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What is subrogation and why do you have to pay back your health insurance?

Posted by Raj Chohan | Mar 06, 2019

When you have been injured in an automobile collision through the fault of another, your health insurance company has what's known as a right of subrogation.  This means it has the right to stand in your shoes and look to the at-fault party to reimburse the health insurance company for the money it spent on your medical treatment.

This may seem counterintuitive. After all, you paid your monthly health insurance premiums through your paycheck or out of pocket.  Why does your health insurance company have a right to be repaid?

The right of subrogation is a contractual right that exists in your health insurance contract. It gives the company a right to pursue the at-fault party for reimbursement of your medical expenses.  The at-fault party's automobile insurance carrier typically pays for your medical care through a monetary settlement. The settlement is almost always intended to include compensation for all damages claims including medical bills.  Because your settlement will include money for your medical expenses, your health insurance company will expect to be repaid from the settlement proceeds. In addition, your health insurance company will likely assert a claim or lien on the settlement proceeds needed to repay the medical expenses related to your care.

In this way, health insurance works differently than it does in situations where you get sick and go to the doctor. When you become ill, there is no right of subrogation because your illness was probably not anyone's fault – at least not in a way in which someone could be held liable. Your health insurance company will simply pay for your care and you will not be responsible for paying anything above your co-pays or deductible.

As a side note, one of the advantages of purchasing Med Pay coverage under your own car insurance policy is because it creates a pool of money that will be used to pay for your initial medical treatment. In Colorado, there is no right of subrogation with Med Pay so you will never have to reimburse Med Pay for the money spent on your medical care.  For a more detailed discussion of Med Pay please see my blog post titled “What is med pay and why does it matter?”

Just because your health insurance has a right of subrogation doesn't mean you should avoid using it.  Health insurance has many benefits including access to quality medical care and follow up treatment which is critical in any personal injury case.  Also, your health insurance has already negotiated lower payment rates with your medical providers which means the amount actually paid by your health insurance will be substantially lower than the amount charged by your medical providers. This difference almost always puts more settlement money into your pocket at the end of the case.

Hiring an experienced personal injury trial attorney is an important decision. Do your homework and be prepared to ask your prospective attorney how they will handle your case and whether they have the trial experience necessary to get a top settlement offer. The Max Law Firm has extensive trial experience and is well equipped to help you with your motor vehicle accident injury case. For a free consultation, call 720-699-8268.

About the Author

Raj Chohan

Raj Chohan is a personal injury attorney with a passion for helping injured Coloradans seek the compensation they deserve and the justice their cases demand. He is a former prosecutor with extensive jury trial experience in some of the most complex and serious cases that exist under Colorado law...