Medical Bills After a Crash: Who Pays First, and Why Using Your Health Insurance Helps

Published January 24, 2019 · Injury Law Basics

The first envelope usually arrives about three weeks after the crash. It is the ambulance bill. Then the emergency room, the radiology group, the orthopedist, the physical therapist. Before long the kitchen table is covered with statements, some of them stamped "past due," and the person who caused the crash has not paid a cent.

This is the moment I hear the most panic from injured people, and it is completely understandable. The good news is that there is an order to how bills get paid after an Ohio car crash, and once you understand it, the stack on the table becomes a plan instead of a crisis.

The surprise: the at-fault driver's insurer does not pay as you go

Most people assume that if another driver caused the crash, that driver's insurance company will pay the medical bills as they come in. It almost never works that way.

The at-fault driver's liability insurer owes you nothing until your claim is resolved, either by a settlement or by a judgment after trial. It does not owe you a monthly check, it will not pay your hospital directly, and it has no obligation to keep your accounts out of collections. It pays once, at the end, in a single lump sum that is supposed to cover everything: past bills, future care, lost wages, and pain and suffering.

That leaves a gap of months, sometimes more than a year, between the crash and the settlement. Your own coverage is what fills that gap.

The order of payment

In most Ohio crash cases, the bills are handled in roughly this sequence.

1. MedPay, if you bought it. Medical payments coverage is an optional part of many Ohio auto policies. It pays reasonable medical expenses for you and your passengers regardless of who caused the crash, usually up to a modest limit such as $1,000, $5,000, or $10,000. It is fast and fault-free, which makes it the natural first payer. I explained how MedPay works, and some of its strings, in an earlier post.

2. Your health insurance. Once MedPay runs out, or if you do not have it, your health plan should be billed. This includes employer plans, individual marketplace plans, Medicare, and Medicaid. Many people hesitate here because "someone else caused this." Use the health insurance anyway. I will explain why below.

3. The liability settlement, last. When the claim against the at-fault driver resolves, the settlement pays your losses and, out of that money, the health plan or MedPay carrier is reimbursed for what it paid, if it has a right to reimbursement. Your lawyer handles that reimbursement as part of closing the case.

If the at-fault driver had no insurance or too little, your own uninsured or underinsured motorist coverage under R.C. 3937.18 may step into the third position. That coverage is optional in Ohio, which is one more reason to review your policy before you need it.

Why using your health insurance usually puts more money in your pocket

This is the part that surprises people. Running your crash bills through health insurance is usually the single best thing you can do for your net recovery.

Contracted rates. Hospitals and doctors who are in your health plan's network have agreed to accept discounted rates. A hospital bill of $40,000 might be paid in full by a health insurer for a fraction of that figure. If the bill is never submitted to insurance, the provider may try to collect the full sticker price from you or from your settlement.

No balance billing by network providers. When a network provider accepts the plan's payment, its contract generally prevents it from billing you for the difference beyond your copay, coinsurance, and deductible. That keeps the provider's hands off your settlement.

Smaller reimbursement claims. When your health plan seeks repayment from your settlement, it seeks repayment of what it actually paid, not what the hospital originally charged. That is often a much smaller number.

Ohio's subrogation statute protects you. Ohio law limits how much a health insurer can take back. Under R.C. 2323.44, when an injured person recovers less than the full value of the claim, for example because the at-fault driver carried only the state minimum $25,000 policy, the insurer's reimbursement claim is reduced in the same proportion. Some employer plans governed by federal law claim to be exempt from the Ohio rule, and that is a fight worth having with the plan documents in hand. I covered the details of subrogation and the make-whole principle in a 2014 post.

Your credit and your peace of mind. Bills that are being paid by insurance do not go to collections.

Liens and "letters of protection"

Sometimes health insurance is not an option, because you are uninsured, because the provider is out of network, or because the provider refuses to bill it. In those cases the provider may ask you to sign a lien or what is sometimes called a letter of protection. That document promises the provider payment out of any settlement in exchange for continuing treatment without payment up front.

Liens can keep care going, and sometimes they are the only realistic way to get it. But they carry risks. The provider is usually charging full, undiscounted rates. The lien may be enforceable against your settlement whether or not the case goes well. And juries and adjusters are sometimes skeptical of treatment provided on a lien. Before you sign one, ask whether the provider will bill your health insurance instead, and talk to your lawyer about whether the terms are reasonable. A lien can often be negotiated down at the end of the case, but it is far easier when the lawyer knew about it from the start.

What to say at the billing office

When you check in for any crash-related treatment, give the front desk your health insurance card and say these words: "Please bill my health insurance." If they tell you they bill the auto insurance first, tell them the auto claim is pending against another driver and has not been accepted, and ask them to submit to your health plan. Keep a list of every provider, every date of service, and every bill you receive. If something goes to collections, send a copy to your lawyer right away.

Do not ignore statements, even when you cannot pay them. Call the provider, explain that you were injured in a crash and that a claim is pending, and ask them to place the account on hold. Most providers will do so for a period of time if they know a claim is moving.

What this means for you

The order of payment after a crash is MedPay, then health insurance, then the liability settlement at the end, with the settlement reimbursing what your own coverage paid. Using your health insurance is not a favor to the person who hit you. It protects your credit, reduces what providers can claim from your settlement, and usually increases what you keep.

A plan for the bills is part of a plan for the case. It is one of the first things we work out with every client in our car accident practice and across our personal injury cases. If your crash happened on this month's icy roads, my recent post on winter-crash fault explains why the weather does not let the other driver off the hook.