Who Pays Medical Bills After a Car Accident, and When

The at-fault driver's liability insurer owes you what its driver owes you: compensation for the injury, paid once, when the claim is resolved and you sign a release. It does not have a contract with you, it does not pay bills as they come in, and in most states it is not required to. An adjuster who says the company will take care of your bills means at the end, from the settlement, not now. People who stop treatment or avoid the emergency room because they think no one is paying hurt both their recovery and their claim.

While the claim is pending, the bills are yours, and they are paid from the sources in the order below. The order matters because each source has rules about what it pays, what it recovers later, and what it does if you do not use it.

At settlement, the at-fault insurer pays a lump sum that includes the medical expenses, and from that sum the sources that paid in the meantime are reimbursed. The net to you depends on those reimbursements, which is why they are negotiated as part of the settlement.

First is your own auto policy. Personal injury protection, mandatory in the no-fault states and available in some others, pays medical bills and often a share of lost wages up to its limit, regardless of fault, usually within weeks. Medical payments coverage, optional in most states, pays medical bills up to its limit, often $1,000 to $10,000, regardless of fault, with no deductible. Both pay promptly and both are used first, because they exist for this, and in many states the PIP or MedPay carrier has limited or no right to be reimbursed from the settlement.

Second is health insurance. Use it. Health insurers pay at negotiated rates far below billed charges, and the reduction benefits you because you owe only the copays and deductibles. The health insurer will have a right to reimbursement from the settlement for what it paid, called subrogation, under rules that vary by state and by the type of plan; that right is handled at settlement and is usually negotiable. Medicare and Medicaid have statutory rights that must be addressed.

Third is you, for what the first two do not cover, and the provider's agreement to wait. Some providers, particularly those used to injury cases, will treat on a letter of protection from an attorney, agreeing to be paid from the settlement, and will file a lien rather than send the bill to collections. Others bill you and, if unpaid, send it to collections, which is addressed below.

Suppose you were injured by a driver who ran a stop sign, in a state without no-fault, and your treatment over five months produced $42,000 in billed charges: emergency room, imaging, an orthopedic consultation, and physical therapy. Your auto policy had $5,000 in medical payments coverage, and you had health insurance with a $2,500 deductible.

The emergency room bill of $8,000 was sent first to your MedPay, which paid $5,000, and the balance went to your health insurer, which paid at its negotiated rate. The remaining treatment went through health insurance, which paid about $19,000 of the $34,000 billed after contractual reductions; you paid $2,500 in deductible and $900 in copays. The physical therapist's final two months were billed to you directly because the insurer required a new authorization, and you arranged to pay $50 a month pending the claim.

At settlement, the at-fault insurer paid a sum that included the medical expenses, valued in your state at the amount actually paid rather than billed. The health insurer's $19,000 subrogation claim was negotiated down by a third to account for your attorney's fees under the state's common fund rule; the MedPay carrier had no reimbursement right in your state. The physical therapist was paid in full from the settlement. All figures are hypothetical; the structure is typical.

The bills are manageable with a few steps, and ignoring them is the one approach that makes everything worse.

• Give every provider your health insurance and, if you have it, your auto policy's MedPay or PIP information at the first visit; do not tell them to bill the at-fault insurer, which will not pay.
• Find out your MedPay or PIP limit and which bills it has paid; it pays promptly and often has no reimbursement right.
• Keep every bill and every explanation of benefits; the amounts billed and paid are both needed at settlement.
• Ask providers who bill you directly for a payment plan pending the claim, or whether they will accept a letter of protection from an attorney.
• If a bill goes to collections, respond in writing, explain the pending claim, and ask the collector to hold; many will, and a paid-in-full at settlement resolves it.
• Do not stop treatment because of cost; a gap in treatment reduces the claim more than the bills cost.
• Expect subrogation letters from your health insurer and respond through your attorney; do not ignore them.

In the no-fault states, Florida, Michigan, New York, New Jersey, Pennsylvania on a no-fault election, and a handful of others, PIP is the primary payer and is mandatory, with limits from $10,000 in Florida to unlimited on some Michigan policies; a claim against the at-fault driver for medical expenses beyond PIP requires meeting the injury threshold. Florida requires treatment within 14 days for PIP to pay. Elsewhere PIP or MedPay is optional and health insurance is the main payer.

Whether the medical expenses claimed from the at-fault insurer are valued at the amount billed or the amount actually paid after insurance reductions is a state question that changes the claim's value substantially: California and several others limit it to the amount paid; Texas limits it to amounts actually paid or incurred; some states allow the full billed amount; others allow the billed amount but let the defense show the paid amount. Subrogation rights also vary: some states bar health insurers from recovering from a settlement, most allow it subject to a reduction for attorney's fees under the common fund doctrine, and self-funded employer plans governed by federal law can often recover in full.

Medicare's and Medicaid's recovery rights are federal and statutory, must be addressed before settlement funds are distributed, and have their own procedures and timelines. Hospital lien statutes in many states let hospitals file a lien on the settlement for the full billed amount, subject to limits. Deadlines for the underlying claim are the state's injury statute: one year in Tennessee and Kentucky, two in Texas, California, Florida and Georgia, three in New York and North Carolina.

An injury claim can take a year or more, and a provider that bills you directly may send the account to collections in ninety days. Medical debt in collections has less effect on credit reports than it once did, after changes in how the credit bureaus treat it, and paid medical collections are removed, but it is still a problem to manage. A written explanation to the collector that a liability claim is pending and that payment will come from the settlement often results in a hold; an attorney's letter of protection usually does.

Providers who understand injury claims, including many orthopedic, chiropractic and physical therapy practices, will treat on a lien or a letter of protection and wait for settlement, and attorneys know which ones will. Hospitals in many states can file a statutory lien on the settlement instead of billing you, which protects them and leaves you with no collection activity.

The one thing not to do is to stop treating. The claim is valued on the documented treatment, a gap of more than a few weeks is used to argue the injury resolved, and untreated injuries do not heal better. The bills are a problem with solutions; the gap is not.

Who pays the medical bills, in what order, and how much of the settlement goes back to them, is a large part of what an injury claim is actually about, and it is the part that determines the net to you. The questions to answer early are what PIP or MedPay coverage you have, how the bills are being routed, and what subrogation claims will exist at settlement. Most personal injury attorneys work on contingency and handle the lien negotiation as part of the claim.

Ask Legal Matters is a free claim-review request service, not a law firm. Requests may be shared with independent attorneys and legal services partners who handle inquiries in your state, and an attorney must evaluate the facts before anyone can say what the claim is worth. If medical bills from a crash someone else caused are piling up, you can request a free claim review.

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• Pedestrian Accident Claims: Rights, Fault and Compensation
• Car Accident With No Police Report: Can You Still Claim?
• Road Rage Accident Claim: Intentional Acts and Insurance
• Hit and Run Accident Claim: What to Do and Who Pays
• What Information to Exchange After a Car Accident (and Not Say)
• Hit by an Uninsured Driver? Where the Money Comes From
• At Fault in a Car Accident? Comparative Negligence Explained

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