Why Do I Have To Pay My Health Insurance Company Back From My Personal Injury Settlement?

Why Do I Have To Pay My Health Insurance Company Back From My Personal Injury Settlement?

Do I have to pay health insurance premiums and the cost of healthcare itself?


Every major health insurance company that I am aware of has provisions in their insurance policy that allow them to recover, from your recovery, for expenditures that they made for medical care for an injury caused by an at-fault third-party. Moreover, the substantive law of subrogation likely allows insurance companies responsible for medical and other related expenses incurred in the wake of a personal injury-causing event to recover the amounts expended from the person responsible for causing the situation. The process is to place a “lien” on any recovery. The most common reaction I get from those unfamiliar with this process is something to the effect of:

“Why do I have to pay my health insurance back don't I already pay premiums for that coverage ?”

That is a pretty solid argument, at least on the face of it. If an individual is covered under a traditional premium-based health insurance policy, particularly one in which that individual pays the full premium as opposed to an employer-paid plan

"....why should they have to pay premiums for health care insurance, and also pay back the insurance company back for the cost for that care?"

That argument may not carry as much force when the recipient does not pay insurance premiums out of pocket - e.g. some Medicaid based programs. However, in a situation where an individual is buying all or part of their health insurance, they may have a seemingly legitimate question as to why they must reimburse an insurer for injury-related treatment. It's important to understand if there is no at-fault individual there is no reimbursement. By way of example only, suppose an individual is afflicted by a serious illness requiring multiple hospitalizations, surgeries and lengthy and protracted care. In this scenario, there is no person responsible for this unfortunate illness, and there would be no reason or call for the unfortunate individual to reimburse their health insurance company for the multitude of expenses incurred. It is only where another individual, through an act of negligence, or perhaps intent, causes an injury to an individual, and a health insurance provider steps in to pay for the medical expenses associated with that injury that the reimbursement scenario arises. If there is no at-fault party or guilty actor, there is no reimbursement.

This is a difficult concept for an injured person to swallow. This is perhaps best described as the law placing the burden for a loss with that individual most responsible. Of the three involved entities- insurance company, at-fault party and victim, of course, the at-fault party is the one most responsible for the event. The reimbursement, although paid by the injured person, actually comes from the funds provided by the at-fault party or their insurance company. In fairness should pay for the event the injury causing it.