Subrogation: What You Need to Know

To understand subrogation, consider the following: If you’ve ever visited a doctor following an accident, you’ve probably received a very ominous letter from your health insurer a few weeks later. The letter tells you that you must give the details of the accident and implies that you must get the medical bills reimbursed by the person responsible for causing the accident. When we meet with new clients the overall impression seems to be:

My health insurer won’t pay my bills because the accident was someone else’s fault.

Although this is the message your health insurer is trying to convey, it is flat out wrong.  If you have health insurance, your insurer is required to pay your bills regardless of whether the accident was your fault or someone else’s. If the accident was caused by another person’s negligence, their insurance company may ultimately be responsible, but they will not pay your bills in advance of a full and final settlement. When that occurs, your health insurer will have a right to repayment of the bills they paid, but not until YOU settle the claim. That right is called “subrogation.” Again, your health insurer’s right to subrogation cannot be exercised unless and until you settle your personal injury claim

So, where should your bills go when you are in an accident?

The first priority in payment of medical bills should be your medical insurer.  Medical insurers negotiate discounts with doctor’s offices. For private companies it is usually around 20%. For public assistance the discount can be as high as 80%. Those discounts belong to you because you have paid for them either in premiums or through your taxes. The discounts do not belong to the liability carrier of the at fault party.  The at-fault party is required to reimburse you for 100% of the bill, and subrogation requires that you reimburse the insurer for the amount they actually paid. The savings belong to you.

Sometimes, when you are injured on another person’s premises, or while traveling in a car, there may be a policy of insurance called “Medical Payments Coverage,” frequently referred to as Med-Pay. That coverage guarantees payment of medical bills for anyone suffering an injury in a vehicle or on the covered premises regardless of who was at fault. It is usually limited to $5,000 or $10,000. There is no discount on billing, which means every dollar you use in Med Pay you must pay back to the insurer through subrogation. The best use of Med Pay is to cover deductibles or other out of pocket expenses.  Frequently doctors or chiropractors will attempt to bill Med-Pay coverage as a first priority. To do so surrenders your discount and ultimately costs you more.

As part of our service, we help clients manage their bills and ensure they are directed to the appropriate Insurer. If you are in an accident, it is best to secure representation early to avoid your bills being sent to the wrong company. Contact us – we can help.