Alyssa Lane
There are several ways to account for insurance proceeds in QuickBooks, depending on the type of insurance and the nature of the claim. For example, in the case of a property insurance claim, one might create an income category for insurance claims, whereas for auto insurance, one might create a deposit account for the check received from the insurance company. In the case of health insurance, it is important to understand the total monthly cost of the plan, the payroll cadence, and the employee/employer contribution split. This information can then be used to create journal entries within QuickBooks to account for health insurance contributions.
| Characteristics | Values |
|---|---|
| Record insurance premium | Click Accounting on the left pane, select Chart of Accounts, select New, select Other Current Liabilities from the Account Type drop-down menu, enter a name for the account, enter the balance amount, select Save and close, record the payments by creating expense transactions using the account created, record the increased premium amount via journal entry, check with an accountant to ensure it's recorded correctly |
| Record insurance settlement | Deposit the funds given by the insurance company, use the same expense account as the source account for the deposit, create a bank deposit for the check received from the insurance company, create a deposit account for insurance |
| Record insurance claim payment | Create an account to track the entry and then make a deposit, tap the Accounting menu on the left panel, select Chart of Accounts, press New, choose the account you want to use by clicking the Account Type drop-down, choose the correct category in the Detail Type drop-down, enter a term that will identify the account in the Name field, fill in the remaining field boxes, hit Save and Close, consult with an accountant to determine the specific account to use in tracking the insurance claim payment |
| Record insurance payment paid on behalf | Click Receive Payment within the specific customer invoice, select either Check or Direct Deposit, attribute the payment to an A/R account |
| Record property insurance claim | Deposit the check in the same EXPENSE category, create an income category for Insurance Claims |
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What You'll Learn
Recording insurance payments received from insurance companies
Creating a Bank Deposit
If you receive a payment from an insurance company, such as a settlement or reimbursement, you can record it as a bank deposit in QuickBooks. First, create a new account specifically for the insurance payment. You can name it "Insurance Company" or something similar. Then, go to the "Accounting" or "Chart of Accounts" section and select "New" or Account to create the new account. Choose the appropriate account type, such as Other Income or Other Current Liabilities, depending on the nature of the payment. Once the account is created, you can deposit the funds and link the payment to this account.
Recording Insurance Premiums
To record insurance premiums, you can create a liability account in QuickBooks. Go to "Accounting" on the left pane and select "Chart of Accounts." Choose "New" and select "Other Current Liabilities" from the "Account Type" drop-down menu. Then, select "Trust Accounts - Liabilities" from the "Detail Type" drop-down menu. Enter a name for the account, such as "Health Insurance Premium," and the balance amount. After saving the account, record the premium payments as expense transactions using the newly created account.
Recording Insurance Claim Payments
For insurance claim payments, you can follow a similar process as above. Create a new account specifically for the insurance claim, such as "Blue Cross Insurance Claim Account." Then, when you receive a payment, go to "Receive Payment" within the specific customer invoice and select the appropriate payment method (check or direct deposit). You can then link the payment to the appropriate insurance claim account.
It's important to note that the specific steps may vary depending on your version of QuickBooks and the type of insurance payment you're recording. Additionally, consulting with an accountant or bookkeeper is recommended to ensure accurate recording and compliance with tax regulations.
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Recording insurance payments paid on behalf of a patient
Create a New Account
To begin, you will need to create a new account to track the insurance payment entry. Go to the "Accounting" or "Accounting Menu" on the left panel and select “Chart of Accounts” to access the “All Lists” page. From there, click on the “New” menu in the upper right corner to open the “Account Window”.
Choose Account Type and Category
In the Account Window, select the appropriate account type by clicking on the “Account Type” drop-down menu. Then, choose the correct category for the insurance payment by using the “Detail Type” drop-down menu. For insurance payments, you may select "Other Current Liabilities" as the account type and “Trust Accounts - Liabilities” as the category.
Enter Account Name and Amount
Enter a name that identifies the account, such as “Insurance Company” or “Health Insurance Premium”. You can also accept the suggested name. Next, enter the amount of the insurance payment in the corresponding field.
Save and Close
Once you have entered all the necessary information, click on “Save and Close”. This will create the new account for tracking insurance payments.
Record the Payment
After creating the account, you can now record the insurance payment received on behalf of the patient. Click on “Receive Payment” within the specific customer invoice and select either “Check” or “Direct Deposit” as the payment method. You can then attribute this payment to the appropriate account, such as the “Blue Cross Insurance Claim Account” or “Medicare Claim Account”.
It is important to note that QuickBooks operates on a customer level, so you may need to set up the patients as sub-customers of the insurance company to properly track the payments. Additionally, consult with an accountant to ensure that the insurance payment is recorded correctly and complies with tax requirements.
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Recording insurance settlements
Next, you can create a bank deposit for the amount of the check you received from the insurance company. This can be done by depositing the funds and using the same expense account as the source account for the deposit. If you have accompanying expenses, you can match the income and expense in the same account. If you do not plan to get your item repaired, there may be a more complicated treatment of the money received, as the value of the item may have decreased. In this case, it is best to consult an accountant.
For property insurance claims, you may need to create an income category for Insurance Claims. However, if you are repairing an item, this is considered an expense for that property.
Additionally, for health insurance contributions, you can accrue for employer/employee contributions during a pay period by creating a journal entry with a balance of the total monthly cost of the plan. Once the health insurance bill has been paid, the liability account should be relieved and left with a balance of $0.
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Setting up a payment received for an insurance claim
To set up a payment received for an insurance claim in QuickBooks, you can follow these steps:
Firstly, you need to create an account to track the entry and then make a deposit. Go to the Accounting menu on the left panel, then select the Chart of Accounts to open the All Lists page. Click on the New menu in the upper right corner to access the Account window. Choose the account type and category that apply to your insurance claim payment. Enter a term that will identify the account in the Name field (e.g. Insurance Company). You can fill in the remaining field boxes with relevant details. Finally, hit Save and Close.
If you are receiving payments from specific insurance companies or government payors on behalf of patients/beneficiaries, you can click on "Receive Payment" within the specific customer invoice. You can then select either Check or Direct Deposit, which usually goes to Accounts Receivable (A/R). You can then attribute the payment to an A/R account, such as a Blue Cross Insurance Claim Account or Medicare Claim Account.
For property insurance claims, you may want to deposit the check in the same EXPENSE category or create a separate income category for Insurance Claims. This may depend on whether you are repairing or replacing the damaged property, as repairs do not impact the fixed asset, while a replacement does and is considered a new fixed asset.
Additionally, if you are dealing with health insurance contributions, you need to understand the total monthly cost of your plan, your company's payroll cadence, and the employee/employer contribution split. You can then set up an integration with payroll software to ensure that health insurance deductions and expenses are properly booked into your accounting ledger within QuickBooks. Alternatively, you can create a journal entry for health insurance contributions by clicking "New" and then "Journal Entry" under the "Other" section.
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Recording insurance premium
Next, record the payments by creating expense transactions using the newly created account. You can record the increased premium amount via journal entry, and it is recommended to check with your accountant to ensure it is recorded correctly.
If you are recording insurance premiums for employee payroll, the process is slightly different. In the 'Other Liability & Asset Accounts' section of the 'Payroll Settings', the Health Insurance Premium is located. This section only lists liability accounts, so the Employee's Health Insurance Payable grows. Company contributions, on the other hand, only have expense accounts, and these contributions are duplicated as a general health insurance expense.
For insurance premiums related to a specific claim, the process is a little different again. When setting up a payment received for an insurance claim, choose the name of your insurance company, the account you will use to pay for the repairs, and a description such as "proceeds from accident claim". Enter the amount and save. This can be done by creating a bank deposit for the check you received.
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Frequently asked questions
To record the payment, create an account to track the entry and then make a deposit. Tap the Accounting menu on the left panel and select Chart of Accounts to open the All Lists page. Press the New menu in the upper right to access the Account window. Choose the account you want to use by clicking the Account Type drop-down. Then, choose the correct category in the Detail Type drop-down. Enter a term that will identify the account in the Name field.
In QuickBooks Online, you can create a bank deposit for the check you received from the insurance company. Go to Accounting and select Chart of Accounts. Select New. From the Account Type drop-down menu, select Other Current Liabilities. From the Detail Type drop-down menu, select Trust Accounts - Liabilities. Enter a name for the account and the balance amount. Select Save and close.
You can deposit the check in the same EXPENSE category. Alternatively, you can create an income category for Insurance Claims.
First, understand the total monthly cost of your plan, your company's payroll cadence, and your employee/employer contribution split. Next, set up an integration directly to QuickBooks Online to ensure that payroll gets properly booked to the necessary accounts.
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