Five Words You Never Want to Hear

After a Car Accident

Barry: One of the things that I'm always very wary of, and I refer to it as the five words you never want to hear after a car accident from your doctor or your hospital, and that's this, "We'll bill the liability insurance." What this means is that rather than submitting your bills to your health insurance, they will put a lien on the settlement of your case so that they can get paid the full amount that they're billed instead of the discounted amount that they agreed to with your health insurer.

On the surface, it may seem really appealing when you're in the emergency room after a car accident to have the other driver's liability insurance pay your bills, and it may make sense intuitively. But it ends up costing you potentially thousands of dollars, and that's because what the hospital will have a lien for is the full amount that they billed rather than simply accepting the discounted amount that they negotiated with your health insurance. So, essentially what happens then is that if that bill for the emergency room visit is $5,000, the hospital gets paid $5,000 and not the $1,500 it would have been paid by your health insurance. That $3,500 difference would have gone into your pocket, but when the hospital is billing the liability insurance, it goes into theirs.

So, effectively what happens is that the hospital is ... This is going to sound like an awful thing to say, but basically, they're cheating people out of benefits that they work for. It's one of these things that just ... It makes my blood boil. But you see this all the time, and people don't understand what they're getting into when someone at a doctor's office or a hospital says, "We're going to bill the liability insurance."

Well, I mean, the person's hurt. They go in, and they're thinking, "Okay. I've got an 80/20 here. I don't have the other 20." You know what I mean? And so, that's kind of the mentality, right? I mean, you go in thinking, "This is a way I can avoid having to pay anything out of pocket right now."

And the thing is is that if you lose your case, it's not like the hospital is your partner in the case, and they don't get paid anything. You still owe them the money. So, if they don't bill your health insurance, you still owe that money. And if you're not able to pay because the case goes wrong in some kind of way, and there's not a settlement on your behalf, you're still liable for that money. It's not that the hospital has become your partner and saying like, "Well, if you lose, we lose, too." It's, "If you win your case, we win more than we would otherwise." It's kind of a giant scam, and it's one of these things that on the surface seems very appealing that people should bill the liability insurance because it's the other guy who's at fault. Why should my health insurance have to pay this?

But, in the end, if you have health insurance, that's a benefit that you work for, and it provides for that discounted amount that your health insurer negotiated with the hospital. It provides for a timely payment of your medical bills, and "billing the liability insurance" doesn't do any of that.

You certainly, if you hear those words, "We'll bill the liability insurance,"-

Pam: What do you do?

Barry: Well, the hairs on the back of your neck should go up because, I mean, it's a sign that they're really not behaving in an honorable, forthright kind of way with you. The first thing you should do is insist, number one, "Here's my health insurance. I would like you to bill my health insurance." If they don't do that, then when you get the bill at home, go ahead and submit it to your health insurer on your own. Typically, they will go ahead and pay your bill even if you're the one who submitted it.

But, ultimately, those are benefits that you work for, and you should certainly take advantage of them to help protect your family and its financial wellbeing in the event an accident occurs.

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