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How Medical Bills Are Paid After a Car Accident

Written by Ankin Law Office

There are several ways for medical bills to be satisfied or paid following a car accident. When a victim sees his or her medical bills after a crash, they may feel overwhelmed by the high cost of medical treatment. The question of how medical bills are paid is one of the most commonly asked questions by car accident victims. This is because car accidents can leave victims facing severe injuries. These injuries in turn require expensive medical treatment. Car accident cases are not always quickly resolved, and doctors do not wait until a case is resolved to obtain payment. This leaves patients facing additional financial stress during the recovery process.

Paying Medical Bills with MedPay After a Car Accident

MedPay is a benefit that is offered when a person purchases automobile insurance. Under Illinois law, MedPay is an optional type of coverage. If a car accident victim has MedPay, he or she can use it to pay his or her medical bills. Typically, automobile insurance companies offer MedPay with limits of $2,500, $5,000 or $10,000. The amount of MedPay coverage available depends on how much a car accident victim purchases when he or she purchased the automobile insurance policy.

The main benefit of MedPay is that it is a form of no-fault insurance. This means a car accident victim may be deemed to be at fault, but can still have his or her medical bills paid with MedPay coverage. Another benefit of MedPay is that, unlike health insurance, it pays 100% of a medical bill on a victim’s behalf.

The downside of MedPay is that it offers a limited amount of financial coverage. Car accident victims with medical bills exceeding MedPay coverage amounts are responsible for the remaining bills. Another downside of using MedPay is that payment of medical bills can be time-consuming. A victim must make a claim with his or her automobile insurance company, and then submit bills for payment.

Paying Medical Bills with Health Insurance After a Car Accident

Car accident victims can also use their personal health insurance to pay for their medical expenses following an automobile collision. Some car accident victims are reluctant to use their health insurance to pay their medical bills. This is because car accident victims mistakenly believe that if the other driver is at fault, his or her insurance carrier will pay medical bills in full.

There are many benefits to using health insurance to pay medical bills after a crash. The main benefit is that health insurance has higher coverage limits than MedPay. This means more medical bills can be paid with health insurance as opposed to MedPay. This also means a victim has more options when seeking quality medical care after a car accident.  Another benefit is that health insurance pays medical bills promptly. A car accident victim does not have to make a claim directly. Instead, he or she simply has to provide his or her health insurance information to the medical provider.

The main drawback of using health insurance is that policies often have deductibles. Car accident victims must pay these deductibles out of their own pockets. Another drawback of using health insurance is that the health insurance company will assert a lien against the victim’s car accident case. 

Liens Against a Settlement Award

A lien is a security interest that a person, or entity, holds against a property or asset. A medical lien is asserted when a debt is owed. A health insurance company will assert a medical lien against a potential award or settlement. This is because a health insurance company is entitled to partial reimbursement of the money it paid to a car accident victim’s medical providers. A health insurance lien must be protected by a victim’s attorney, and satisfied when a case settles, or when a judgment is obtained. A victim’s car accident lawyer can negotiate the amount of the lien that is asserted by a health insurance company. 

While medical liens can affect the amount of money a victim nets, they can be useful to car accident victims that lack health insurance, MedPay, or sufficient amounts of MedPay coverage. This is because a car accident victim can request that a medical provider place a lien on the potential recovery from his or her car accident case in lieu of accepting immediate payment. This deferred payment method is optional, and is subject to the medical provider’s discretion. The main drawback of a medical lien that is requested by a car accident victim is that the amount of the lien cannot be negotiated. The medical provider is entitled to have the entire bill paid from the settlement or judgment. However, Illinois law places limits on liens. The total amount of a lien, or combined liens, cannot exceed 40% of a judgment or settlement. If a case cannot be settled, or if a victim does not win his or her case at trial, the medical provider can still obtain payment for the bill by placing it in collections.

Satisfying Medical Bills from a Judgment or Settlement After a Car Accident

Medical expenses are the main factor used when calculating damages in a car accident case. If a victim lacks MedPay or health insurance, the entire bill or lien can still be claimed, but it will have to be paid from a settlement or judgment. In some cases, car accident victims have MedPay but not health insurance. This means only some medical bills are paid. 

Medical bills that are partially paid are satisfied from a settlement, or from a judgment. The main benefit of paying medical bills from judgment or settlement is that the victim can claim the entire value of the bill. For example, if the victim had a $10,000 hospital bill, but MedPay or health insurance only paid $5,000 of the bill, the entire $10,000 bill can be claimed. This is because the collateral source rule precludes the opposing party from arguing that the victim did not suffer damages because insurance paid the bill. Additionally, a car accident victim can obtain financial compensation beyond the full value of a medical bill.

Generally, a victim can claim economic and non-economic damages in a car accident case. Economic damages are the financial losses a victim suffered, such as medical bills. Non-economic damages are the pain and suffering a victim suffered due to the accident. A victim’s medical bills can increase the amount of non-economic damages a victim can claim. This is because victims with severe, and painful, injuries require more medical treatment.

Paying Medical Bills Out of Pocket After a Car Accident

If a car accident victim lacks health insurance or MedPay, he or she can pay his or her medical bills personally. The main benefit of paying a medical bill personally is that it avoids a medical lien being asserted by a health insurance company or by a medical provider. Car accident victims often do not personally pay medical bills in personal injury cases. This is because the cost of medical treatment is prohibitively expensive for victims to pay the bill personally. This is especially true with victims that required emergency medical treatment, and surgery.

Categories: Auto Accidents