How to Pay my Medical Bills after a Car Accident: Lien or Health Insurance?

You were in a car accident caused by the other driver. You go to the Emergency Room, maybe an Urgent Care facility. You follow up with your primary care physician who refers you to either an orthopedic surgeon or a pain care specialist. You are treating in physical therapy for months and rack up tens of thousands in medical bills. The financial pressure is immense.

And of course you are thinking “why should I be paying these medical bills when it was someone else’s fault?”

Understandably, most clients do not believe it is fair to be paying their own medical bills after a car accident. You would not have incurred these bills, but for the other driver’s negligent driving, so shouldn’t they be paying for your treatment?

The simply answer is yes they should, but how those bills get paid and when they get paid, while still protecting our clients is important. The answer is not so cut and dry.

Clients Not Using Health Insurance

Most medical facilities and doctors offices require timely payment – they are not satisfied to wait until you have finished treating and obtained a settlement to get paid – they are running a business, after all. However, in certain instances these providers will treat you for “free” upfront by placing a lien on your insurance claim. For clients without health insurance, this is a very beneficial practice as it allows them to get the medical treatment they need without the significant financial burden and stress of paying their medical bills as they receive treatment.

The downside to this practice is that once a case is settled or we obtain a verdict in our favor, it become time to pay for that treatment out of those funds. And because these medical professionals have been patient and waited months or even years to be paid for treatment provided, they will not be satisfied with anything less than 100% repayment. So, that ER visit which would normally only cost you $500 out of pocket through health insurance – now the Hospital is seeking the full $5,000 bill out of your settlement money significantly reducing the money in your pocket.

Obviously, the benefit to this arrangement is you got the medical treatment you needed without the upfront financial burden. However, as you can see it comes at a significant cost on the back end.  

Clients Using Health Insurance

Most people receive health insurance through their employers, the State government (Medicaid), or the Federal government (Medicare). It is almost always in our clients’ best interest to use their own health insurance when receiving medical treatment for injuries from a car accident. (Exceptions to this rule do apply, and your attorney will guide you on what is best for your situation).

Insurance companies all have “in network” contracts with health care providers detailing a contracted rate at which they will pay for certain services. For example, a hospital may charge $5,000 for an MRI, however, a health insurer negotiated only paying $1,500 for that same MRI.

What does that mean to our clients?

Unlike the client whose claim was liened, and the medical provider is seeking repayment for the full $5,000 bill, the client who used their own health insurance is now only responsible for paying back what its health insurer paid - $1,500 out of $5,000. Additionally, because we as your attorneys created a benefit to your health insurer by paying them back, you are entitled to additional reduction of that amount. This means out of the $5,000 medical bill you would have received if you did not use health insurance, only about $1,000 will be paid back to the health insurer.

As you can see in this example, our clients who used health insurance will have received an additional $4,000 over those who did not use health insurance.

What happens if I do not pay my medical bills and wait for the case to resolve?

This is never something we recommend. Eventually, the medical provider will report the bill as delinquent or worse, put the bill into collections. This will have a significant negative impact on your credit score and a detrimental impact on major future purchases (like a car or house). Never ignore those medical bills, and always consult your attorney on how best to handle them.

The decision on handling the financial strain of medical bills and how to best utilize health insurance in a motor vehicle collision case is complex, and you should discuss the options with your attorney to ensure you are making the best decision for you. While this decision sounds simple after reading this blog, there are many variables to consider not outlined here.  If you have been in a recent motor vehicle collision and have questions about how best to use your health insurance, contact our office immediately to discuss your options by emailing info@aaglawgroup.com or calling 312-500-0707 for a free consultation.