If you are injured in an accident and your health insurance pays some of your medical bills, you may receive a letter from your health insurance company asking if your medical bills came about as the result of an injury. This is the first step health insurance companies take toward reimbursement (sometimes called subrogation). It is imperative that you contact your attorney for advice before responding to any such letter.
Precisely how does reimbursement work? Usually it happens like this: You (or a covered family member) are injured. The doctors submit their bills to your health insurance. Your health insurance pays the bills. A few months later you get a letter from your health insurance asking if the bills they paid came about as a result of an injury. If your answer is "Yes", your health insurance company will total up your medical bills and then send you a bill for the total amount of the bills related to your injury. What they are really after is your injury settlement.
PLEASE NOTE: There are different kinds of reimbursement claims. Many reimbursement claims are governed by state laws. The topic of this post is ERISA reimbursement claims -- a kind of claim that is governed by federal law. You should ask your attorney to help you determine whether your claim falls under ERISA. If it does not, your rights will be very different from what is discussed in this legal guide.
BAIT AND SWITCH
Here is the bottom line: ERISA Reimbursement is a bait and switch scheme, a sophisticated legal tactic used by health insurance companies to break their promise to pay your medical expenses.
To understand what the issue is it may help to think of health insurance as a contract based on two promises. First you make a promise -- you promise to pay your health insurance premiums (and you start making them). In exchange the health insurance company promises to pay your medical expenses if you become sick or are injured.
The issue arises when ERISA reimbursement allows your health insurance company to keep all of your premiums even when they break their promise to pay your medical bills. It allows your health insurance company to convert your medical benefits into loans.
The unfair nature of ERISA reimbursement becomes even more obvious when you consider the promise your employer made to you when you agreed to go to work for them. Health insurance is an employee benefit. It is part of your compensation package. You went to work for your employer, in part, because they agreed to provide you with insurance coverage. You were told that you would receive medical payment benefits (not just loans) as part of your compensation package.
ERISA reimbursement converts your medical payment benefits into loans. Your health insurance pays your bills but then demands that you pay them back. This is unjust - if your health insurance company has its way, part of your compensation for employment will be siphoned away.
BREAKING THE HEART OF THE BARGAIN
The very heart of the bargain when you purchased insurance is that if you have to go to the doctor you would be made whole. Your bills will be paid. You will not have to risk paying the bills out of your personal assets. The heart of the bargain is that the insurance company agrees, in exchange for your payment of a premium, to take a risk that you may become sick or injured. ERISA reimbursement breaks the heart of the bargain. It shifts the risk back to you -- meaning you paid your premium payments for essentially nothing (at least so far as an accident is concerned).
If this all sounds like it should be illegal, I agree! I think it should be. Regrettably, in 2006 the Supreme Court of the United States changed the law to actually make it easier to bring ERISA reimbursement claims against consumers.
SO WHAT SHOULD YOU DO?
What should you do? Foremost, remember this: you have the high moral ground. ERISA reimbursement is a way for big businesses to enrich themselves at the expense of consumers. Many legal cases have noted that the money health insurance companies get from reimbursement claims does not go toward reducing future premiums, but instead is pure profit for the companies. ERISA reimbursement allows the insurance companies to get a double recovery. First they collect your premium. Then they collect your settlement. This is wrong.
WHAT ELSE SHOULD YOU DO?
You are not obligated to keep terms of a contract that are inequitable. Inequitable contracts are immoral contracts. You should not feel that you are bound to reimburse your insurance company simply because they can point to a term in a contract that says you have to reimburse them. Were you told about that term before you agreed to purchase insurance? Was that term hidden from you in any way? Were you given any real choice in the matter? Should the courts enforce a term in your contract that has the effect of allowing the health insurance company to take your premiums and your injury settlement too? Terms that allow the insurance company to essentially escape from the bargain it made?
HOPING FOR A BETTER DAY
I hope to see the day when this inequitable practice is outlawed altogether. I hope (although this may be naive) for the day when the ERISA industry, of its own free will, decides to stop "crushing my people and grinding the faces of the poor" (that's a reference to a passage in the book of Isaiah, chapter 3, where God enters into judgment against those who oppress others).
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