Understanding Health Insurance Claims in Personal Injury Cases
Medical insurance is a huge value driver of an injury case. We have most client treatment run through their health insurance which has a huge net effect in driving costs down and providing bigger margins for our clients.
How Health Insurance Works
In order to understand how health insurance can benefit personal injury victims, it is first necessary to briefly go over how health insurance works. Most, if not all, health insurance plans are designed to cover a certain amount of medical bills once a deductible has been met and the insured would then be responsible for covering the remaining portion. The reason health insurance can help drastically reduce out-of-pocket expenses at the end of a personal injury case is because typically, the insurer will have a contract in place with a medical provider to pay a predetermined amount for a treatment rendered. Once the insurance pays their contractual portion to the provider, members then are usually required to pay a predetermined copay amount and the provider usually adjusts the remainder of the bill to satisfy the total amount charged for the service(s) rendered.
A hypothetical scenario illustrating how health insurance works would be to consider the situation of a client we will refer to as John. John was rear-ended in a car accident and incurred a $10,000.00 hospital bill as a result. John's health insurance provider, who was in-network with the hospital he treated at, has a contract in place which outlines that John will pay a co-pay of $500.00 while the insurer will pay 30% of the bill ($3,000.00, which might have to be paid back later) and $6,500.00 will be adjusted or written off by the hospital. The benefit that health insurance provided in this instance is that it saved John at least $6,500.00 off of a $10,000.00 bill. John satisfied the debt in full and only had to pay $500.00 because he had health insurance and went to a hospital that was in-network with his insurer.
How does health insurance yield a greater recovery?
Continuing with the example of John above, let's assume he files a claim against the person who rear-ended him for his hospital bill ($10,000.00) plus pain and suffering. His case settles for $25,000.00. When it comes time to distribute settlement funds, John will walk away with a significantly larger recovery amount than he would have if he did not have insurance. Here's an example of what his settlement statement would look like:
Settlement amount - $25,000.00
Payment to hospital - $0.00 (John paid his copay and his health insurance covered the rest)
Attorney's fee (33.3%) – ($8,333.33)
Subrogation* amount – ($3,000.00) – If the Health Insurer is ERISA protected then you might have to pay back this amount. It can be negotiated or tossed if there's no right to recovery
Net recovery check to John at the end of the case: $13,666.67. If John would not have had health insurance, then we would have had to negotiate directly with the hospital to pay off the entire $10,000.00 balance. With law firms, hospitals have all the leverage, and they refuse to reduce usually more than 15-33.33%. Health insurance is a big win for the client.
For a complimentary case evaluation contact us or call (404) 618-0960 to speak with a qualified Atlanta injury lawyer today. Our firm is expert at both maximizing your settlement and reducing costs associated with it.