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If you are injured in an automobile accident, should you encourage your hospital or other medical providers to bill the liability insurance company of the at-fault driver, or should you encourage them to bill your own health insurance plan?

The answer may not be what you expect. Every situation is different, and every state’s laws are different, but in Alabama, if you as the injured party in a wreck case have a typical health insurance plan or policy, it may be in your economic interest to encourage the hospital and other providers to bill your health insurance plan. This is particularly true where the injuries and medical bills are very large in relation in relation to the amount of the other driver’s automobile liability insurance coverage. One reason that it may be in your interest that your health plan be billed is that hospitals and other providers, when billing through such plans, are often required to give very substantial discounts and then write off the balance, except for deductibles and co-pays. They may not required to give such discounts when receiving money from automobile liability insurance.

You may likely have to repay the health insurance plan because of subrogation provisions in the plan, but the amount, after these discounts, is usually much less than the full amount of the bills.

For example, if you are seriously injured, and have a $30,000 hospital bill, and the at-fault-driver has a small $25,000 liability insurance policy, there could be a very different result with respect to how much money is available:

  • If the hospital bills the health insurance plan, which requires the hospital to accept $6,000 in satisfaction of the $30,000 bill, then, out of the $25,000 policy you must reimburse the health insurance plan for its $6,000 (or such lesser amount as might be negotiated) leaving, after the hospital bill, at least $19,000.
  • But where hospital seeks its money from auto insurance, instead of billing your health insurance plan, the full $25,000 available might be obtained by the hospital, in payment toward its $30,000 bill, leaving zero dollars available to you from the automobile liability insurance coverage.

Many other factors can come into play affecting the ultimate amount of recovery, such as the availability of underinsured motorist coverage, no-fault automobile insurance, medical expense coverage on automobile policies, and the ability of a skilled attorney to negotiate compromises and reductions with respect to charges.

It is always wise to consult an attorney as early in the process as possible, where there is a serious injury.

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