Where the Money Comes From

There are multiple financial scenarios that follow a car accident. In situations when you or another party needs medical treatment, someone has to pay. In many cases, even if you are not at fault, you’ll need to pay your own medical costs until questions of insurance, fault and legal liability get straightened out.

It’s important to keep meticulous records of what treatment you receive, who you receive it from, how often you’re treated and how much you pay for that treatment. Later, if it’s determined that the other driver was at fault, or if your own auto or health insurers agree to cover the costs, you’ll have to show detailed paperwork as proof that you already paid the bills if you want to be reimbursed quickly.

There are several sources of funds for accident-related medical bills you incur. If you’re lucky enough to not have to pay out of your own pocket, there’s a chance your own medical insurance company will pay, depending on the conditions of your policy. Likewise, your car insurance company might pay if you have a “med pay” policy. However, med pay policies will only cover bills up to whatever limit is listed in your policy.

If the other driver was at fault, either she or her insurance company will eventually have to pay or reimburse you for medical expenses you incur. The typical complication in major accidents is actually a matter of timing. Legal questions of fault are not always settled quickly. That means someone will have to pay for medical treatment in the meantime.

There’s also a question of whether the accident takes place in a no-fault or at-fault state. No-fault states tend to settle legal, and payment matters much more rapidly than at-fault states. The main reason is that there’s no drawn-out wrangling about who caused the accident in a no-fault state. For the purposes of getting medical bills paid, no-fault states handle payment matters more efficiently.

Potential Sources for Bill Payment

  • You (directly out of your pocket)
  • Your car insurance company
  • The at-fault driver’s insurance company
  • The at-fault driver
  • Your health insurance carrier

No-Fault States

The most common arrangements for medical bill payment in no-fault states is for the auto insurance company to cover expenses up to the limit of the state’s no-fault policy amount. After that, if bills are higher, you can look to your own health insurance provider, Medicaid or Medicare to pay for additional amounts. If you don’t have Medicare or Medicaid coverage, and if your health insurance policy has reached its payout limit, you will need to cover additional medical bills out of your pocket.

States Without No-Fault Laws

In so-called “at-fault” states, you can purchase med-pay coverage within an auto policy. Typical medical reimbursement limits on med-pay max out at $10,000. After that, you can turn to your own health insurance coverage as an additional payment source. However, until you receive reimbursement from either med-pay on your auto insurance or from your health insurance carrier, you will have to pay medical bills yourself.

Of course, later on, you might get a settlement from the at-fault driver’s insurance company if you were not the one who caused the accident.

Reimbursing Health Insurers

If you’re in an accident that is not your fault and it takes a while for the legal settlement to be resolved, you’ll have medical expenses in the meantime. Some drivers use their state- or federal-sponsored insurers, like Medicare or Medicaid, to pay upfront medical bills. The majority of medical professionals will not send your case to a collection agency if you explain to them that you are waiting on a legal settlement from an insurance company of an at-fault driver.

In addition, if you need to wait on payment from any source, Medicaid, Medicare, your auto carrier, or your health insurer, remember to explain the situation to your medical provider so you won’t take a hit on your credit report for late payments. That’s one way of avoiding having to pay large medical expenses upfront after a car accident.

Keep in mind that once there’s a settlement and you receive financial compensation based at least in part on medical costs, you will need to hand over some of that money to Medicaid, Medicare or your health insurance company. In essence, the legal settlement amount earmarked for medical compensation belongs to whoever covered the bills at the time of treatment.

If you paid out of pocket, then you retain the settlement proceeds. If someone else paid, then they are entitled to reimbursement from whatever amount you were able to recover via the legal case.

As Soon as an Accident Happens

All the legalities are important to know, but when an accident occurs, it’s vital to get medical assistance immediately. Of course, you’ll need to notify the police so a report can be written and fault assessed. Emergency medical personnel will take you to the hospital if you need to go.

Even if you don’t, apparently, suffer injuries, be sure to visit a medical professional as quickly as possible for treatment and evaluation. There are plenty of physical and psychological repercussions that a car accident can cause. Not all of them show up immediately. Some, like low-back injuries and sleep disorders, might not appear for several days. Know what to do as soon as an accident takes place:

Things to do Immediately After an Accident

Visit a doctor or hospital for treatment and evaluation

Contact your car insurance carrier

File a police report

Contact your attorney or consider hiring one

As is the case with all sorts of insurance-related cases, keep documentation of everything for your own files. Get a copy of the police report of the accident. Make copies of any letter or email you sent to or receive from an insurance company, attorney, medical provider or any other entity connected with the accident.