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Can I protect my settlement money from my insurance company?

After a civil suit is settled, it may appear as if everyone and their brother has a hand out for your money. But while denying requests for handouts may become routine, there is one claim that may be quite unexpected — your health care provider.

Hospitals, doctors and other care providers can make claims against patients' settlements to collect on unpaid medical bills. Still, some have gone even farther. But your insurance settlement money could be jeopardized even further.

Suppose that after your accident, your health insurance provider agreed to charge the hospital either a fixed amount or a certain percentage for the charges you incurred, e.g., a $150 chest x-ray may have been capped at $100. Your health insurance plan may cover 70 percent of the charges, or $70.

As the insured, you may have been liable for 30 percent of the cost, or $30. That still is $50 shy of the total cost the hospital charges for the x-ray. In most cases, that will be the end of the matter, and the hospital absorbs the loss.

But when there is a civil settlement or judgment following an accident, health care providers may use a process known as "balance billing" to recoup these losses. Here's how it works.

A hospital can file a lien against an injured plaintiff's insurance settlement. If you were injured in an accident and settled for $10,000 and had $5,000 worth of hospital charges, after your insurance company paid their portion, your balance was $2,500. But if a lien was filed, the hospital can collect that remaining $2,500 that was originally part of the total cost.

While the practice is illegal in some states, subrogation claims still exist in others. Insurance liability can be a complex issue that few laypersons fully understand. Make sure that you know your rights when accepting a settlement or judgment following an accident.

Source: FindLaw, "Protecting a Settlement from Your Health Insurance Provider," accessed Dec. 15, 2017

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