Who Pays My Medical Bills After an Accident?

You were in an accident. Now the medical bills are arriving. The emergency room visit. The follow-up with your doctor. Physical therapy. Maybe imaging or specialist appointments.

You assumed the person who caused the accident—or their insurance company—would pay for all of this. But weeks have passed, and the bills are addressed to you. Collection notices might be next.

What's going on? Who's actually responsible for these bills? And what happens when your case finally settles?

This is one of the most confusing parts of an injury claim. Let's clear it up.

The Short Answer

You're responsible for your medical bills while your case is pending—but you may be reimbursed from your settlement later. The at-fault party's insurance doesn't pay your bills as you go. They pay a lump sum at the end, if and when you reach a settlement or verdict.

In the meantime, you need to figure out how to handle the bills that keep arriving.

Why the At-Fault Party's Insurance Doesn't Pay Your Bills Directly

This surprises many people. If someone else caused your accident, shouldn't their insurance pay your medical expenses?

Eventually, yes—that's part of what a settlement covers. But insurance companies don't pay as you treat. They wait until the case is resolved, then pay a single amount that's supposed to cover everything: past medical bills, future treatment, lost wages, pain and suffering, all of it.



Until then, you're on your own for managing the bills. The hospital doesn't wait for your lawsuit to settle. They want to be paid now.

Your Options While the Case Is Pending

You have several ways to handle medical expenses while your case works its way through the system.

Health insurance. If you have health insurance through an employer, the marketplace, Medicare, or Medicaid, use it. Your health plan will pay for accident-related treatment the same way it pays for any other medical care.

This is usually your best option. Health insurance plans have negotiated rates with in-network providers, so your bills are lower than they would be otherwise. Lower bills mean more money stays in your pocket when the case settles.

There's a catch, which we'll get to in a moment. But for now, understand that health insurance is typically the most practical way to get treated while your case is pending.

Medical payments coverage (for car accidents). If you were in a car accident, check whether your auto policy includes "med pay" coverage. This pays medical bills up to a certain limit—often $5,000—regardless of who was at fault.

Med pay can help, but there's a trade-off. Unlike health insurance, med pay doesn't have negotiated rates with providers. The same treatment might cost more when billed to med pay than when billed to a health plan. Sometimes providers will ask you to sign paperwork directing them to bill med pay first—because they get paid more that way.

Letters of protection. Some providers are willing to treat you now and wait for payment until your case settles. Your attorney sends a letter promising to pay the provider from your settlement. This is called a letter of protection.

Not all providers work this way. Chiropractors and some physical therapists often accept letters of protection. Most hospitals, surgeons, and specialists do not. They want to be paid through insurance or up front.

Letters of protection can help you access treatment when you don't have other options. But the bills are accumulating, and they'll come out of your settlement at the end.



Out of pocket. If you don't have health insurance and can't find providers who will work on a letter of protection, you may need to pay out of pocket and seek reimbursement later. This is the least desirable option, but sometimes it's the only one available.

The Catch: Subrogation

Here's the part that surprises people. If your health insurance pays for accident-related treatment, they expect to be paid back from your settlement.

This is called subrogation. It's a long-standing legal principle that applies in New Mexico and most other states. The idea is simple: if a negligent party caused the insurance company to pay for your care, the insurance company has a right to recover that money from whatever you collect.

When your case settles, your health insurer will assert a subrogation claim. They'll want reimbursement for what they paid.

The good news is that subrogation claims are often negotiable. The amount your insurer can recover isn't necessarily dollar-for-dollar what they paid. There are legal reasons why reductions are possible, and your attorney can often negotiate the subrogation amount down.



But the health insurer does have a right to recover something. Your settlement won't all be yours to keep.

Liens Work Similarly

Sometimes a hospital or medical provider will treat you and file a lien on your case instead of billing insurance. A lien is a legal claim against your settlement—the provider is saying they're owed money from whatever you recover.

Like subrogation, liens get paid from your settlement at the end. The provider waits for payment, but they have a legally enforceable right to collect.



If a provider files a lien on your case, your attorney needs to know so it can be addressed when the case resolves.

Medicare Has Special Rules

If you have Medicare, pay close attention. Medicare has strict federal rules about injury claims.



Medicare is entitled to be repaid from your settlement for any accident-related treatment they covered. This is federal law, and it's strictly enforced.

Medicare may also require a "set-aside"—money from your settlement reserved for future accident-related medical care. The rules around Medicare set-asides are complex and depend on your specific situation.

If you have Medicare, give your attorney a copy of your Medicare card early. They need to report the claim to Medicare, track what Medicare pays, and make sure everything is handled correctly. This isn't optional—getting it wrong can create serious problems.

Medicaid in New Mexico

In New Mexico, Medicaid is administered through private insurance carriers that receive funding from the government. From your perspective as a patient, it works similarly to employer or marketplace coverage.

That includes subrogation. If Medicaid pays for your treatment, they have the same right to reimbursement from your settlement that a private insurer would.



If you have Medicaid, let your attorney know so they can handle it appropriately.

What Happens at Settlement

When your case settles, here's what typically comes out of the total amount:

• Attorney fees (usually a percentage of the recovery)

• Taxes on attorney fees

• Reimbursement of case costs your attorney advanced

• Subrogation payments to health insurers

• Payments to any lienholders



• What's left is your take-home amount

In a typical case, the injured person takes home between 40% and 55% of the total settlement. That percentage can vary significantly depending on the specifics—especially if there are coverage issues or large subrogation claims.

This is why understanding the full picture matters. A $50,000 settlement doesn't mean $50,000 in your pocket.

Don't Ignore Bills While Your Case Is Pending

Medical debt doesn't pause just because you have a lawsuit pending. If you ignore bills, they can go to collections.



New Mexico has some protections around medical debt—including rules about surprise billing and collection practices—but they don't make you immune. If you receive collection notices or have concerns about unpaid bills, let your attorney know. There may be options for managing the situation.

Why This Gets Complicated

Here's something that illustrates why professional help matters in this area.

For any given medical treatment, there may be three different numbers: the amount the provider charged, the amount your health insurance actually paid, and the amount the health insurer claims they're entitled to in subrogation. These are often all different.

Sorting through this requires gathering specific records, understanding the legal rules that govern each type of claim, and negotiating with subrogated carriers and lienholders to reduce what they're owed.



People who handle injury claims on their own often miss or mishandle this piece. It's one of the areas where having an attorney adds real value.

The Bottom Line

Your medical bills are your responsibility while your case is pending. The at-fault party's insurance pays at the end—not as you go.

Use health insurance if you have it. Understand that your insurer may have a right to reimbursement from your settlement. Keep your attorney informed about your treatment, your coverage, and any bills that arrive.

This is a technical area with lots of moving pieces. Getting it right can make a meaningful difference in what you actually take home.

At 505 Legal, we help our clients navigate the complicated landscape of medical bills, health insurance, and subrogation. If you've been injured and are confused about who's responsible for your medical expenses, we're here to help you understand how the pieces fit together.

Written by Kenneth H. Stalter, Co-Founder, 505 Legal.