Personal Injury Settlements: Will My Health Insurance Bill Me?

When people in the United States file personal injury claims, they may not think about their medical bills if they have been paid for by their health insurance carrier. Sometimes, plaintiffs (injured parties) assume that because they pay premiums, their health insurance will automatically pick up the tab and the carrier won’t ask to be paid back. But, that’s not always how it works.

People are often surprised that when they receive their personal injury settlements, paying their medical bills is a top priority and if a health insurance company is involved, they’ll expect to be reimbursed. When plaintiffs receive their settlements, make no mistake, the money to satisfy their health insurance claims often comes directly out of their settlement.

What is Subrogation?

You may have heard the term “subrogation,” which Investopedia defines as “a term describing a legal right held by most insurance carriers to legally pursue a third party that caused an insurance loss to the insured.”

In many jurisdictions, if someone is injured in an accident and they receive medical treatment covered by their health insurance, they will get what’s called a subrogation letter in the mail from their health insurance company. The letter will ask about the accident and whether it was work-related or if someone else (a third party) was involved.

Essentially, if someone is injured by a third party, their health insurance would cover all of their medical expenses because the personal injury case is premature, but in the subrogation letter, it would remind the insured that it is entitled to a full reimbursement if he or she receives a personal injury settlement or verdict. But is this the case in New York?

New York Law on Subrogation

Subrogation laws vary from state to state and in New York, plaintiffs in personal injury cases are no longer subject to subrogation claims from health insurance carriers. However, this refers to private health insurance carriers. It does not apply to medical bills paid for by Medicare or Medicaid. To learn more, check out this page from the New York State Senate.

Related: Are Personal Injury Settlements Taxable?