What Is Subrogation In Health Insurance?

Subrogation is an essential part of the health insurance industry. It is a legal principle that allows insurers to recover the cost of medical expenses paid out under a policy if the policyholder is compensated for those same medical expenses by a third party such as a personal injury settlement or a workers’ compensation claim.

How Does Subrogation Work?

Suppose you are involved in an accident your insurer pays for your medical expenses. Later you file a lawsuit against the person who caused the accident you receive a settlement that covers your medical expenses. Your health insurance company has the legal right to recover the money it paid for your medical expenses from the settlement amount you received. This process of recovering the money from the settlement is called subrogation.

Why Do Health Insurance Companies Use Subrogation?

Health insurance companies use subrogation to keep the costs of health care premiums low. If they did not have subrogation rights they would be unable to recover the costs of medical care provided to their policyholders. In turn they would have to increase premiums to compensate for these losses.

Who Is Eligible for Subrogation?

Subrogation is typically available to health insurance companies that provide medical coverage to policyholders. It is most commonly used in cases where the policyholder has been injured due to the negligence of a third party such as in a car accident slip fall or medical malpractice.

What Are the Benefits of Subrogation?

Subrogation benefits both health insurance companies policyholders. By enabling insurers to recover the cost of medical expenses premiums can remain low for policyholders. It also allows policyholders to receive medical care even if they cannot afford it at the time of treatment knowing that their insurer will recover the costs if they are compensated by a third party.

Conclusion

In conclusion subrogation is a legal principle that allows health insurance companies to recover medical expenses paid out under a policy when the policyholder is compensated by a third party for the same expenses. It is an important tool for keeping premiums low ensuring that policyholders have access to the medical care they need.