FAQ: Should I use my health insurance to pay my medical bills when the accident is someone else’s fault? Shouldn’t their auto insurance company be responsible for those bills?

  • July 15, 2009
  • Blog

Clients often ask if they should use their own health insurance to pay their medical bills after an accident. The answer is yes. If you’ve been involved in an accident, using your health insurance to cover your medical expenses will get them paid now. Many medical providers and specialists require patients to have health insurance before the providers will provide treatment. Since accidents are never anticipated, having health insurance provides the means to obtain the proper care required for the injuries incurred, without depleting your finances until the case settles.

Under Virginia law, health insurance companies are prohibited from requiring you to pay them back if you receive payment for those bills from the other (at fault) person’s auto insurance company [1]. Although some people think this sounds like you are making a double recovery for the same medical expenses, there is a sound policy behind this law. There is no reason that the person who has caused your injury should benefit from the fact that you (often together with your employer) have paid for health insurance. The person at fault (the “tortfeasor”) and their auto insurance company owe you the full cost of the medical care you receive. Similarly, there is no reason that your health insurance company should benefit from the fact that the medical treatment the company paid for just happens to have been someone else’s fault. The health insurance company has to pay for all covered medical expenses, whether you receive payment for those expenses from someone else or not. (In part the law recognizes that either the injured person or their health insurance company will receive a windfall, and the law chooses that to be the injured person, not the health insurance company)[2].

Unfortunately, submitting your medical bills through your health insurance company is not as beneficial it once was. The Virginia law applies to both health insurance policies and health benefit plans [3]. Many large employers provide self-funded “health benefit plans” that are not, technically, insurance. While control over health insurance plans is the exclusive jurisdiction of state law, health benefit plans can also be subject to federal law. Under federal law, it appears that health benefit plans are allowed to contain a requirement that you reimburse the plan if you make a recovery from someone else for medical bills that the plan has paid. Some plans provide for more than just reimbursement; they actually say that the plan has a right of subrogation, meaning that the plan can directly sue the tortfeasor to get their reimbursement for medical bills they have paid.

Regardless of whether or not you have to reimburse your health plan, you should still give your health insurance or health plan information to your health care providers. There are a number of reasons for this. First, the health insurer or plan pays the medical bills up front. This helps keep your credit good. If you do have to reimburse your health benefit plan, the plan awaits settlement of the case to be reimbursed. Since the tortfeasor’s auto insurance company normally will not settle until the injuries are resolved and the plaintiff has been released from treatment, the health insurer or plan provides the needed financial coverage for the medical care as it is incurred. Second, if you have health insurance, you won’t have to reimburse your health insurance company. Third, even if your medical expenses are paid by a self-funded health benefit plan that you may have to reimburse, the amount the plan has paid is usually less than the amount of the original plan. Health insurers and health benefit plans have contracted for reductions with the health care providers (“participating providers”), so they pay less than you would have to pay the doctor or hospital directly. As a result, it’s cheaper to reimburse the plan than it is to pay those medical expenses directly yourself. Fourth, even if your medical expenses are paid by a self-funded health benefit plan that you may have to reimburse, these plans are frequently willing to negotiate the amount of the reimbursement, and will accept less than they actually paid.

Involving an attorney can be advantageous, not only by assisting you with securing a fair settlement, but also by identifying whether your medical expenses were paid by a health insurance or benefit company that may be entitled to reimbursement or not, and if reimbursement is required, by possibly negotiating down the reimbursement you will likely have to pay out of the settlement.


[1] Va. Code sec. 38.2-3405.A. and B.

[2] insurance company lobbyists have tried to get the legislature to repeal the law that prohibits the companies from requiring reimbursement. To date, the companies have not been able to show any state where such repeal has resulted in a reduction in premiums, so the legislature has kept this benefit for the people of Virginia.

[3] You may not be aware of whether you have a health insurance policy or are in a health benefit plan; to the participant, they appear very similar. Both usually require you to pay a premium, and both pay medical expenses with certain co-pays and deductibles. Sometimes even attorneys have difficulty determining which one a client has. Sometimes the same health company may provide health insurance to some people, and act as the “plan administrator” for health benefit plans for other people. For instance, Anthem does both.