After a car accident, you are generally responsible for paying your medical bills. This is the case even if it is clear that the other driver was at fault for the crash.
However, if the other party or parties is determined to be at fault, you can bring a claim against them (and/or their insurance companies) seeking compensation for medical expenses and other damages.
If you have health insurance or Med-pay, the insurance company may cover the costs as they accumulate. A verdict or settlement can then compensate you for out-of-pocket expenses.
After a car accident, how are medical bills paid?
After a car accident that caused injuries, you are responsible for paying your own medical bills. If you have insurance coverage, the type and extent of this coverage will dictate
- how the bills actually get paid, and
- when.
This is the case even when it is very clear who caused the crash. The at-fault driver will only have to compensate you once they have been found liable for the accident. This happens if a jury’s verdict finds that they caused the crash, or if they settle the personal injury claim against them.
Because the at-fault driver may not be found liable for months or even years after the crash, this creates a dilemma for you as the victim. Your medical bills will accrue, regardless. Many of them will need to be paid before the case reaches a verdict or gets settled. This can put financial strain on you.
How the medical bills are paid will depend on your insurance coverage. A personal injury lawyer can help you and your loved ones understand this complicated aspect of the law.
You have private health insurance or Medicaid
If you have private health insurance, Medicare, or Medicaid, then the insurance company will cover the medical bills. This coverage will be subject to the deductible and other policy limitations.
As you receive medical bills from healthcare providers, you can file claims with the insurance company. These claims formally request the insurance company to pay your medical bills according to the terms of your insurance policy. If the policy does not cover the particular procedure or healthcare service, the insurance company may deny your claim. If the claim is properly denied, you may have to pay the costs out of your own pocket.
If you have had your insurance claim denied and have had to pay for medical treatment on your own, you should consider establishing an attorney-client relationship with a skilled car accident lawyer from a local law firm. If a health insurer refuses to cover costs that are within your policy, it can be an act of bad faith.
You have medical payment car insurance
You can choose to add medical payment insurance, or “med pay,” to your car insurance policies. This insurance coverage will pay medical bills for injuries sustained in car accidents up to the policy limits. It generally does not have a deductible.
Once the policy limit has been reached, the responsibility for the medical bills shifts back to you or your health insurance company.
You can use med pay coverage to make up for a high deductible health insurance plan, or to cover health insurance co-payments.
For example: Tracy is in a car accident. She accrues $100,000 in bills from medical providers and emergency room care. She has health insurance, but the deductible is $6,000. If Tracy has med pay coverage, then her car insurance company will pay for the first $6,000. If she does not have med pay coverage, Tracy will have to pay $6,000 out-of-pocket.
You have no health insurance
If you have no health insurance, then you will be personally responsible for paying all of your medical bills out of your own pocket.
Many hospitals have payment arrangements that can spread the amount owed over several years.
If you do not pay the medical bills, they will be sent to collections.
What about medical liens or hospital liens?
Most states allow hospitals or other entities to cover your medical bills, in exchange for a lien on your eventual personal injury verdict or settlement. These are known as liens.
If you do not appear to have enough insurance coverage to pay for your care, hospitals often request that you sign a lien letter. This letter gives the hospital permission to recover what it is owed from your personal injury case.
If you agree to a lien, you will not have to pay for your medical bills upfront. However, the medical institution that has the lien will recoup its costs from any verdict or settlement that is made.
How are bills paid in a “no-fault” state?
A few states in the U.S. require you to carry “no-fault” auto insurance. Also known as personal injury protection, or PIP insurance, this coverage will pay for some or even all of the medical bills that you receive. The coverage triggers regardless of who was at fault for the crash, but limits when you can file personal injury claims over a car accident.
No-fault coverage pays for medical bills up to the auto insurance policy’s cap. Once the no-fault limit is reached, responsibility shifts back to you or to your health insurance company.
The following states use no-fault insurance to apportion the costs of a car crash, rather than personal injury claims:
- Florida,
- Hawaii,
- Kansas,
- Kentucky,
- Massachusetts,
- Michigan,
- Minnesota,
- New Jersey,
- New York,
- North Dakota,
- Pennsylvania, and
- Utah.
Can my insurance company take a share of a personal injury verdict?
Yes, insurers often have a contractual right to be reimbursed for the bills they have paid on your behalf after a car crash. This right is generally included in the insurance policy. Insurance companies pursue this reimbursement from your personal injury claim through the process of subrogation.
For example: Mark gets hurt in an auto accident. He builds up $20,000 in bills for medical treatment. His health insurance policy has a $4,000 deductible, so he pays that out-of-pocket. His insurance company pays the other $16,000. Mark then settles his personal injury claim against the driver who hit him for $25,000. His health insurance company can recover the $16,000 that it paid from the settlement.
While subrogation may seem unfair, it prevents you from having a windfall. If the full amount of your medical expenses were paid for by your insurance carrier, and then you won your car accident claim against the at-fault party, your medical care would be paid for twice.
What is the law in California?
California is not a no-fault state. This means that you are responsible for paying your medical bills after a car accident, without the help of no-fault car insurance. However, even if you are uninsured, you can agree to a hospital lien against your personal injury verdict or settlement.1
California law also limits how and whether insurance companies can recover money through subrogation. For example, insurance companies are limited to the lesser of:
- the cost of the medical services provided, or
- a set percentage of the total settlement – either 33 percent if you were represented by a personal injury attorney, or 50 percent if you did not have a lawyer.2
California also recognizes the limitations on subrogation from the:
- Made Whole Doctrine, and
- Common Fund Doctrine.
Contact our California auto accident attorneys for additional help. Also see our article on How long does it take to get paid after a settlement?
Additional reading
For more in-depth information and historical analysis, refer to these scholarly articles:
- Who Pays for Car Accidents?: The Fault versus No-Fault Insurance Debate – Georgetown University Press.
- The Economic Treatment of Automobile Injuries – Michigan Law Review.
- Recent Developments in Automobile Accident Compensation – Columbia Law Review.
- Automobile Accident Costs and Payments: Studies in the Economics of Injury Reparation – University of Michigan Legal Studies Series.
- The Financial Impact of Automobile Accidents – University of Pennsylvania Law Review.
- Ceilings, Costs, and Compulsion in Auto Compensation Legislation – Utah Law Review.
