Scroll

How are finance charges calculated?

Finance charges in MacPractice are evaluated from the account's balance. However, each charge is checked to determine whether it is included for the sake of calculating finance charges accurately.

This article aims to explain how finance charges are assessed. Finance Charges are typically assessed from running the Statements Manager. Please refer to this article for more information on the Statements Manager.

Finance Charge Formula
Finance charges are calculated using these formulas:

  • Assessable Balance x Monthly Rate (%) = Finance Charge
  • If Finance Charge is less than Minimum FC:
    • Finance Charge = Min. Finance Charge
  • If Finance Charge is greater than Maximum FC:
    • Finance Charge = Max. Finance Charge

The Monthly Rate (%), Min. Finance Charge, and Max. Finance Charge are set in the Finance Charges tab in the Statements Manager.

Screen_Shot_2018-02-13_at_11.46.36_AM.png

What's the Assessable Balance?
When the Statements Manager is run, it checks for the Assessable Balance, the portion of the balance that qualifies for finance charges. 

The Assessable Balance is calculated by checking all charges against the number of days entered in the Overdue field.

If a charge is overdue, the Patient Portion of that charge will count towards the Assessable Balance.

Overdue Base Date and Overdue Field
In the Finance Charges tab of the Statements Manager, in the top right of the window you can see an "Overdue Base Date" section and an "Overdue" field visible in the screenshot above.

The Overdue Base Date section controls how the Overdue Base Date is calculated. You can choose whether the Overdue Base Date is either Service Date, or the Last. Insurance Payment Posted Date. 

Service Date

  • This can either be the charge's Posted Date or Procedure Date.
  • The age of the charge is the number of days between today's date and the Posted/Procedure Date, whichever is selected.

Last Insurance Payment Posted Date

  • The Last Insurance Payment is the most recent insurance payment connected to a charge.
    • If charge was paid by insurance, the Overdue Base Date is that connected insurance payment's Posted Date.
    • If charge has not paid by insurance, and the charge has an insurance portion, the Statements Manager will use the current date, meaning it won't be considered as an overdue charge.
    • Otherwise, the charge's Posted Date will be used.

The Statements Manager will take the value entered into the Overdue field, and compare each charge's Overdue Base Date with the numbers of days equal to the Overdue field. If the difference exceeds the Overdue field number, that balance is added to the Assessable Balance.

Example

In an example account, let's say we have three charges.

  • $100.00 on 01/01/2018
  • $150.00 on 01/10/2018
  • $200.00 on 01/20/2018

On 01/21/2018, we run the Statements Manager, and have a Finance Charge of 5.00% entered, with a maximum Finance Charge of $10.00. The Overdue field has 5 days entered, and the Overdue Base Date is set to Service Date and Posted Date.

In this situation, only the charges for 01/01/2018 and 01/10/2018 would be assessable charges. Therefore, we would take 5.00% of the sum of the assessable charges.

$100 + $150 = $250, sum of the assessable charges.

5% of $250 is $12.50, this would be the Finance Charge.

Since the maximum Finance Charge is $10.00, the $12.50 would drop to $10.00. This would be the final Finance Charge that is assessed to the account.

Was this article helpful?
0 out of 0 found this helpful
Have more questions? Submit a request

Comments