Amy on Organizing Records

Be proactive to prevent medical identity theft by taking these measures:

• Guard your health insurance identity card as you would your credit cards.
• Insist your healthcare providers check your ID when you present your health insurance identity card.
• Don’t give out personal or medical information on the phone or in writing until you verify your contact.
• Be especially careful about any free offers.
• Monitor your Explanation of Benefits (EOB) statements and report any discrepancies.
• Review your medical records regularly to ensure accurate data.
• Shred health insurance forms and prescription information.

and, as you should already be doing to prevent financial identity theft:

• Get free credit reports.

Landmark studies* by the Ponemon Institute estimate the average cost of medical identity theft per victim is $20,663. 

Victims first learn about the medical identity theft upon

• receipt of a collection letter (46%) 
• discovery of a mistake in health records (30%),
• a drop in credit score (16%),
• an alert from a healthcare provider (9%),
• errors posted to medical invoices (9%), or, least likely,
• a data breach notification (5%).

Consequences are far ranging beginning with:

• out-of-pocket payments (50%),
• termination by plan or provider (49%),
• increased insurance premiums (33%),
• time lost to correct errors (24%),
• diminished credit score (19%),
• mistreatment or misdiagnosis of illness (18% and 10%), and
• legal fees (14%).

An estimated 1.49 million Americans were affected by medical identity theft in 2011 for a national impact of $30.9 billion.

In instances where there has been a data breach rather than an individual theft, the cause is most usually

• a lost or stolen computing device (49%) followed by
• a third-party mistake—perhaps by a business associate (46%), and
• an unintentional employee action (41%).

A data breach caused by a

• criminal attack (30%) or
• malicious insider (14%)

is much less likely.

Data breaches are most likely to be detected by

• an employee (51%), followed by 
• an audit/assessment (43%) or
• a patient complaint (35%).

Once a breach is detected, it takes an average of seven weeks to notify affected patients despite the widespread belief that it is critical to notify victims as soon as possible.

*All statistics cited are from the Ponemon Institute's Second Annual Survey on Medical Identity Theft, a survey of adult-aged individuals (March 2011), or the Study on Patient Privacy and Data Security, a survey of hospitals and healthcare organizations (December 2011).

Medical identity theft is a variation on identity theft, the theft of your personal information. Medical identity theft can affect your finances and your health. Learn to recognize the signs of medical identity theft:

• Bills for medical services you didn’t receive;
• Explanation of Benefits (EOB) statement that does not match services you received;
• Contacts from debt collectors about medical debt you don’t owe;
• Medical collection notices you don’t recognize on your credit report;
• Your health insurer denies a legitimate claim and says you’ve reached your limit on benefits; or
• You are denied insurance because your medical records show a condition you don’t have.

Medical identity theft may alter your medical and health insurance records. Inaccurate records can lead to inappropriate treatment which, in turn, could worsen your condition.

As you prepare to file your tax return, take time to organize your records regarding medical expenses. Although you must meet a threshold in order to take the deduction, you cannot make that calculation unless you have retained your records and added up your expenses. You may be surprised to learn what you may include such as mileage or travel expenses plus meals and lodging if you go out of town for care.

Even if you do not reach the threshold for the deduction or do not itemize, there’s another use for compiling your medical expenses. Use this data to estimate the set aside amount for a Flexible Spending Account (FSA). Using an FSA allows you to pay qualified medical expenses with pre-tax dollars. However, it’s critical not to overestimate your expenses because you will forfeit any dollars remaining in your account at the end of the plan year.

See IRS Publication 502 for details regarding qualified medical expenses.