A) THE MISCONCEPTION:
There is a misconception out there that you cannot use your health insurance to pay for your medical expenses if you are injured in a car crash, slip and fall, or in some other way where you are going after an at-fault party or insurance company for compensation. This is nonsense!
This misconception probably stems from an old remnant left over from a time in Colorado law, which ended back in 2003, where no-fault auto insurance benefits were primarily responsible for paying for car accident related medical benefits. Before 2003, if a person was injured in a car accident and had health insurance, that health insurance would not pay any medical expenses until the no-fault auto insurance benefits were exhausted. Because no-fault insurance provided a great deal of coverage for those injured in car accidents, most people did not need to use their health insurance to pay for related medical expenses.
But, when the law changed nine-years ago to eliminate no-fault insurance benefits, health insurance went from a secondary to a primary source for coverage of accident related medical expenses. Regardless, many of our clients with health insurance do not initially use their health insurance to pay for their medical expenses before they hire us to represent them. They simply do not realize the availability of using their health insurance EVEN in auto accidents or other injury cases where someone else is at-fault.
B) WHY HEALTH INSURANCE IS YOUR FRIEND AFTER YOUR CRASH:
If you are lucky enough to have health insurance at the time of your personal injury, you should absolutely submit ALL of your medical care and therapy charges to your health insurance provider.
Health insurance is the source that should step up and pay your medical bills after you are injured in an accident. Contrary to what you might have been told by your friends, family, or even your health insurance provider when you called to seek care (yes, we know that happens sometimes), your health insurance is responsible for covering your medical care.
Since the law changed in 2003, once a settlement is reached with the at-fault party's insurance, the subject then turns to what, if anything, must be paid back from the settlement to the health insurance provider that covered the medical expenses. Your health insurance provider, a hospital who filed a lien, your doctor/chiropractor who agreed to wait to get paid from your settlement, or a private finance company that fronted your medical care expenses all expect to get a piece of your "settlement pie." When health insurance pays the medical bills, their efforts to get paid back (successful or not) is called subrogation. When a finance company pays the medical bills, their collections efforts are called their "claimed right of interest."
When you are injured and do not have health insurance, it is often necessary to arrange payment of medical bills with a medical finance company or a doctor that will wait for your to settle your case before he or she gets paid. But, when you have health insurance, there is really never a reason not to use your health insurance, and never a reason to use private financing in lieu of health insurance.
C) THE TWO-FOLD REASON TO ALWAYS USE YOUR HEALTH INSURANCE:
The two most important reasons to ALWAYS run your injury related medical care through your health insurance are (1) re-pricing and (2) the great likelihood that you might not have to pay back as much, if anything, to your health insurance upon the settlement of your case.
Hospital liens, doctors that treat you on a lien, and finance companies generally charge you more for the privilege of waiting to get paid from settlement proceeds. They charge anywhere from the very highest end of the reasonable value of medical services all the way up to a level many times over the reasonable value for the services provided. Unfortunately, when our clients are injured and do not have health insurance, financing sources such as medical finance companies are a necessary evil. Nonetheless, in fairness to these financing sources, they take on an extraordinary risk.
These sources agree to pay for a doctor to provide you with care NOW with the expectation that they will get paid IF/OR WHEN you get your case settled. But, not all injury cases settle. Some cases go to trial, and sometimes, injured people lose at trial. Accordingly, like a bank, medical finance companies stay in business by making sure that when cases do resolve favorably, they handsomely collect to offset the bad risk cases that don't resolve favorably. Consequently, you should only use medical finance companies to cover your medical expenses as a last resort. Certainly, health insurance, along with your Med-Pay coverage from your auto insurance policy should cover your medical expenses for your personal injury, not side deals with a chiropractor or medical financing company.
1) Health Insurance Re-Pricing:
Medical financing companies charge a premium, much higher than the usual amount charged for the same medical services, for the burden of waiting to get paid from your settlement. In sharp contrast, health insurance providers drastically cut down the prices that hospitals and doctors charge for medical care. Health insurance companies have agreements with medical doctors and hospitals that allow them to "re-price" the invoiced charges that doctors and hospitals send them.
Hence, when health insurance companies seek subrogation for the medical care they paid for, they do not expect you to pay the full amount that they were charged by the hospitals and doctors. Instead, they expect you to pay back the low "re-priced" charges that they actually paid for your care. As you can see, a person paying back his health insurance for care is going to pay much less than a person who used a medical financing company to cover her medical expenses (re-pricing vs. premium pricing).
2) Favorable Laws Make It Harder Now for Insurance Companies to Take Money From Your Settlement:
The second overwhelming advantage for using your health insurance to pay for your personal injury care comes from the Make Whole Statute that the Colorado Legislature adopted two years ago. In all cases, where health insurance or Med-Pay are seeking to be paid back from your settlement for the proceeds expended to pay your medical bills, they now have to follow very strict procedures, and the overall evaluation is premised on the injured party having first-right to the settlement money. In case you were wondering, these laws don't extend the same kind of scrutiny to charges by medical finance companies.
At Anderson, Hemmat & McQuinn, we understand that for our clients, it is not what you settle for that matters, but what you actually get to keep at the end of the day that matters the most. If you are injured in a car accident or slip and fall and you have health insurance, you should ALWAYS use your health insurance to cover the related medical expenses. Using your health insurance significantly lowers the amount that you have to pay back to your health benefit providers after you reach a settlement. Without a doubt, it is always a better deal for our clients when they use their available health insurance instead of using other forms of financing that are available. Call us today if you have been injured and have questions about how to handle the resulting medical bills.