Health Insurance Lien and Your Injury Claim Settlement (Does Not Apply to Medical / Medicare)
In many, if not most cases, some time after you suffer an injury for which you seek treatment, covered by your or your family member's health insurance, you will receive a questionnaire from that insurance company asking whether or not you have an injury claim, including all the information about the parties involved and your attorney. If you are represented by an attorney, you should forward that questionnaire to him as soon as possible. Your attorney then will fill it out and will send it to the appropriate office handling these forms. If you are not represented by an attorney, then you should fill out and return that form yourself.
Under the law, your private health insurance company that pays for some or all of your medical expenses associated with an injury claim is entitled to (partial) reimbursement from any judgment or settlement you receive from that claim. Failure to fill out and return the health insurance inquiry form once you receive it is considered an insurance fraud, which is a criminal offense.
There are some good news too:
(1) in most cases, your private insurance company generally cannot recover more than 1/3 of your settlement, if you are represented by an attorney. This means that even if they spent $300,000 on treating you, and you only recover $30,000 in your case, the most that your health insurance company can receive from your settlement is $10,000.00; and
(2) generally, health insurance liens are negotiable. Your attorney will make various arguments to your health insurer to reduce their reimbursement demand. Although the results vary and some insurers are more flexible than others, generally such negotiations lead to a significant reduction of health insurance lien.
If you don't receive an inquiry from your private health insurer about whether or not you have an injury claim, you do not have an obligation to contact them yourself (except in cases of Medical/Medicare and other public health services providers).
When your injury case settles, your attorney receives one check for the total settlement amount. He will deposit that check into his attorney-trust account and will then disburse the funds three ways (unless there are other lien holders): one check will go to the health insurance company to sataisfy their lien, one check will go to your attorney to compensate him for attorneys' fees, and one check to the claimant as a net settlement.
The net amount you receive is not taxable and you don't have to claim it in your tax return.
Under the law, your private health insurance company that pays for some or all of your medical expenses associated with an injury claim is entitled to (partial) reimbursement from any judgment or settlement you receive from that claim. Failure to fill out and return the health insurance inquiry form once you receive it is considered an insurance fraud, which is a criminal offense.
There are some good news too:
(1) in most cases, your private insurance company generally cannot recover more than 1/3 of your settlement, if you are represented by an attorney. This means that even if they spent $300,000 on treating you, and you only recover $30,000 in your case, the most that your health insurance company can receive from your settlement is $10,000.00; and
(2) generally, health insurance liens are negotiable. Your attorney will make various arguments to your health insurer to reduce their reimbursement demand. Although the results vary and some insurers are more flexible than others, generally such negotiations lead to a significant reduction of health insurance lien.
If you don't receive an inquiry from your private health insurer about whether or not you have an injury claim, you do not have an obligation to contact them yourself (except in cases of Medical/Medicare and other public health services providers).
When your injury case settles, your attorney receives one check for the total settlement amount. He will deposit that check into his attorney-trust account and will then disburse the funds three ways (unless there are other lien holders): one check will go to the health insurance company to sataisfy their lien, one check will go to your attorney to compensate him for attorneys' fees, and one check to the claimant as a net settlement.
The net amount you receive is not taxable and you don't have to claim it in your tax return.