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Do I Have to Pay Medical Bills Out of My Settlement? (2024)

Do I Have to Pay Medical Bills Out of My Settlement?

If you sustain a personal injury in an accident or other mishaps due to another person’s negligence, it can be relieving to know you’re not going to bear the financial burden associated with the injury. As long as you can prove that it’s not your fault, you can get compensation when you file a successful personal injury claim. This compensation is also known as a personal injury settlement.

To maximize your settlement funds, you need a proper understanding of what it covers. So most people find themselves wondering “Do I have to pay medical bills out of my settlement?”

Yes, you may have to pay medical bills out of your settlement funds. When you receive a settlement for a personal injury case, part of that money is often intended to cover medical expenses incurred due to the injury. However, exactly how you pay your medical bills depends on several factors discussed later in this article.

What happens if you need money to settle your medical bills and other expenses before your settlement arrives? Well, that’s where our personal injury loans come in. At Stonewood Funding, we can fund your case while you wait for the maximum settlement, and if you do not win your case, you won’t owe us anything. You can apply online now or book a free consultation with us to discuss your funding needs and get started.

In this article, you’ll learn what your settlement covers, how medical bills influence your settlement negotiations, and pro tips for managing your medical bills before you receive your settlement award.

Everything You Need to Know About Settlements

Everything You Need to Know About Settlements

A settlement in personal injury cases refers to an agreement between the injured party (plaintiff) and the party responsible for the injury (defendant) or their insurance company, to resolve a personal injury claim without going to trial. This agreement usually involves the defendant or their insurer agreeing to pay a certain amount of money to the plaintiff. In return, the injured person agrees not to ask for any more money for the injuries or damages claimed in the lawsuit.

The goal of a settlement is to compensate the injured party for their losses, which may include medical expenses, lost wages, pain and suffering, and other damages.

Typically, attorneys representing each party negotiate the terms of the settlement. Both parties can settle at any stage of a personal injury lawsuit. It can be before the injured files the lawsuit, during the lawsuit, or even while a trial is ongoing. However, the settlement must come before the final verdict is reached.

How Do Medical Bills Influence Settlement Negotiations?

How Do Medical Bills Influence Settlement Negotiations?

Medical bills play a crucial role in determining the financial aspect of a claim, which helps in deciding the amount of the settlement.

Firstly, medical bills and records provide solid evidence of the injuries sustained by the plaintiff. They provide insights into the nature and extent of the injuries, the treatment required, and the medical prognosis. Such data makes it easier to determine the seriousness of the injuries and the necessity of the treatments received, which directly impacts the compensation amount.

Secondly, the total amount of past medical expenses is an essential figure in settlement negotiations. It provides a good starting point for calculating both economic damages, such as lost wages and future medical expenses, and non-economic damages such as pain and suffering. Higher medical bills signify more severe injuries and a greater impact on the plaintiff’s life. So, the more substantial the medical bills, the higher the potential settlement amount.

Settlement negotiations also consider the cost of future medical care related to the injury. For a more accurate calculation, the negotiating parties may obtain estimates for future treatments, rehabilitation, and any long-term care needs should be factored into the settlement amount.

Also, medical bills can serve as leverage in negotiations. High medical expenses can pressure the defendant or their health insurance company to offer a higher settlement to fully compensate the plaintiff for their losses. On the other hand, the defendant might argue that the injuries are not as severe as claimed if medical expenses are relatively low.

The defendant’s insurance policy limits can also play a role in negotiations. If medical bills and other damages exceed the available insurance coverage, negotiations will need to address how to compensate the plaintiff within the policy limits or explore other avenues for additional compensation.

Laws That Govern Settlement Money and Medical Bill Payments

Laws That Govern Settlement Money and Medical Bill Payments

In California, several laws and legal principles govern how settlement money and medical bill payments are handled in personal injury cases. Let’s consider some of them below.

1. Subrogation Rights

California law allows health insurance companies to claim subrogation rights. Subrogation rights ensure that if your health insurance pays for your medical treatment due to an injury, the insurer may have the right to be reimbursed from your settlement.

2. Medical Liens

A medical lien is a legal claim that secures a healthcare provider, hospital, or health insurance company against a patient’s settlement in a personal injury case. The lien ensures that the medical provider gets paid for the medical services they provide to the patient from the money received through the settlement or judgment. This means a portion of your personal injury settlement could be used to pay back hospitals, doctors, or other medical providers who treated you.

Federal law also grants Medicare and Medicaid a right to get a reimbursement from a settlement for any medical expenses they covered related to the injury. These rights are provided by the Medicare Secondary Payer (MSP) provisions and the Medicaid Third Party Liability Act.

3. Insurance Laws

In states with no-fault insurance laws, each party’s own insurance pays for their medical bills and lost wages up to a limit, regardless of who was at fault. In traditional fault states, the at-fault party’s insurance covers these costs. Also, health insurance providers may pay for the injured party’s medical bills and then seek reimbursement from the settlement through subrogation rights.

4. Taxation of Settlements

Generally, personal injury settlements are not taxable in California or under federal law. But that’s provided they compensate for physical injuries or sickness. However, portions of the settlement intended to compensate for lost wages or punitive damages may be taxable.

5. Attorney Fees and Expenses

In California, the settlement amount often covers attorney fees and legal costs. The plaintiff and their personal injury attorney agree on these fees beforehand. This means that the amount paid as legal fees affects the final settlement amount. So, you need to consider affordability before you hire a personal injury lawyer.

6. Comparative Negligence

California follows a pure comparative negligence rule. That means that if you are partially at fault for your injury, your settlement amount can be reduced by your percentage of fault. This can impact the overall settlement amount available for covering medical bills and other damages.

7. Confidentiality Agreements

Most times, settlements in California include confidentiality agreements to keep the terms of the settlement a secret between the parties involved. The undisclosed terms may include the amounts allocated for different types of damages like medical bills.

8. Structured Settlements

California law also permits the use of structured settlements. Here, the injured party receives payments over time instead of a single lump sum. This can affect the timing and allocation of funds for medical bill payments.

Factors That Contribute to the Settlement Amount

Factors That Contribute to the Settlement Amount

There are many factors that combine to determine the final settlement amount in personal injury cases or a car accident settlement. These factors may be different for different cases, depending on the specific details of each case. Such factors include:

Medical Expenses: This covers all medical costs associated with medical treatment related to the injury, both past and future. It covers hospital bills, medications, rehabilitation, therapy, and any anticipated medical treatments or surgeries.

Lost Wages and Earning Capacity: Settlements often compensate for wages lost due to the injury, as well as any decrease in the ability to earn money in the future. It takes into account the injured person’s career trajectory, age, and skill set.

Pain and Suffering: This non-economic damage compensates for the physical pain and emotional distress suffered due to the injury. Calculating pain and suffering can be complex, as it involves subjective evaluation.

Property Damage: If the injury involved damage to property, such as in a car accident, the settlement may cover the cost of repairing or replacing the property.

Disciplinary Damages: In cases where the defendant’s conduct was particularly reckless, corrective damages may be awarded to punish the wrongdoer and discourage similar conduct in the future. However, disciplinary damages are less common in settlements and are more typically awarded by a court at trial.

Contributory Negligence: In some cases, the injured party may be found partially responsible for their own injuries. The laws governing how this affects the settlement vary by jurisdiction. In some places, the settlement amount might be reduced in proportion to the injured party’s degree of fault.

If you’re looking for maximum compensation, it’s best to consult with an experienced personal injury attorney. With their expert evaluation and negotiation skills, you stand a higher chance of getting a more befitting settlement award.

7 Pro Tips on How to Manage Medical Bills Before Receiving a Settlement

7 Pro Tips on How to Manage Medical Bills Before Receiving a Settlement

It can be challenging sometimes to take care of your medical bills before receiving a settlement from a personal injury claim. But it’s not rocket science; you can follow the strategies below to minimize the financial burden.

  1. Communicate with Your Healthcare Providers: Inform your medical provider about your pending settlement. Many providers are willing to wait for payment if they know a settlement is forthcoming. You can ask for your bills to be put on hold temporarily or request a payment plan that allows you to pay off your bills over time in more manageable amounts.
  2. Get Pre-Settlement Funding: Pre-settlement funding, also known as a lawsuit loan or legal funding, refers to a cash advance given to personal injury or accident victims while they await their settlement. This advance provides the plaintiff with immediate funds to cover living expenses, medical bills, or other needs while they wait for the settlement of their lawsuit. Pre-settlement funding is considered non-recourse, which means you’re required to repay the money only if they win their case or reach a settlement. That means you’re obligated to repay if you lose the case. If you need pre-settlement funding within California, don’t hesitate to contact us at Stonewood Funding – let’s help you ease the burden! You can apply now to access your funding support with just a few clicks.
  3. Use Your Health Insurance: If you have health insurance, use it to cover your medical expenses for now. Your insurance company can pay your medical bills upfront, and any subrogation or reimbursement issues can be sorted out once you receive your settlement.
  4. Explore Medical Liens or Letters of Protection: Some healthcare providers might agree to treat you in exchange for a medical lien or a letter of protection (LOP). So, you get to pay them from your future settlement rather than upfront.
  5. Seek Assistance from Medical Bill Advocates: Medical bill advocates can help negotiate bills and find errors that could reduce what you owe. They are experienced in dealing with healthcare billing and might save you money.
  6. Consider Med-Pay Coverage: If you have Med-Pay (medical payments coverage) through your auto insurance policy, it can cover outstanding medical bills related to car accident injury, regardless of who’s at fault. This can be a temporary solution until you settle your claim.
  7. Keep Detailed Records: Maintain thorough records of all your medical treatments, bills, and communications with providers and insurers. These records help ensure that all your medical expenses are accounted for in your settlement.
  8. Consult with Your Attorney: Your personal injury lawyer can offer guidance on managing medical bills and may negotiate with providers on your behalf. They can also ensure that your settlement accounts for these expenses properly.

Contact us for a Free Consultation

Paying medical bills while waiting for your settlement funds should not be a struggle. With a few simple clicks, you can apply online and access our pre-settlement funding at Stonewood Funding. Our lawsuit settlement loans are risk-free as you don’t have to pay a dime if your claim did not go through. Schedule a free consultation with us today, let’s get you funded as you await your settlement.

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