At any given moment, a medical emergency could happen resulting in thousands of dollars’ worth of medical bills incurred. As unfortunate as it sounds, it is not an uncommon scenario in personal injury cases. Having health insurance is not only valuable in helping to cover large medical bills, but insofar as personal injury cases are concerned, health insurance can also lead to greater out of pocket recovery amounts by clients.
How Insurance Works In order to understand how health insurance can benefit personal injury victims, it is first necessary to briefly go over how health insurance works. Most, if not all, health insurance plans are designed to cover a certain amount of medical bills once a deductible has been met and the insured would then be responsible for covering the remaining portion. The reason health insurance can help drastically reduce out of pocket expenses at the end of a personal injury case is because typically, the insurer will have a contract in place with a medical provider to pay a predetermined amount for a treatment rendered. Once the insurance pays their contractual portion to the provider, members then are usually required to pay a predetermined copay amount and the provider usually adjusts the remainder of the bill to satisfy the total amount charged for the service(s) rendered.
A hypothetical scenario illustrating how health insurance works would be to consider the situation of a client we will refer to as “John”. John was rear-ended in a car accident and incurred a $10,000.00 hospital bill as a result of the accident. John’s health insurer, who was in-network with the hospital he treated at, has a contract in place which outlines that John will pay a copay of $500.00 while the insurer will pay 30% of the bill ($3,000.00) and $6,500.00 will be adjusted (i.e. written off by the hospital). The benefit that health insurance provided in this instance is that it saved John $9,500.00 off of a $10,000.00 bill. John satisfied the debt in full and only had to pay $500.00 because he had health insurance and went to a hospital which was in-network with his insurer.
How does health insurance yield a greater recovery? Continuing with the example of John above, let’s assume he files a claim against the person who rear-ended him for his hospital bill ($10,000.00) plus pain and suffering. His case settles for $25,000.00. When it comes time to distribute settlement funds, John will walk away with a significantly larger recovery amount than he would have if he did not have insurance. Here’s an example of what his settlement statement would look like: Settlement amount - $25,000.00 Payment to hospital - $0.00 (John paid his copay and his health insurance covered the rest) Attorney’s fee (33.3%) – 8,333.33 Subrogation* amount - $3,000.00 Recovery check to John at the end of the case - $13,666.67 If John would not have had health insurance, then he would have had to negotiate directly with the hospital to pay off the entire $10,000.00 balance.
Subrogation In personal injury, subrogation most commonly occurs when a 3rd party (in this instance, a health insurer) provides funds to the benefit of their insured and then attempts to collect those funds paid out from the settlement proceeds of the insured. In John’s case above, his health insurer had a clause stipulated in their contract with John that allowed them to recover money paid to his health providers from the proceeds of his personal injury case. It is important to note that not all health insurers are necessarily entitled to recover from settlement proceeds (especially if members are not part of a self-funded ERISA governed plan – future blog post coming soon on this topic). Hiring an experienced personal injury law firm such as Paisley Law, LLC is crucial because we help to protect the interests of our clients by making sure that they do not have to pay an insurer unless they are absolutely obligated to by law. In John’s scenario, his insurer was entitled to compensation because he had a self-funded ERISA plan; however, this does not have to apply to everyone.
Contact Paisley Law, LLC At Paisley Law, LLC, the last thing we want our clients to do is stress about dealing with large medical bills. We take the extra step other law firms don’t take in making sure that all providers bill health insurance that can do so and that your recovery is maximized by making sure doctor bills get paid accordingly. A lot of times hospitals or doctors offices will purposefully avoid billing health insurance because they believe that they will get paid more by filing a lien against a personal injury case. Do not become a victim of these deceptive billing practices. Contact Georgia personal injury lawyers at Paisley Law, LLC today and let us help you make sure that your bills get paid accordingly and that you don’t have to pay more than you are obligated to by law.