Paying for Medical Bills After an Accident – Understanding Insurance and Liens

Following an accident in Illinois, the three most common ways to pay for medical bills incurred as a result of treating your injuries caused by the accident are health insurance, healthcare liens and Medical Payments coverage (Med Pay).  

Med Pay pays for the treatment of injuries for automobile accidents only.  It applies only to you or your passengers that suffer injuries as a result of a car accident regardless of who caused the accident.  Med Pay also pays the medical bills if you or one of your family members is hit by an automobile as a pedestrian, or while a passenger in someone else’s vehicle.  Med Pay has many of the same benefits as your health insurance, but without provider restrictions, gaps in coverage, low limits or high deductibles.  Med Pay can also supplement your health insurance in paying for deductibles and copays.  Med Pay providers will also have a lien on your eventual injury recovery equal to 2/3 of the amount paid to satisfy your medical bills.

Health insurance (including Medicare) can also be used to pay for medical bills resulting from all types of accidents in Illinois.  However, health insurance can have its limits and drawbacks depending on networks, provider limitations and the need to pay for deductibles and copays.  Like Med Pay, health insurance also has a lien on your eventual injury recovery.  The lien is generally limited to 2/3 of the amount the health insurance company pays for your medical bills.  An exception might exist if your health insurance company is part of an ERISA plan, you have Medicare, or you signed an agreement with the health insurance company that dictates their ability to recover a lien that is higher.  In these instances, the lien might be recovered at the full amount of payments made.  

Finally, some – but not all – doctors, hospitals and other health care providers will agree to treat injury patients on what is known as a healthcare lien.  A healthcare lien allows the medical provider to render treatment to injury patients without any expectation of immediate payment.  Rather, the provider sends a lien notice to the insurance company and your attorney indicating the total amount of their bill and that a lien is asserted on your eventual recovery.  In other words, the provider is paid from settlement proceeds directly.  Healthcare liens are often attractive to medical providers as they allow for the potential to recover the full amount of the billing, a sum that is often drastically higher than what they might be forced to accept from health insurance or Medicare.  Subject to some limitations in the Illinois HealthCare Lien Act, medical providers are not required to discount their liens once a recovery is realized by the injury patient.  The sole exception to this general rule is when the total liens that exist are in excess of 40% of the injury patient’s settlement or judgment.  For instance, if a patient’s surgeon has a $65,000 lien, but a patient is only allowed to recover $100,000 because of insurance policy limitations, the surgeon’s lien recovery cannot exceed $40,000.  However, providers do have the option of accepting the lien payment and then seeking a collections recovery for the remaining amount from unsuspecting injury patients.

As with all aspects of injury cases, the payment of medical bills in an efficient and proper manner is critical to maximizing a client’s right to recovery.  The attorneys at Feagans Law Group P.C. have the relationships and experience needed to effectively negotiate liens, and the knowledge necessary to avoid collections lawsuits for incomplete lien recoveries.  Our attorneys would be honored if you chose our firm to Guide Your Path to Justice!