My settlement paid my health insurance company, which subrogates, for services received during recovery from the accident. My wife's health insurance did not subrogate so we did not have to repay them for services they paid for. Since I would have received the money we paid my insurance company for the medical expenses if they didn't subrogate, this payment could be considered a legitimate medical expense that is subject to deduct from my income taxes.
Car / Auto Accident Lawyer
You should talk to an accountant about this question. It is unlikely you can deduct the amount that you paid to your health insurance company, because part of the settlement is to compensate you for the medical bills incurred, so the payment to your health insurance would be cancelled by the payment you received from the defendant's auto insurer.
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It is difficult to give an accurate evaluation of your case based on the limited information provided. It is always best to contact an experienced attorney who can evaluate all the facts and help determine your next best course of action.
Since you did not pay tax on the money the medical expenses are not deductible. If you take a deduction for the medical expenses, then the portion of the settlement becomes taxable.
Any individual seeking legal advice for their own situation should retain their own legal counsel as this response provides information that is general in nature and not specific to any person's unique situation. Circular 230 Disclaimer - Advice given in this response cannot be used to eliminate penalties with the IRS or any other governmental agency.