Clients often ask their Cleveland auto accident lawyers questions relating to how much money their cases are worth. One of the most common questions is, “How much money will I end up with?” There are helpful videos you can watch that will explain how medical bills are paid and how case values are decided; however, the amount of money you will actually “walk away with” is difficult to estimate early in your case for many reasons. One of these reasons is related to health insurance. Many people mistakenly believe their medical bills will be paid by health insurance, and then they will get a large settlement for injuries on top of the amount the health insurance paid. But this is not exactly how insurance works. Let’s take a look at this a little more closely.
What is “Subrogation?”
Insurance is all about subrogation. This is a somewhat confusing term for a lot of people who are not dealing with it every day. It basically means to step into another’s shoes and assume their rights and responsibilities. It is almost always based on a contract. This is the legal basis for insurance. The best way to think of it is like the kid who tries to pay a friend to pretend to be him in order to go take a test. One person is stepping in and assuming the role of the other for some limited purpose. While both of these kids are cheating, in the grown-up world of insurance, this is exactly how the game is played.
Since most people cannot afford to pay tens of thousands in medical bills upfront or pay for large property damages, they carry insurance. Since there are different types of insurance, it is important to understand that each has a distinct purpose. But no matter what, to perhaps expand our metaphor, you cannot send two people to take the same test. Indeed, you cannot recover twice for the same damage or harm. Therefore, if one insurance policy pays for an injury or expense, then you cannot have another insurance policy double down on the same thing. This is important to keep in mind as we continue.
What Happens if Private Health Insurance Pays My Medical Bills?
Consider what happens when your insurance company pays for a doctor’s visit. First, the health insurance company has already negotiated a reduced price for services. So, that $10,000 knee replacement may only cost your insurance company $4,500 once billed. The insurance company has contracted with the provider to accept this reduced amount as payment in full so they don’t go after you for the difference. In exchange, the provider can count on payment and a steady stream of patients.
Now imagine if you are injured in a car accident by a negligent distracted driver. You go to the hospital and receive about $10,000 in care, and the health insurance pays $4,500. If you hire an attorney and pursue a case against the negligent driver, you may be able to recover compensation for your injuries. This compensation includes money for your medical bills, pain and suffering, lost wages from work and other types of damages that may have been incurred. Say you receive $50,000 for your injuries. Your health insurance company has a right to be reimbursed for the amount it paid for your bills. After all, you can’t recover twice for the same thing. The good news is, many times the insurance company will reduce the amount it demands to be paid. This keeps more money in your pocket.
What if I Have Medicare?
Medicare is a little different. Since Medicare is a federally funded health insurance program, the government will be involved in your settlement to the extent that Medicare has paid for care. Say you had Medicare instead of private insurance. Then Medicare will assert a lien against your case. Once notified of the case, Medicare will send a correspondence known as a conditional payment letter. This letter informs you of the lien and estimates how much you must pay back to Medicare from your settlement or verdict. This number is an estimate until the case if finally resolved, at which time Medicare will provide a final payment amount.
Without an attorney, dealing with Medicare can be time consuming and extremely frustrating. And, if not handled properly, a client could see her entire settlement eaten up by liens. An experienced Cleveland auto accident lawyer can negotiate with Medicare to reduce the lien and ensure that all necessary paperwork is processed quickly and in a way that won’t delay your case any more than it has to be. Keep in mind that Medicare can create delays simply by virtue of being a large government bureaucracy.
What if I Have Medicaid?
Like Medicare, Medicaid is a government program. So naturally there will be complications. However, in some ways Medicaid can be good. Medicaid has the lowest negotiated prices. It generally pays providers a very small percentage of the actual billed care. The $10,000 knee replacement we mentioned earlier could be paid in full by Medicaid for as little as $800 to $1,200. While doctors and hospitals know this and would greatly prefer the rates paid by private insurance or even Medicare, they also know that by accepting Medicaid, they receive a much large pool of potential patients.
When your auto crash case settles, Medicaid, like the other health insurance options, will have the right to be reimbursed. However, since Medicaid pays so much less, the lien is often lower. Similarly, Medicaid usually will negotiate with your attorney to reduce its lien so you keep more money in your pocket. However, without an attorney, there are many pitfalls that can cost you your settlement.
Will I Get Less if I Have Health Insurance?
Without getting too technical, keep in mind that insurance companies use your medical expenses as a strong indicator of the value of your case. This means if you have $10,000 in medical bills, the insurance company will be more inclined to pay you more than someone with only $5,000 in bills. This is clearly not the only factor, but it is probably the most common and strongest factor considered. In recent years, states have grappled with how to present medical bills to juries. In some states, attorneys must only show the jury the actual amount paid by the insurance company, which is almost always much less than the total billed. And yes, this can mean lower settlements.
Fortunately, most states prohibit the defendant from introducing evidence of your health insurance or how much it paid. This is known as the “collateral source rule.” Ohio law has, however, changed in recent years. Certain cases have been decided by Ohio courts, which have now made it possible for defendants and their insurance companies to use some evidence of “write-offs” by providers to show that your injuries, and therefore the value of the case, are lower than you say. Still, creative and experienced Cleveland auto accident lawyers have many ways to fight this and ensure you get compensated properly and reasonably. If you are hurt in an accident, you should talk to a lawyer today.