Do I have to pay back Health Insurance benefits from my verdict or settlement?
After a personal injury verdict or settlement, reimbursing health insurance is generally required to some extent, and under some circumstances. The requirement is typically contained in the insurance contract, state laws, and regulations, or federal laws and regulations. Whether a person can lawfully avoid or mitigate a health insurance reimbursement depends on a number of variables. I will focus on some of the more common areas that come up, but this is by no means a comprehensive look at every conceivable reimbursement scenario involving health insurance.
In general, health insurers have a right to be reimbursed to the extent they paid for medical treatment that was caused by another person or entity, such as an at-fault driver in a car crash. The limitations on that reimbursement are important to injured persons and the personal recovery they may make in an injury claim.
Washington Health Insurance Reimbursement (non-Medicaid)
Just like Washington PIP reimbursement (hyperlink), Washington's health insurance reimbursement turns on whether the injured person was “made whole.” In other words, if the damages can reasonably be shown to be in excess of the third party's policy limits, or if the injured person bears any fault for the injury, health insurance has no legal right to be reimbursed.
If the settlement or verdict makes the injured person whole, the health insurance may have the right to be reimbursed the money it spent on care related to the injury, subject to a discount for its proportionate share of attorney fees and costs incurred in making the recovery.
Oregon Health Insurance Reimbursement (non-Medicaid)
The liability insurer for an at-fault driver in Oregon is required to directly reimburse a health insurer for amounts paid, if a few conditions are met. The health insurer must be entitled to reimbursement under its policy, it must not be pursuing recovery by lien (more below), and it must request it from the at-fault driver's insurance. There is a proportionate reduction for any fault the injured person shared for the collision. The reimbursement is capped by the at-fault driver's policy limits.
There is an added wrinkle if the health insurer decides not to pursue direct reimbursement from the liability carrier. In that case, the attorney for the injured person may be responsible for collecting reimbursement, but the health insurance company has to take a reduction for a proportionate share of attorney fees and costs, which could be reduced further if the injured party is found to be at-fault any percentage.
Watch out for the Government
The news is jam-packed with stories about the rising cost of health care, the steps the United States government takes to work on the issues, and generally how effective those attempts are. One thing is certain if you are insured under a Medicaid plan, Medicare, or an ERISA plan (which is controlled by federal law), the government wants to get paid back.
Medicaid is a health plan that is organized and partially funded by the federal government, and partially funded and run by the states' governments.
The law for Medicaid reimbursement in personal injury settings is complex, varies somewhat between states, and is subject to changes quickly and frequently. If the available insurance limits are going to be swallowed up by the Medicaid lien, then Medicaid is only entitled to be reimbursed to the extent its proportion of medical expenses is a piece of the true value of the case. Finding the true value of the case is a difficult and complicated process in its own right.
Otherwise, in most cases, the Washington Health Care Authority is required to reduce by a proportionate share of its attorney fees and costs. The Oregon Health Care Authority is a different animal, and an attorney skilled in Oregon Medicaid reimbursement might be able to find a way to negotiate a limited reimbursement.
Medicare is a wonderful federal program that allows seniors and some disabled people to have health insurance. But the federal government is not in the habit of giving handouts. If they make a payment for your injuries, you are required to pay them back. When considering reimbursement amounts, they will consider the whole picture.
This includes the attorney fees and costs you had to expend to get your verdict or settlement, the amount of the settlement and other factors. There is no made whole rule for Medicare, and if it is not paid back properly, you may be required to pay back double the lien amount. Because the federal government has the ability to make the at-fault party pay, even after a settlement, both a plaintiff and a defendant have a heightened interest in making sure this type of lien is handled properly.
ERISA Plan Reimbursement
An ERISA plan is a special type of insurance. Under federal law, the Employee Retirement Income Security Act of 1974 (“ERISA”), a company can elect to pool employee funds into a trust account, and the trust acts as the health insurer for the employee's other beneficiaries.
In an ERISA situation, the difficult task is usually deciding whether the plan is truly organized and properly run under the ERISA scheme.
If the plan is truly an ERISA plan, federal law permits it to be first in line to receive payment from a third party. Depending on the plan language, the fund out of which health care expenses were paid may have priority over all the proceeds of the settlement, and it may decide not to have to take any reduction. Some plans are written so the fund is fully reimbursed out of a settlement, even if it swallows up all the available funds, and others allow for proportionate sharing of attorney fees and costs, no matter the amount of their lien.
Understanding It All
This is complicated stuff. The state in which you bought the healthcare policy, the available insurance limits for the injury claim, and the type of policy or health care plan you have are important factors to be aware of in dealing with your reimbursement claim. Depending on the way a few of those factors play out, you may simply be acting as a bill collector for your health insurance, the health insurer's claimed right to reimbursement may be reducible, or you may not have to pay the health insurer back a single penny.
The assistance of a skilled and experienced personal injury attorney may make a difference in using the available tools to minimize reimbursement obligations.