When you are hurt in an accident, you are left with substantial and possibly ongoing medical expenses. While the at-fault party is responsible for paying for your medical bills, it can take weeks or even years to completely resolve a personal injury claim. What can you do in the meantime to ensure your medical bills are paid? If you have health insurance, one option that may be available to you is having your health insurance cover your medical expenses. If you choose this route, there are a few important things to keep in mind.
Subrogation and Injury Settlements
The majority of health insurance policies contain a subrogation clause that states the health insurance company will pay for medical care for a client who is injured in an accident, but if the accident victim recovers compensation from a third party (in a personal injury lawsuit or a settlement), the client must reimburse the health insurance company for the amount it paid from the settlement proceeds.
When you use your health insurance to be treated for injuries related to a personal injury case, the insurance company will investigate if the treatment was related to injuries caused by a third party. If they determine a third party caused your injuries, your account will be sent to the subrogation department. Your attorney will send a letter to the insurance company that they are representing you and notify the insurance company when your claims settles or a verdict is reached. If you are not able to be fully compensated due to this health insurance lien on your claim, your attorney can work toward negotiating a reduction with the insurance company.
If you do not receive compensation for your injury, the insurance company’s right to subrogation does not exist and you will not be required to reimburse the insurance company.
Paid vs Incurred Medical Expenses
Another factor to consider is the “paid or incurred” rule. Health insurance companies have contracts with hospitals and medical providers to pay discounted rates. While a procedure may cost someone without health insurance $500, the health insurance company may have a negotiated rate of $350 for the procedure. If you have health insurance and have the procedure, the bill will be $500, but there will be an adjustment of $150 and the insurance company will only need to pay $350 for the bill to be paid in full.
Under California law, personal injury recoveries for medical expenses are limited to the amount reimbursed by the insurance company. You cannot collect the market value of the services rendered, even though the market value is usually higher than the medical bill that was negotiated by your insurance company.
Medicare and Personal Injury Cases
If you are a Medicare recipient, many of these same rules apply when Medicare pays for treatment related to your injury claim. Federal law requires that you report your accident to the Medicare Coordination of Benefits (COB) Contractor, a private company that processes Medicare reimbursements when the recipient has a personal injury claim. If you fail to report your accident to the COB Contractor, they will likely still find out. This is because Medicare flags payments for treatment that usually occur due to injuries. In this case, you will receive a letter asking if you had a personal injury and for details of the claim.
Once your accident is reported, Medicare will monitor the case and you will be asked for periodic updates. When the case is settled, your personal injury lawyer will be required to notify the COB Contractor before disbursing the settlement money to you. A statement will be sent to your attorney with all of the medical bills Medicare paid that the Contractor believes are related to your case.
Medicare must be reimbursed for medical bills it paid if you settle a personal injury claim or are awarded a jury verdict. The COB Contractor is almost always forbidden from accepting a negotiated amount so it is nearly impossible to have the lien amount reduced.
Contact a Los Angeles Personal Injury Attorney
Personal injury claims can be complicated when health insurance is involved, although it is certainly more convenient to know that your medical bills will be paid while you are negotiating for a fair settlement from the insurance company. A personal injury lawyer can help you understand how your health insurance will affect your injury claim amount.