Subrogation: Do You Know Your Health Insurance Provider?

Posted on 06/10/15

How well do you know and understand the obligations of your health insurance provider? People buy health insurance in case they become sick or injured. Depending on the plan chosen, they will not have to pay out of their pocket the high cost medical bills. However, what most people do not know is that if an outside party causes the injuries, the health insurance company may be entitled to be paid back in full. Sometimes it is the sick or injured person, the one who bought the coverage and paid all the premiums, that ends up repaying the health insurance company.

For example, four years ago Valerie Rodriguez was injured in a car accident when a drunk driver hit the vehicle she was in. Rodriguez sued the drunk driver and was awarded $26,000. However, four years later Rodriguez can only put $1,700 into her pocket. The vehicle Rodriguez was a passenger in was also being driven by a drunk driver and Rodriguez knew this. Under subrogation, the process an insurance company uses to get reimbursement from the party responsible for a claim it already paid, Rodriguez’s health insurance coverage was entitled to be reimbursed for what it spent on her medical care. Given the circumstances that Rodriguez was also in the car with a drunk driver, subrogation is reasonable. However, Rodriguez’s settlement did not take into consideration the costs associated with subrogation. Her health insurance was able to claim subrogation and “piggy back” on her case, pay none of the costs, and in the end take its share out of the settlement.

Tell us what you think: Is the federal law that is reinforced by the U.S. Supreme Court unfair and inequitable?