In healthcare centers, the first thing that is prioritized is patient care and providing the best treatment at the right time. The patient pays all of their expenses to healthcare professionals for their services after the treatment and recovery. Here the work of medical billing starts. Medical billing involves multiple processes and different entities like healthcare providers, insurance companies, and patients. Among these players, one crucial entity that plays a critical role in the medical billing process is the guarantor. A person or organization that is required to cover a patient’s medical expenses is known as a guarantor. But why do we need a guarantor in medical billing and why does it matter? Let’s understand the whole concept of a guarantor in medical billing.
What is a Guarantor?
A guarantor is a person or entity that is responsible for paying a patient’s medical bills. This person is someone who has a financial interest in the patient’s medical care such as a family member, spouse, or employer, and agrees to take responsibility for another person’s debt or obligation if that person defaults. The guarantor takes financial responsibility for the patient’s medical bills regardless of who receives the medical care or who is ultimately responsible for paying the bills. For example, if you are applying for a loan and your credit score is not strong enough, a lender requires you to have a guarantor. The guarantor will be responsible for repaying the loan if you fail to do so. Now, this isn’t always as straightforward as it sounds. Sometimes the patient and the guarantor are the same person. But in most of the cases, they’re not.
Why the Guarantor Role Even Exists
Healthcare providers need someone they can turn to for payment if insurance doesn’t cover the entire bill or if there’s no insurance at all. The guarantor is essentially the backup plan. They guarantee responsibility. Billing systems need a point of contact to direct invoices, set up payment plans, or send to collections if things go in the wrong direction. That’s why defining the guarantor clearly at the beginning of care really matters. It helps practices avoid confusion later and speeds up their billing processes. But what are the benefits of a guarantor from the provider’s side? Having a clearly designated guarantor is a safeguard.
Who Usually Ends Up Being the Guarantor?
The major question is who can be a guarantor? The guarantor isn’t just whoever fills out the form. There are a few typical scenarios and they depend on the patient’s age, insurance coverage, and even legal guardianship. Let’s look at some common examples:
Adults Paying for Their Own Care
If you’re an adult going to the doctor, you’re usually both the patient and the guarantor. It is as simple as you receive the care, the bill comes in your name, and you’re responsible for paying it. No matter how you pay whether through insurance, out-of-pocket, or some combo of both.
Children or Minors
What if a five-year-old gets a checkup? Obviously, they’re not footing the bill. In this case, a parent or legal guardian becomes the guarantor. That parent is the one who gets the bill and is legally responsible for paying it, even if the services were provided to the child. This scenario is considered standard but can be critical in case of divorce, joint custody, or step-parent involvement.
Dependent Adults
Some adults like those with disabilities or elderly individuals might not be able to manage their finances. In that case, a caregiver, legal guardian, or someone with financial power of attorney can be listed as the guarantor. Again, they’re not the patient but they take on the role of financial responsibility.
Why is Guarantor Important in Medical Billing?
In medical billing, the guarantor is responsible for providing accurate and up-to-date information about the patient’s insurance coverage and medical history. Guarantors are also important for a few other reasons:
Financial Responsibility
As we already stated the guarantor assumes financial responsibility for the patient’s medical bills. This means that they are legally responsible for paying the bills even if the insurance company denies the claim or does not cover the full amount.
Insurance Verification
The guarantor is responsible for providing the patient’s insurance information and verifying the coverage. Without this information, the medical provider may not be able to bill the insurance company which would cause a delay in payment.
Billing Address
The guarantor provides the billing address which is where the medical provider sends the bills. If the billing address is incorrect, the bills may not reach the guarantor, resulting in a delay in payment or even non-payment.
Follow-up
If the insurance company declines the claim or does not cover the full amount, the guarantor is responsible for following up with the insurance company and resolving any issues. This can be a time-consuming and difficult process but it is essential to verify that the bills are paid.
Types of Guarantors
Not all guarantors are the same. Depending on the situation, the title of guarantor can mean different things. Let’s see the most common types.
Primary Guarantor
The primary guarantor as the name shows is the main person responsible for paying the medical bill. This is usually the first person listed when setting up a patient’s billing profile.
They’re responsible for:
- Receiving statements
- Handling payment plans
- Dealing with insurance rejections or balances not covered
Example:
If the child visits the pediatrician. Then definitely the mother fills out the forms and agrees to take financial responsibility. In this case, the mother is the primary guarantor.
Secondary Guarantor
The secondary guarantor is like the backup of the primary guarantor. They’re not the first person expected to pay but they’ve agreed to step in if needed. This person can be called on to help cover the bill if the primary can’t or doesn’t pay.
Example:
An elderly patient might have a son listed as the primary guarantor but a daughter is listed as secondary in case he can’t manage the payments. If the bill goes unpaid for a certain time then the provider can contact the secondary guarantor to pay all those bills.
Guarantor for Medical Treatment
Guarantor for medical treatment shows someone who specifically agrees to take financial responsibility just for a certain treatment or visit, not for all of the patient’s medical care.
Example:
A college student gets minor surgery and a friend provides to cover just that procedure. If the friend signs a guarantor form for that specific visit or treatment, they become the guarantor for medical treatment.
Tertiary Guarantor
A tertiary guarantor is usually the third level of responsibility in the billing chain. They’re rarely used but they exist in more complex financial arrangements.
Example:
If a child is covered by both parents’ insurance (primary and secondary), a grandparent steps in to help with any remaining balance. The grandparent might be listed as the tertiary guarantor to handle whatever’s left after the first two payers.
Financial Guarantor
The financial guarantor is the person or entity responsible for paying the bill. Most of the time people overlap it with the primary guarantor but it’s often used more broadly in systems or billing software.
A financial guarantor could be:
- A parent
- A spouse
- A legal guardian
- Or even an organization
Example:
If a foster care agency is paying for a child’s care then they’d be listed as the financial guarantor.
Non-Financial Guarantor
This type of guarantor can be confusing as we are saying above a guarantor is someone financially responsible. But in some healthcare systems, the term non-financial guarantor is used to refer to someone who’s listed for legal or record-keeping purposes without actually being responsible for the money.
This could be:
- A legal guardian who manages care decisions but not finances
- A point of contact for the patient who’s not paying the bill
- Someone listed in the system to receive updates, but not statements
Example:
A social worker for a group home might be listed as a non-financial guarantor so the medical office has someone to communicate with about care but the state is actually footing the bill.
So basically, they’re involved in the patient’s case but not in the money side of things.
What is the difference between Guarantor and Subscriber?
In medical billing, the terms guarantor and subscriber are often used interchangeably. But both of these terms are totally different. A subscriber is a person who is enrolled in the health insurance plan and is responsible for paying the insurance premiums. The guarantor on the other hand is responsible for paying the patient’s medical bills regardless of who is enrolled in the health insurance plan. In many cases, the subscriber and the guarantor are the same people but this is not always the case. For example, a parent can be the subscriber to a family health insurance plan but the child’s medical bills can be the responsibility of the guarantor who is the parent.
Is there a difference between Guarantors and Co-Borrowers?
While guarantors and co-borrowers share some similarities, they are not the same thing. Co-borrowers are individuals who are jointly responsible for repaying a loan, such as a mortgage or a car loan. In contrast, a guarantor is someone who assumes financial responsibility for another person’s debts, such as medical bills. Unlike a guarantor, a co-borrower is equally liable for the debt and has an ownership interest in the property or asset that the loan is used to purchase. For example, if you and your spouse apply for a mortgage together, you will both be co-borrowers.
How are Guarantors and Cosigners different?
A cosigner is similar to a guarantor in that they agree to take responsibility for someone else’s debt if they default. However, a cosigner is usually required when the primary borrower does not have enough credit history or income to qualify for a loan on their own. A cosigner is also equally liable for the debt and may have a legal right to claim ownership of the asset that the loan is used to purchase. For example, if a student applies for a private loan to pay for their tuition they may need a cosigner to qualify for the loan.
