Bookkeeping, payroll, and tax services for small businesses across the Valley of the Sun.

Call or Text: (602) 730-4560

How do I handle patient copays and deductibles in my accounting when collected at different times?

The best practice is straightforward: collect copays and known deductible amounts at the time of service. When the patient is standing at your front desk, that is the single easiest moment to collect what they owe. Every day that passes after the visit makes collection harder and more expensive.

This matters more now than it ever has. Patient responsibility after insurance currently accounts for roughly 58% of practice bad debt, up from just 11% in 2018. High-deductible health plans have shifted an enormous portion of financial responsibility to patients, and practices that don’t adapt their collection process are writing off money they earned.

Verify benefits before the appointment. Know what the patient’s copay is, whether they’ve met their deductible, and what their coinsurance looks like. When your front desk can say “your copay today is $40 and you have $800 remaining on your deductible, so your estimated out-of-pocket for this visit is $165,” you collect significantly more at the point of service than practices that send a bill six weeks later.

When you can’t collect at the time of service, the accounting treatment matters. Set up a separate accounts receivable account or sub-account for patient balances, distinct from your insurance A/R. These two receivables behave completely differently. Insurance A/R follows a predictable timeline with known payers. Patient A/R ages unpredictably and requires different follow-up. Lumping them together makes it impossible to see where your collection problems actually are.

When you post the charge, the full amount goes to revenue. The insurance portion goes to insurance A/R. The patient portion (copay, deductible, coinsurance) goes to patient A/R if not collected at checkout. When insurance pays and there’s a remaining patient balance, that amount moves from insurance A/R to patient A/R. This way your patient A/R balance always reflects exactly what patients owe you right now.

Age your patient A/R separately and review it weekly or at minimum twice a month. Balances over 60 days old are significantly harder to collect. Have a clear policy for when you send statements, when you make follow-up calls, and when you consider sending accounts to collections or writing them off. Medical and dental practices that review patient A/R regularly and act on aging balances keep their write-offs much lower than those that let balances sit.

In QuickBooks, you can handle this with sub-accounts under Accounts Receivable or by using separate A/R accounts if your version supports it. The key is that your reporting clearly separates what insurance companies owe you from what patients owe you. When you run an aging report, you should be able to see each category on its own.

Write-offs for uncollectible patient balances should go to a specific bad debt expense account. Don’t just delete the invoice or apply a discount. You want to see how much you’re writing off each month and each quarter so you can evaluate whether your front-desk collection process needs improvement. If bad debt is climbing, the fix is almost always operational, meaning better benefits verification and more consistent upfront collection, not just better follow-up after the fact.

Whether you’re a dental office in Scottsdale or a chiropractic practice in Mesa, the financial discipline is the same. Practices across the Valley that treat patient collections as a front-desk priority rather than a billing department afterthought consistently perform better financially. If your books aren’t set up to give you that visibility, or you’re behind on reconciling what’s been collected versus what’s outstanding, that’s worth fixing now. David has spent years helping Phoenix practices with exactly this kind of construction job costing in Phoenix level of detail applied to healthcare accounting, where every dollar is tracked to its source and its status.

Your Valley of the Sun Bookkeeper

The Next Step:
A Quick Conversation

Tell us what's going on with your books. We'll listen, ask a few questions, and give you a clear quote with no surprises.

More Questions

How should I account for security deposits received and returned on rental properties?

Security deposits are a liability, not income. Record them to a liability account when received and reverse the entry when returned. If you retain any portion for damages, reclassify that amount to income and record the repair expense separately.

Read answer

What home office deduction rules apply to real estate agents who work from home?

Real estate agents who work from home can claim the home office deduction if they meet the exclusive-use and regular-use tests. Most agents qualify because their home office serves as their principal place of business for administrative work.

Read answer

Can I deduct hand tools and power tools as a self-employed electrician or do I depreciate them?

Most hand tools and power tools under $2,500 can be deducted immediately using the IRS de minimis safe harbor election. Tools over $2,500 can be fully deducted through Section 179 or depreciated over 5 to 7 years. Either way, keep every receipt because tool deductions are a common audit flag for trades.

Read answer

What financial reports should a medical practice owner review monthly?

Focus on a P&L by provider, A/R aging by payer, collections vs charges ratio, overhead percentage, and days in A/R. Monthly review catches revenue and cash flow problems before they get out of hand.

Read answer

How do I account for tip income and tip reporting requirements at my salon?

Your obligations depend on whether your stylists are W-2 employees or booth renters. Employees must report all tips to you, and tips over $20 per month are subject to FICA. Booth renters handle their own tip reporting on Schedule C.

Read answer

What are Arizona's requirements for filing state payroll taxes and Form A-4?

Arizona uses a unique flat-percentage withholding system where employees choose their rate on Form A-4. Employers deposit withholding quarterly using Form A1-QRT and file an annual reconciliation on Form A1-R by February 28.

Read answer

Phoenix-based bookkeeping firm serving small businesses across the Valley of the Sun. We provide bookkeeping, payroll, tax preparation, and fractional CFO support with transparent pricing and no upselling. Owned and operated by David Morrow, a former COO with 20+ years of business experience.

Client Reviews

5-Star Rated Firm

Social

  • QuickBooks Online Certification Level 1 badge
  • QuickBooks Online Certification Level 2 badge
  • QuickBooks Online Payroll Certification badge

© 2026 2Morrow Bookkeeping LLC