How Do Health Insurance Payments Affect Personal Injury Settlements?

by Staff | June 28th, 2021

Medical bills are extremely expensive in the U.S. A broken leg or even a sprained ankle can cost thousands of dollars, especially when you need an ambulance ride to the hospital. Meanwhile, more severe injuries that require overnight hospital stays or surgery can wipe out your family’s savings in an instant.

Having health insurance can help soften the financial blow for people who suffer serious injuries, especially when those injuries are caused by others. That’s because health insurance kicks in for almost all injuries, whether they are the victims’ fault or not.

For many victims, having health insurance when injured can save them from bankruptcy. But because of deductibles, copays, coverage limits, and so on, health insurance doesn’t always mean that victims can immediately recover from their injuries financially, nor does it mean they never need to file personal injury claims or lawsuits against the at-fault parties.

However, using health insurance or other healthcare benefits to pay for your medical bills can have a big impact on your future settlement check if you pursue compensation from the at-fault party, and here are the reasons why.

If You Get a Settlement, Your Health Insurer Will Want to Be Paid Back

Some people think that getting a personal injury settlement is just a nice windfall after their medical bills have already been paid by their health insurance. But health insurers know that many accident victims file compensation claims and lawsuits, and when they foot the bill for their policyholders’ medical bills, they want to be paid in full from those settlements.

Health insurance companies achieve this by placing liens against their policyholders’ injury claims. These liens must be paid via a process called subrogation. It means that when policyholders receive their settlement checks, whether on their own or through their attorneys, they must pay their health insurers back in full for their already-paid medical expenses.

Medicare, Medicaid, and Workers’ Compensation Want to Be Repaid After Paying for Injuries, Too

If you receive Medicare or Medicaid and use either of those programs as your primary healthcare insurer, note that both will want to be repaid from any money you collect in a personal injury claim or lawsuit. Like health insurance companies, these government programs will place liens on your injury-related expenses if you begin to pursue compensation.

And if your injury occurred at work and resulted in you receiving workers’ compensation benefits, some of that money may be reclaimed by the Indiana Workers’ Compensation Board via subrogation. However, subrogation usually only comes into play when a workplace injury is caused by a coworker or another third party. If the injury was caused by the injured worker, subrogation doesn’t come up, as there’s no third party to collect from.

Subrogation Can Be Negotiated

So why bother to file a compensation claim in the first place if you have to use the settlement to repay your insurer? Your health insurance may pay your medical bills, but it doesn’t compensate you for your pain and suffering, while a personal injury lawsuit does. 

Additionally, as with almost all financial aspects of a personal injury claim, the amount of money demanded via subrogation can be negotiated. Experienced lawyers can help reduce medical bills via negotiation, which can then reduce the amount of money that a health insurer or governmental body demands in repayment.

Having a lawyer on your side can also help you avoid overpaying your health insurer, Medicare, Medicaid, or workers’ compensation if your settlement doesn’t cover all of your bills. The parties that demand subrogation want to be paid in full, but that’s not feasible if your settlement isn’t enough to cover your bills, let alone pay them back. Our legal team can ensure that your subrogation obligations are fair for what you were paid.

Our Lawyers Can Handle This Complex System to Your Advantage

Subrogation can go one of three ways: you end up paying back more money than you should, you pay back exactly the right amount, or you pay back less than what you anticipated and end up with more money in your pocket. It’s our goal to achieve the second outcome at worst and the third at best while doing everything we can to avoid the first.

When you’re recovering from an injury, the last thing you want is to deal with a complicated and frustrating legal process just to avoid going into debt.  At Fleschner, Stark, Tanoos & Newlin, our Indiana personal injury lawyers know the state’s subrogation laws, whether they involve state-run agencies like the Indiana Workers’ Compensation Board, federal agencies like Medicare and Medicaid, or private companies like health insurers.

Let us help you get and keep the money you’re owed for an injury that wasn’t your fault. Contact us today for a free consultation.

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