As an injury attorney, I often have to tell my clients some shocking news: in cases where they recover medical bills from an at fault third party, they may have to pay back some of their proceeds to their health insurance company. It makes sense on paper. The health insurance didn’t cause the accident, yet they were saddled with the bills from the injuries.
The term for this is called subrogation. This is an unusual word and it is one that is used in my office virtually every day.
It matters because it reduces the recovery to my clients. However, the health insurance companies don’t do a great job of explaining that to you. So for instance, if you fall off your porch at home because you’re just being clumsy, you would not owe your health insurance company anything back because you would not have recovered from a third-party.
However, if you fall off the neighbor’s porch because he didn’t nail down his planks yet and didn’t warn you about it, he essentially built a trap for you and may be liable for your injuries. In that case, his homeowners may very well cover all the medical bills and pain/suffering for the bills and you might owe your health insurance back a portion of that money
What’s really sad is to hear about people who settled their cases on their own, completely unaware of this obligation, and then get a bill from their health insurance for more than what they got in the settlement from the third-party. The only good news is you can’t be made to pay more than you recovered, but you could in certain circumstances be required to pay every penny you recovered.
That’s why it’s important to get advice early on in a serious accident.
Often the amount is owed to the health insurance under the subrogation plan can be either Waived or significantly reduced by negotiation. Sometimes, that discount is minimal, but often times, it is significant.
It’s important to look at since it affects the bottom line tax-free amount that goes to my client. Another issue that has to be looked at is what charges do the health insurance relate to the accident. I have actually received a request from health insurance companies to be paid back for things that could not have had anything to do with an accident. In fact, I once had a man who was hurt in accident and the health insurance company wanted to be paid back for his wife’s Pap smear. So getting the correct bills located and getting negotiations are often part of the attorney’s services to the client.
So even if you don’t consider yourself “the type who sues” when you’re in a serious accident, it is worthwhile to have an injury lawyer on your side.
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