Healthcare providers build up patient credit balances from collecting more coinsurance, copays, and deductibles than they earn. Unfortunately, because the fees are unearned, the healthcare provider has inadvertently accepted fiduciary responsibility for the funds. In addition to safeguarding the funds from potential loss, the healthcare provider is now facing penalties and interest from the states for failing to turn over the funds as unclaimed property.
Penalties & interest
For example, Title 6 of the Texas Property Code requires an individual or entity holding property to which it does not have legal claim (the “holder”) to turn that property (the “unclaimed property”) over to the rightful owners by July 1st each year. If the holder cannot locate the rightful owners, it must turn the unclaimed property over to the state comptroller. In fact, all companies who fail to report and remit unclaimed property on time are assessed interest and penalties from the date the property should have been turned over until the date it is received by the state comptroller.
Benefit of a VDA
Fortunately, both penalties and interest can be waived by the comptroller if the holder enters a Voluntary Disclosure Agreement (VDA) and reports and remits the unclaimed property voluntarily. However, once the comptroller initiates an investigation, the holder is precluded from entering a VDA. Other state unclaimed property divisions have different rules and requirements to follow. Due to the complexity of complying with the ever-changing unclaimed property laws, leading businesses automate the compliance process with software.
Find out how Sovos unclaimed property compliance software can benefit your business.