Medical Expenses

You, or someone you know, is seriously injured as a result of a motorcycle crash. There is liability insurance, medical payment or PIP coverage, health insurance, underinsurance, and possibly Medicaid or Medicare. An experienced motorcycle attorney can tell you who should pay the medical bills after the crash.

Always use health insurance first

The temptation is to try and sort out responsibility before submitting medical bills for payment. For purposes of saving your credit and paying the the bills efficiently, fault and responsibility are irrelevant. In the end, responsibility may determine who pays or repays whom, but for the immediate future you need the bills paid now and you are entitled to discounts negotiated by your health insurer or the government. Also, regardless of who pays, you will want to reduce the amount that must be paid out-of-pocket by you.

Use "med pay coverage" to reduce co-pay

Most car and motorcycle policies have a limited no-fault medical payments (med pay) coverage that applies to medical bills incurred in an accident. Typically there is no deductible or co-payment on med pay coverage, and no negotiated discount (see below). Therefore many medical providers will insist that you must allow them to submit bills on your med pay coverage. The better plan is to submot the bills on your health insurance coverage, and then use "med pay" to cover your co-payment and deductible.

Here's the math:

Assume you have $5,000 of med pay coverage and your total medical bills are $20,000. Your health insurance pays 80% and you are responsible for the other 20%. If you submit on "med pay" coverage first, the $5,000 is paid as first dollar coverage, leaving $15,000 unpaid. You turn that in on your health insurance and it pays 80% ($12,000), leaving you still owing $3,000. On the other hand, if you turn the total bills in on your health insurance first, the health insurer pays it's 80% ($16,000 of the $20,000), leaving $4,000 still due. That amount is easily covered by your $5,000 "med pay" coverage. All the bills are paid and you owe nothing.

No double recovery

What about when you finally collect from the other person's liability insurance? Do you score a windfall? In both your health insurance and vehicle med pay insurance you will find the word "subrogation". That word tells you that when you collect from the responsible party, your health insurer or vehicle insurer get their money back out of the money that you recovered.

So why not let the other guy pay in the first place?

First of all, the "other guy" never volunteers to pay up front. Insurance companies for the "at fault" party will hold on to their money until you are ready to accept final settlement or until a verdict is rendered. In the meantime the doctor and hospital debt collectors will be beating down your door.

More medical bill math

If you collect from the "other guy", there is no segregation of the funds to identify what goes to the medical bills and what goes to you. You get a single check. So here's where the health insurer's discount works in your favor. To make it easy, let's say that your medical bill is $100. Your case is resolved for $200. If you have to directly pay the bill from your settlement or verdict, you will pay the entire $100. But if your health insurer pays the bill, it will pay less than the total due (irrespective of the copay). This is known as a negotiated discount. So if the health insurer's share is $80, it may pay only $60. When you repay (subrogation), you only pay what the health insurer paid. In this example you would repay $60 instead of the full $80. The estra $20 stays in your bank account.

What about attorney fees?

Attorney fees are paid as a percentage of the total amount recovered on your behalf. Depending on the nature of the case, the fee may range from $25% to $40%. If the doctor bills are paid from health insurance or your vehicle med pay coverage, when you repay the insurer, most attorneys can cause the insurer to reduce the amount due by the insurer's share of the fees attributable to your recovery. In the example above, if you owned $60 after the insurer's negotiated discount, and if your attorney fee was one third of the recovery, the insurer would ordinarily have no choice but to reduce it's repayment by an additional $20, because that is what it cost you to secure their money for them.

Medicare and Medicaid

Be aware of Medicare and Medicaid's statutory lien. Under either program you can usually get your bills paid on the front end. And that is usually quite advantageous, because the government discount exceeds virtually all private healthcare advangates. But it is important to keep the government up to date on your case resolution efforts. No money from your case can be distributed until a final repayment number is received from Medicare or Medicaid. If your attorney fails to update those agencies from the start, you may have a long wait for the money that you need to survive right now.