider would be ill advised to represent to a client or prospective client that a deductible or copayment will be waived in order to induce that person to use the provider's services, a point illustrated in Kennedy v. Connecticut Gen. Life Ins. Co., 924 F.2d 698, 702 (7th Cir. 1991) (to receive payments under a plan requiring copayments, a provider must collect copayments "or at least leave the patient legally responsible for them"); Attorney General Opinion JM-1154 (1990) (waiver of an insurance deductible under section 27.02 of the Business and Commerce Code); 49 A.L.R.4th 1219 and authorities cited there (a provider's agreement on a patient's copayment liability as an unfair trade practice).

Common questions

Does Texas law ban doctors from ever waiving a copay or deductible?
Not under this provision. The opinion read section 4(c) of Insurance Code article 21.24-1 as a clarifying rule, not a flat prohibition. Its point is that taking an assignment of benefits does not, by itself, relieve a provider of the duty to bill for and collect the copay or deductible.

So what does "may not waive ... by acceptance of an assignment" actually mean?
It means the assignment alone is not a waiver. Accepting an assignment of your insurance benefits does not automatically cancel the patient's responsibility for the copay or deductible or the provider's responsibility to bill and collect it.

Where do a provider's actual billing duties come from?
From the insurance policy that was assigned, or from other applicable law, the opinion said, not from section 4. The Attorney General did not decide exactly what a provider must do, treating that as outside the question.

Is it risky for a provider to advertise that copays or deductibles will be waived?
The opinion warned it would be ill advised to promise a waiver to induce someone to use the provider's services, citing authorities that treat routine copayment waivers as a potential unfair trade practice.

Citations

• Insurance Code article 21.24-1 (assignment of health insurance benefits; added 1991, Acts 1991, 72d Leg., ch. 242, § 11.87(a)): § 3(a) (right to assign benefits), § 3(b) (limits on what an assignment creates or authorizes), § 4(a) (payment made directly to the provider), § 4(b) (insurer relieved on direct payment), § 4(c) (assignment does not relieve covered person's or provider's responsibilities)
• Business and Commerce Code § 27.02 (waiver of insurance deductible; via AG Opinion JM-1154)
• Kennedy v. Connecticut Gen. Life Ins. Co., 924 F.2d 698 (7th Cir. 1991)
• Attorney General Opinion JM-1154 (1990); 49 A.L.R.4th 1219

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/dan-morales/dm-0215
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1993/dm0215.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain; the garbled case name was verified against the official reporter, and one garbled signature given name is marked. The linked PDF is authoritative.

Office of the Attorney General
State of Texas

DAN MORALES
ATTORNEY GENERAL

April 13, 1993

Honorable O. H. "Ike" Harris
Chairman
Jurisprudence Committee
Texas State Senate
P.O. Box 12068, Office 128-C
Austin, Texas 78711

Opinion No. DM-215

Re: Interpretation of article 21.24-1, section 4(c) of the Insurance Code relating to assignment of health insurance benefits and waiver of deductibles or copayments (RQ-353)

Dear Senator Harris:

Section 4, subsection (c) of article 21.24-1 of the Insurance Code provides:

The payment of benefits under an assignment does not relieve the covered person of any contractual responsibility for the payment of deductibles and copayments. A physician or other health care provider may not waive copayments or deductibles by acceptance of an assignment. [Emphasis added.]

You ask whether the effect of the second sentence of section 4(c) is to prohibit a physician's or other health care provider's waiving a copayment or deductible in any instance in which there is an assignment of benefits. We conclude that the language in question generally operates only to clarify that the assignment of benefits does not relieve the health care provider of any obligations incumbent on it, prior to bill for or to collect a copayment or deductible amount.

We arrive at this construction of the section 4(c) prohibition regarding a health care provider's waiver of a copayment or deductible on the basis of its context. Insurance Code article 21.24-1, added in 1991, contains several provisions that clarify the legal rights and obligations arising among the various parties created by an assignment of benefits from an insured to a health care provider. For example, section 3(a) defines the right of an insured to assign insurance benefits to a health care provider: it provides that a health insurance policy may not contain language that would prohibit or restrict the written assignment of benefits by a "covered person," i.e., an insured, to a health care provider who furnishes health care services covered by the policy. Acts 1991, 72d Leg., ch. 242, § 11.87(a). Another provision of article 21.24-1, section 4(a), defines how payment of proceeds is to be made on certain assignments made by a covered person and delivered to or obtained by the insurer. It provides that "the benefit payment shall be made directly to the physician or other health care provider." Ins. Code art. 21.24-1, § 4(a); see also §§ 1 (definitions of, inter alia, "covered person," "health care provider," "health care service," "health insurance policy," and "insurer"), 2 (application of article to employee benefit plans, and to Texas Employees Uniform Group Insurance Benefits Act and the Texas State College and University Employees Uniform Insurance Benefits Act).

Section 3(b) provides that the article does not create benefits not available under a particular health insurance policy, does not authorize the assignment of benefits to recipients or providers of services not covered by a policy or not legally entitled to receive such, and does not prohibit an insurer's verification that services were provided. Section 4(b) provides that where the insurer pays the provider directly under an assignment, the insurer is relieved of the obligation to pay the benefits in question to the covered person.

All of the previously discussed provisions serve to define the rights and obligations of the various parties affected by the assignment of benefits. We read the second sentence of section 4(c) as having a similar purpose. Just as the first sentence of section 4(c) clarifies the obligations of a covered person once he or she makes an assignment of benefits, the second sentence of that section makes a similar provision with respect to the health care provider, i.e., that an assignment of benefits by an insured does not relieve the physician or health care provider who receives the benefits from any contractual responsibility regarding billing or collecting copayments or deductibles. Such a reading of the second sentence of section 4(c) comports with the clarificatory tenor of the other provisions of section 4 and of section 3(b) of article 21.24-1.

We therefore conclude that the second sentence of section 4(c) is intended to clarify that the acceptance of an assignment of benefits does not relieve the provider of any obligations regarding billing for or collecting a copayment or deductible. What a health care provider must do to satisfy any contractual obligations in this regard is not addressed by section 4 and is beyond the scope of this opinion. Such obligations may be created by the insurance policy assigned or perhaps by other applicable law. We do caution, however, that a health care provider would be ill advised to represent to a client or prospective client that a deductible or copayment will be waived in order to induce that individual to use the health care provider's services. See generally Kennedy v. Connecticut Gen. Life Ins. Co., 924 F.2d 698, 702 (7th Cir. 1991) (in order to receive payments under the plan in question, which required copayments, a provider must collect copayments "or at least leave the patient legally responsible for them"); Attorney General Opinion JM-1154 (1990) (waiver of insurance deductible under section 27.02 of the Business and Commerce Code); 49 A.L.R.4th 1219 et seq., and authorities cited there (health provider's agreement as to patient's copayment liability after award by professional service insurer as unfair trade practice).

SUMMARY

Section 4(c) of article 21.24-1 of the Insurance Code clarifies that a health care provider who accepts an assignment of benefits is not relieved of any obligations regarding billing for or collecting a copayment or deductible. What a health care provider must do to satisfy any contractual obligations in this regard is not addressed by section 4 and is beyond the scope of this opinion. We caution, however, that a health care provider would be ill advised to represent to a client or prospective client that a deductible or copayment will be waived in order to induce that individual to use the health care provider's services.

DAN MORALES
Attorney General of Texas

WILL PRYOR
First Assistant Attorney General

MARY KELLER
Deputy Attorney General for Litigation

RENEA HICKS
State Solicitor

MADELEINE B. JOHNSON
Chair, Opinion Committee

Prepared by [given name illegible in source scan] M. Walker
Assistant Attorney General