After reaching a settlement on your case, your relief may turn to confusion when your insurance company demands payment for the injuries sustained in your accident or crash.

You’ve been injured. You’ve finally settled your case.  And now your health insurance is claiming a part of that money.  You (or your employer; or both) pay premiums for that health insurance.  Why should the health insurance company receive any more money?  Let me explain. 

Conceptually, the person responsible for the medical bills is the person against whom you have just settled your case– not you, and not your health insurance.  

That means that the settlement that you are receiving is intended to include compensation for those medical bills. 

If you had not had health insurance when you were injured, you would have been personally responsible for the medical bills you incurred.  In that situation, when your case settled, you would have had to pay those bills out of the settlement money.  However, you were fortunate enough to have health insurance.  As such, your health insurance took care of the medical bills that you incurred as a result of your injury.  Now you have received a settlement which, in part, reimburses you for the medical bills – as if you had paid them yourself.  In other words, you have received money as compensation for an expense that you personally did not actually incur.  Most health insurance policies include language to address this very issue. Your policy may state that if the health insurance company pays for a medical bill and you recover money from another person for that same medical bill, then the health insurance company is entitled to be reimbursed. 

The good news is that you are much better off having to reimburse your health insurance than you would have been if you hadn’t had health insurance. 

To start, if you’re like most of the rest of us, you aren’t able to suddenly cover thousands of dollars for medical bills.  Instead, those bills would have remained outstanding during the entirety of your case, which can take several years.  In the meantime, your credit score would go down and you’d probably even be receiving calls from creditors.  Having a health insurance plan to pay the bills means you avoid all of those problems.

Furthermore, if you look at an explanation of benefits form from your health insurance company (you should receive one of these after each doctor visit or procedure), the amount paid by the health insurance is always less than the amount billed by the healthcare provider.  Your health insurance is only entitled to be reimbursed up to the amount which they actually paid - not the amount of the bill; not the amount that was “adjusted.” 

So, by having your health insurance pay the medical bills while you pursued your case, you only need to reimburse the reduced rate, instead of having to pay the full amount of the bill to the provider.

Remember, it’s not that your health insurance company is taking your money.  Instead, your health insurance fronted the money for your medical bills to save your credit score and then accepted a discounted rate as reimbursement.  Your health insurance has actually done you a valuable service. 

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