Should I use my health insurance to pay my medical bills after an accident?

After being injured in an automobile collision, clients often ask whether they should use their health insurance to pay their medical bills. After all, it may seem intuitive that when you have been injured as a result of someone else’s negligence, the at-fault driver’s insurance company should be responsible for the cost of your medical treatment.

In Virginia however, drivers who have been injured in an automobile collision should always use their health insurance to cover their medical bills, even if the other driver was at fault.

mother and child at the doctor's office for an x-ray

Why should I use my health insurance, if the other driver is at fault?

The reason for this is that the at-fault driver’s insurance company will only pay for your medical expenses as part of the settlement at the end of your case, which may be many months after you receive the treatment. Using your health insurance to cover your medical bills as they accrue ensures that they will be promptly paid and not adversely affect your credit.

In fact, it is so beneficial for those injured in auto accidents to use their health insurance to pay their medical bills, that Virginia has a specific law regarding the issue. It requires healthcare providers to submit claims for services to their patients’ insurance carrier, even for injuries in which the patient was not at fault.

Will my insurance coverage affect the settlement value?

The good news is that in Virginia, even if your health insurance has already paid some or all of your medical bills, the at-fault driver’s auto insurance carrier does not get a “credit” for the paid bills. In other words, the other driver’s insurance is still responsible for the full amount of your medical expenses as part of the settlement, even if those expenses have already been paid by health insurance. This is called the “collateral source rule.”

Although this may sound as if you are making a double recovery by having your medical expenses paid twice, there are sound policy rationales behind the collateral source rule. One of the goals of tort law is to deter drivers on the road from acting carelessly. If a negligent driver were not required to pay the medical bills of someone he or she injured, simply because that person had the foresight to carry health insurance, the goal of deterrence would not be met. The law recognizes that either the at-fault party or the injured party will receive a windfall in this instance, and it chooses to award the windfall to the injured victim rather than the careless driver.

stethoscope sittng atop insurance paperwork

Do I have to provide any settlement money to my insurance company?

Once your health insurance has paid your medical bills, the next question is whether the health insurance carrier has the right to be reimbursed out of your settlement with the at-fault driver’s auto insurance. Fortunately, Virginia has an “anti-subrogation” law which prohibits health insurance plans from forcing their insureds to repay the plan if the insured receives money from a third-party source, such as an auto settlement.

On the other hand, many large employers provide self-funded “health benefit plans,” which are not technically insurance, and therefore are not subject to Virginia’s anti-subrogation statute. Instead, such are often governed by the federal ERISA law, and are permitted to contain a right of reimbursement or subrogation.

Even if your health plan is provided through a large employer and contains a right of reimbursement, generally it is still beneficial to use your health coverage for medical expenses incurred as a result of an auto accident. This is because the amount actually paid by the health plan usually is less than the full medical bill, since health plans have contracted-for reductions with the healthcare providers (“participating providers”). As a result, it will be cheaper for you to reimburse the health plan for the amount it actually paid, than it will be to pay the full amount of the medical bill directly to the provider out of your settlement.

Does it help to have an attorney during this process?

Sometimes health plans will assert a right of reimbursement even when they are really not entitled to this under their plan documents. Under federal law, upon the request of an insured (or her attorney), health plans are required to provide certain information to prove that they are entitled to reimbursement from a third-party recovery.

One of the benefits of hiring an attorney is not only to assist you with securing a fair settlement, but also to identify which type of insurance should pay your medical expenses under the circumstances of your case, determine whether your health insurer is entitled to repayment, and potentially negotiate a reduction of any reimbursement due from your settlement. If you have been injured in an auto accident through no fault of your own, call Allen & Allen today for a free consultation, at 866-388-1307.