When a personal injury claim is settled, clients often are surprised to find out when their health insurance company makes a claim for part of the settlement and wants that to be paid first out of the money you receive. Clients wonder why and ask shouldn’t the health insurance company pay for my medical bills? Yes, but once those payments were made and the case settles, the health insurance company may be able to obtain reimbursement for the medical payments they made for you.
In fact, insurance companies often have a health insurance lien or subrogation interest on the settlement amount so that before you get your money, the insurance company can legally recoup the medical expenses they paid on your behalf.
The idea behind subrogation is that the health insurance company has a right to get paid back for the bills they paid for you. Essentially, the health insurance company can ‘step into your shoes’ and pursue the negligent party. A way to think about it is like this: Because of the negligence of the other party for causing the accident, your health insurance company had to pay for your medical bills. The insurance company will generally honor their obligation and pay your medical bills as they occur, but they protect their interests by getting reimbursement from the settlement. Many health insurance policies contain this language, and while many do not like it, consumers frequently do not have a choice. If you want health insurance coverage, you have to play by the rules that health insurance companies play by.
Health insurance companies know what their duties are – to cover your medical expenses when you seek medical treatment for conditions that are stipulated in the contract. But they also know how to recover their expenses and they will seek to do so in a personal injury settlement.
This is a complex process, and it always will help to work with an experience personal injury attorney who can negotiate with your health insurance company to reduce the amount the company will take from your settlement.