After a car accident, the victim is generally responsible for paying his or her medical bills. This is the case even if it is clear that the other driver was at fault for the crash. If the victim has health insurance or Med-pay, the insurance company may cover the costs as they accumulate. A verdict or settlement can then compensate the victim for out-of-pocket expenses.
After a car accident, how are medical bills paid?
After a car accident that caused injuries, each injured person is responsible for paying his or her own medical bills. Many accident victims have insurance coverage that will pay these bills. 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 the victim once they have been found liable for the accident. This happens if a jury’s verdict finds that he or she caused the crash, or if the driver settles 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 the victim of the accident. Their 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 the victim.
How the medical bills are paid will depend on the victim’s insurance coverage. A personal injury lawyer can help victims and their loved ones understand this complicated aspect of the law.
The victim has private health insurance or Medicaid
If the accident victim has 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 the victim receives medical bills from healthcare providers, he or she can file claims with the insurance company. These claims formally request the insurance company to pay the medical bills according to the terms of the insurance policy. If the policy does not cover the particular procedure or healthcare service, the insurance company may deny the claim. If the claim is properly denied, the victim may still have to pay the costs out of his or her own pocket.
Victims who have had their insurance claim denied and have had to pay for medical treatment on their own 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 their policy, it can be an act of bad faith.
The victim has medical payment car insurance
Some drivers choose to add medical payment insurance, or “med pay,” to their car insurance policies. This insurance coverage will pay for medical bills from 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 the victim or his or her health insurance company.
Many drivers 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.
The victim has no health insurance
If the victim has no health insurance, then he or she will be personally responsible for paying all of their medical bills out of their own pocket.
Many hospitals have payment arrangements that can spread the amount owed over several years.
If the victim does 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 an accident victim’s medical bills, in exchange for a lien on the eventual personal injury verdict or settlement. These are known as liens.
When treating an accident victim who does not appear to have enough insurance coverage to pay for their care, hospitals often request that the patient signs a lien letter. This letter gives the hospital permission to recover what it is owed from the victim’s personal injury case.
Accident victims who agree to a lien will not have to pay for their 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 drivers to carry “no-fault” auto insurance. Also known as personal injury protection, or PIP, this coverage will pay for some or even all of the medical bills that a victim receives. The coverage triggers regardless of who was at fault for the crash, but limits when victims 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 the victim or to his or her health insurance company.
The following states use no-fault insurance to apportion the costs of a car crash, rather than personal injury claims:
- New Jersey,
- New York,
- North Dakota,
- Pennsylvania, and
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 a car crash victim’s behalf. This right is generally included in the insurance policy. Insurance companies pursue this reimbursement from the victim’s 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 that 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 a windfall for the victim. If the full amount of their medical expenses were paid for by their insurance carrier, and then they won their car accident claim against the at-fault party, their medical care would be paid for twice.
What is the law in California?
California is not a no-fault state. This means that the victim in a car accident is responsible for paying his or her medical bills, without the help of no-fault car insurance. However, even uninsured victims can agree to a hospital lien against a 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 the victim was represented by a personal injury attorney, or 50 percent if the victim did not have a lawyer.2
California also recognizes the limitations on subrogation from the:
- Made Whole Doctrine, and
- Common Fund Doctrine.
- California Civil Code 3045.2 CC.
- California Civil Code 3040 CC.