Administrative Simplification Basics Series:

Health Plan Premium Payments

Administrative Simplification includes standards for administrative and financial electronic health care transactions. Widespread use of these standards—where everyone uses the same format and codes—can lead to substantial savings for health care organizations.

Today, we’ll review one of these transactions: the premium payment transaction, also known as the X12 820 transaction set.

Who Uses Premium Payment Transactions?

Health plans, health plan sponsors, third party administrators, and banks use premium payment transactions to:

Begin the health insurance premium payment process
Share information about premium payment and the individual whose premium is being paid for their health care coverage
Provide payment details for payroll deductions and other related transactions
Provide instructions to banks for making a payment to the health plan (the payee)
Provide premium payment information to health insurance plans

The goal of standardized premium payment transactions is to increase the efficiency and accuracy of payment processing. Visit the premium payment page of the CMS Administrative Simplification website to learn more.