I frequently get the following response when I discuss with clients they must repay their health insurer after an accident.
“Why do I have to pay them back when I pay them a lot of money to provide health insurance for me?”
It is a great question, and worth explaining in more detail.
You only have to reimburse your health insurer if you receive money damages for the treatment that the health insurer paid for.
In other words, if you cause a car accident and your health insurance pays for your treatment, you will not have to reimburse your health insurance because you are not going to receive money damages from another party. A lien (right of subrogation) only arises with your health insurer if you receive monetary compensation from a negligent party.
The law is designed to make sure you can get the medical treatment you need without having to wait for your personal injury claim to resolve. This means that if you go to the hospital for treatment after a car accident caused by a negligent driver, your health insurance will pay that bill. But, if you later receive compensation to cover the cost of that hospital bill by the negligent party, you must repay your health insurance for what they paid out for you.
The legal basis gives health insurers this right of reimbursement (called subrogation) arises by the contract you sign with your health insurer when you purchase their services. Your policy contains language that gives them this right of subrogation against the at-fault party’s insurance. And since the at-fault party’s insurance is paying you for your damages, the right of subrogation extends to you.
To understand this, you must remember that when you receive a settlement, that money is to pay for your medical treatment. When you get paid a settlement to cover your medical bills that your health insurer already paid for you, then you have to repay your health insurer. Otherwise, it would be like you got paid twice for the medical treatment because the negligent party paid you, and your health insurer paid you by paying your bill. The law prevents this type of “double dipping”.
The law is designed to always put the burden on the wrongdoer. In this case, the person that hit you. If your health insurer had to pay your bills for injuries caused by another party, that would unfairly shift the burden (expense) to your health insurance company. But at the same time, the law wants to ensure that injury victims can receive timely medical treatment. The solution is that health insurers and others are given legal protections. In exchange for them paying for your medical treatment, they are given a legal right to be reimbursed if you later make a financial recovery that is to pay for that treatment.
In the end, the system works – you get the timely medical treatment you need; the medical provider is timely paid for their services; the wrongdoer later pays you a settlement for their negligence; out of that settlement you can repay your health insurer.
But I get it, you pay a lot for health insurance, and it can be hard to understand why you have to reimburse them. Hopefully this helps explain that the process is fair and helps ensure the wrongdoer bears the burden for their actions.
Our Personal Injury Attorneys Are Here to Help
Our dedicated personal injury team here at The Injury and Disability Law Center is here to help you if you have any questions about this topic or any other issues after an accident. Schedule your free initial consultation today by calling our office at 575-300-4000, starting a chat, or filling out our online form. If you want even more information, feel free to check out my free book, Car Accident Cases Made Simple(r), where I discuss this topic and more.
