How Your Health Insurance and Personal Injury Claim Affect Each Other

Depending on the complexities of a case, it can take weeks, months, or even years to settle a personal injury claim. Because you obviously cannot hold off that long on taking care of your medical needs, you might need to use your own health insurance until you receive your settlement. Do so if necessary, but make sure that you know how your health insurance and personal claim will affect each other before you accept that final settlement.

Understand that your health insurance company might have a right to recover expenses for your accident-related care out of your settlement. This right is known as subrogation.

In this article, we discuss how your health insurance may interact with your personal injury claim, and what you can expect when all is said and done. For detailed information about your claim or liens your insurer may have on your future settlement, contact a personal injury attorney from Saile & Saile, LLP at 215-717-8471.

When can I use my own health insurance?

You can use your private health insurance to cover your medical needs while you are awaiting your personal injury claim to settle and to cover expenses that exceed all other payouts from other insurers.

Health insurance companies, however, generally do not cover costs for which another company is liable. For instance, if you are in a car accident, either your car insurance or the other party’s auto insurance company should pay your medical bills – not your private health insurance company. Naturally, your health insurer will not want to take responsibility for expenses that it should not have to pay.

Usually, private and government-sponsored health insurance will not cover injuries that you suffer in an accident until they have determined that no other policies are responsible for the costs or that you have exhausted all other policies.

Once you have exhausted all other insurance coverage, you can opt to use your existing health insurance coverage to pay for the remaining costs. For example, if your injuries result in $50,000 in medical bills and your auto insurance covers $15,000 in medical bills, your health insurance may cover the remaining $35,000 minus your deductible.

Often, health insurance policies require a deductible or co-payment, which you will need to pay out of pocket before the insurance company will begin covering your medical expenses.

Additionally, there may be some services and treatments that your health insurance policies do not cover (e.g., dental work, alternative therapies, private nursing); these would remain your financial responsibility until your personal injury settlement comes in.

What is subrogation and how will it affect my personal injury claim?

During the process of filing personal injury and health insurance claims, you will likely hear the term “subrogation.” Subrogation is the legal term that means the act of one party standing in the place of another. In other words, subrogation occurs when your health insurance company pays for your medical expenses during the interim of your personal injury case, and then recovers what its costs from your settlement.

Subrogation allows insurers that pay for your damages to recuperate their costs if another party or its insurance company is ultimately responsible for your expenses that your health insurer already paid. (Note: Both private health insurers and public insurers like Medicare may each be entitled to recover its costs through subrogation if your personal injury case recovers compensation for medical bills.)

For example, if your health insurance paid $50,000 in medical bills under the policy and you recover $150,000 in a personal injury settlement, the health insurer may be entitled to recover $50,000 from that settlement. This would leave you with a net recovery of $100,000 after the health insurance company reimburses itself from your settlement for its costs.

The justification for subrogation in a personal injury settlement hinges on the idea that victims are not eligible for “double recovery.” When you sustain harm through another’s negligence, the law says that you can “be made whole,” but you should not receive compensation twice for the same damages. In other words, if your insurer already paid your medical bills, then you should not get to pocket the money for those same bills out of your settlement.

Will my health insurer take a lien out on my settlement?

Liens, legal claims taken against your property, can dramatically complicate matters in a personal injury claim. Health insurance companies may place a lien on your injury claim settlement if you have a large amount of debt from medical expenses resulting from your accident, which you cannot pay for out of your own pocket. It is their way of staking a claim on your settlement so they secure their reimbursement.

Do they have a right to take a lien out on your settlement? In many cases, yes. The majority of health insurance policies/contracts have a clause stating that it is entitled to payment for any medical bills for which you receive reimbursement.

A financial recovery, such as a claim settlement or monetary jury verdict, is an example of your "reimbursement" – and it is quite likely your insurer will want to recover its expenses from you via a lien.

Those likely to assert healthcare liens against your personal injury settlement include:

  • Medicare
  • Medicaid
  • Private health insurance companies

In addition, if you owe money to the hospital or doctor(s) who treated you following your accident, they may be able to assert a lien against your settlement too. When multiple insurers and debts are involved in your claim, it can become quite complicated; resolving liens can be difficult and time-consuming.

Furthermore, the law does not always say that lien holders must respond to your lawyer within a specific amount of time, so it can take months to receive an appropriate answer as to the final amount of the lien, making the process of negotiating a settlement very difficult. This delay prevents prompt payments of settlement funds to clients, which can be frustrating and wearisome. Your lawyer can help expedite matters as best as possible.

How can I best protect my personal injury settlement?

Our injury lawyers at Saile & Saile LLP have represented numerous clients who faced subrogation and liens against their impending settlements. We believe you should receive as full a reimbursement as possible for your damages, and we will take steps to better protect your settlement. 

Contact us today at 215-642-2336 to speak to one of our compassionate personal injury attorneys to schedule your FREE consultation. You can also download a FREE copy of our eBook, How to Maximize Your Pennsylvania Car Accident Case Before an Insurance Company Takes Advantage of You, to learn more about your options.

Michael L. Saile, Jr.
Car Accident Attorney in Bucks County Pennsylvania
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