Medical providers and insurance companies are adjusting due to the Affordable Care Act (ACA) with mixed results. What many people and some lawyers don’t realize is that the ACA can have a major effect on your personal injury case. This issue revolves around “subrogation.”
In a personal injury case, “subrogation” is when an insurance company who has paid for an injured victims’ medical bills seeks to recover the money which they spent. When the victim receives a settlement or verdict from their personal injury lawsuit, insurance companies recover the money which they spent from the money awarded via settlement. Due to subrogation, the amount of money which an injured victim ultimately recovers can be significantly reduced.
How does the ACA affect this? Well, health insurance plans are typically group plans which are governed by the Employee Retirement Income Security Act (ERISA). Plans governed by ERISA allow for subrogation, and therefore reduce the amount of money which people will ultimately receive in their personal injury lawsuits. However, individual plans, which are the type of plans which people receive through the ACA, are not governed by ERISA, therefore subrogation is not authorized. Also, the ACA contains no provisions which allow for subrogation. This means that victims in cases such as personal injury cases will be able to retain a larger part of the damages they recover. It is essential that your lawyer be on top of this issue, because health insurance companies continue to assert subrogation rights regardless of whether the injured person has an individual or group plan. If your lawyer fails to understand this issue properly then the money which you receive could be significantly reduced.