It also includes Medicare and Medicaid which are in fact are the most important to account for due to the penalties for not paying or paying late. However, this is a topic for another day.
Many people injured in car accidents are very upset when they discover that they must repay their insurance carriers. The typical response is that they paid for insurance, sometimes for years, so why must they pay back medical benefits when they use them? Intuitively, this may not seem fair. In fact, it is does make economic sense.
Anyone lucky enough to have insurance coverage for injuries suffered in an auto accident should count themselves lucky. Many injured persons face enormous challenges in the getting necessary treatment following an accident. In fact, getting treatment can be the greatest challenge related to a car accident.
Insurance Company Liens
Basically,if you do have coverage of some kind, the insurance will cover the medical expenses as dictated by the insurance policy. The insurance company in effect advances the costs of medical care while reserving a lien on any future proceeds available to cover the expenses. Keep in mind that if there is no recovery and therefore no other funds, the insurance company will have no lien and you will owe nothing beyond what you contracted for in your policy.
However, if there is a recovery, then presumably the money recovered is coming from the person (or his insurance company) who was responsible for the accident. This is the very basis for liability and recovery. In other words, the person who causes the accident should pay for the damages. Your own insurance company should not have to pay for the other insurance company’s responsibilities.
This makes perfect sense yet the question still persists, why do I have to pay back my insurance company. The fact is if you do no pay back your insurance company then you are doubly compensated for your injuries. The basis for your recovery is your injuries. These injuries are typically measured to large extent via your medical treatment and hence your medical bills.
Any recovery either by settlement or verdict will reflect your injuries which at least in part are measured by your medical expenses. Therefore, the recovery itself will factor in repayment of your medical expenses. If these were paid by your insurance company, then recovering on those medical expenses without reimbursing your own carrier is akin to a windfall recovery. In essence, you would then be recovering twice for the same medical expense
Insurance Liens Are Negotiable
In short, you must pay back your insurance company for your medical expenses. Your carrier will claim a lien against the proceeds of any settlement or judgment. Failure to pay the lien will likely result in a collection action against you.
That is the bad news. The good news is that you can often negotiate these liens down. The amount of the lien reduction will depend on the circumstances. An attorney experienced in auto accident cases and insurance issues will be able to address these issues with the goal of maximizing your recovery.