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CO-281 Denial Code: Deductible Waived by Contract

CO-281 means the deductible was waived under a contractual agreement. The payer isn't collecting the deductible from the patient, and the provider absorbs it under the contract. X12 allows it only with group code CO, so it can't be billed to the patient.

Quick facts

Code
CO-281 (CARC 281)
Status
Active In use since July 1, 2017.
Code set
Claim Adjustment Reason Codes (CARC)
Group codes
  • CO (Contractual Obligation): The only group X12 allows for CARC 281. The provider absorbs the waived deductible under its contract; the patient isn't billed.
Official description
Deductible waived per contractual agreement. Use only with Group Code CO.
X12 Claim Adjustment Reason Codes, retrieved September 25, 2026
Last verified
against the official X12 list.

What CO-281 means

CARC 281 says deductible waived per contractual agreement. Normally, if a patient hasn’t met their deductible, the payer reports that portion as PR-1 and the provider collects it from the patient. Under some agreements, the deductible doesn’t apply for certain services, and the provider agrees to accept the payer’s payment without collecting the deductible from the patient. The payer reports that waived deductible with CARC 281.

X12 allows CARC 281 only with group CO. That makes it clear: the amount is the provider’s to absorb under the agreement, and the patient isn’t billed.

Example: under a program in the provider’s contract, a set of services is paid without the patient’s deductible. The allowed amount is $120 and the patient hasn’t met their deductible. Instead of PR-1 for $120, the ERA shows CO-281 for the portion the contract waives.

Common causes

  • Value-based or program contracts that waive deductibles for designated services.
  • Employer-sponsored programs where participating providers accept waived cost-sharing.
  • Specific benefit programs negotiated between the payer and provider.
  • Misapplied waivers, where the payer applies a program to services or providers outside its scope.

How to handle it

  1. Confirm your agreement includes the waiver for the service and provider involved.
  2. Post CO-281 as a contractual adjustment.
  3. Refund the patient if a deductible was collected at the visit.
  4. If the waiver shouldn’t apply, contact the payer, cite the contract, and request reprocessing so the deductible is reported correctly.
  5. Don’t bill the patient for a CO-281 amount.

How to prevent problems

  • Document waiver programs in your contract summaries and front desk guidelines.
  • Configure estimates so staff don’t collect deductibles for waived services.
  • Review remittances to confirm waivers are applied only where agreed. An ERA Analyzer can track CO-281 amounts by payer and service.
  • Get compliance guidance before offering any cost-sharing waiver not provided for in a payer agreement.

Remark codes that may appear with CO-281

  • N364 (Alert: According to our agreement, you must waive the deductible and/or coinsurance amounts.): According to the agreement, you must waive the deductible and/or coinsurance amounts.
  • N381 (Alert: Consult our contractual agreement for restrictions/billing/payment information related to these charges.): Points to the contractual agreement that includes the waiver.
  • PR-1 (Deductible Amount): The standard deductible amount, which the patient normally owes.
  • CO-45 (Charge exceeds fee schedule/maximum allowable or contracted/legislated fee arrangement.): Contractual fee schedule reduction.
  • CO-131 (Claim specific negotiated discount.): Claim-specific negotiated discount.
  • OA-209 (Per regulatory or other agreement.): An amount the provider can't collect from the patient by regulation or agreement, which may be refundable to the patient.

CO-281 FAQ

Why would a deductible be waived by contract?

Some agreements, such as value-based arrangements, certain employer-sponsored programs, or specific service programs, have the provider accept payment without the patient's deductible. The payer reports the waived amount with CARC 281.

Can I bill the patient for a CO-281 amount?

No. X12 limits this code to CO, which means the provider absorbs it.

What if I already collected the deductible from the patient?

Refund the patient. The contract waives it, so the patient shouldn't pay it.

Is it OK to waive deductibles on my own?

Routine waivers outside a payer agreement can conflict with payer contracts and, for government programs, federal rules. CO-281 reflects a waiver the payer's agreement provides for, not one the practice decides on its own.

Does CO-281 count toward the patient's deductible?

It depends on the plan and program. Some waived amounts still count toward the member's deductible accumulator, and others don't. The payer's eligibility response or member services can confirm.