What We’re Talking About When We Talk About Subrogation

It may seem counterintuitive, but “subrogation” or subro for short is an unusual word that people in the insurance industry, including us, use in an attempt to simplify an even bigger aspect of insurance — other party liability and reimbursement. 

If you received a letter from us that references subrogation, or perhaps read the relevant section in your Plan brochure you know that as a FEHBA health insurance carrier funded by the United States Treasury, your Plan has a right to subrogation and reimbursement. 

Subrogation means that when the Plan has issued benefits for treatment related to an injury or illness for which another party is responsible, the Plan is entitled to substitute or succeed any legal claims that you may be entitled to pursue against the liable party.  For example; if you slip in a hardware store on a patch of oil and break your leg, but decide not to pursue legal action against the store owner, the Plan can take legal action in your name to recover the value of the medical bills that were paid by the Plan.  Essentially, the Plan is stepping into your shoes, and assuming your rights to file suit.  Subrogation is not common.  The Plan prefers to work with you to resolve claims, and always aims to facilitate a fair settlement for all involved. 

Reimbursement is a bit different Reimbursement means that the Plan is entitled to be paid back for benefits issued related to a claim for which you receive a settlement or judgment from a third party or any other responsible source.  You must fully reimburse the Plan out of the settlement unless the Plan waives or reduces the balance in advance in writing.

 A common example of reimbursement is a liability settlement from a car accident.  Let’s say you are rear ended at a red light by a driver talking on a cell phone and injure your back.  You’re ok, but need some physical therapy, which is paid for your health insurance.  A few months later the other driver’s insurance writes you (or your lawyer) a check to settle the accident and you (or your lawyer) in turn send a check to the Plan to cover the cost of the physical therapy. 

This type of reimbursement happens all the time and can be mutually beneficial.  Accidents can take a long time, years in some cases, to settle.  The Plan pays bills in the meantime, allowing you to get the necessary medical attention that you need without worrying about collection agencies calling you for payment   We help insurers and lawyers factor bills and reimbursement into the settlement offer so that these parties can take care of paying the Plan directly upon settlement, so you don’t have to worry about finding your checkbook! 

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