UPDATED MAY 14, 2019

New Jersey car insurance companies are constantly trying convince you to switch insurance companies by offering cheaper rates. Not long ago, we explained how New Jersey car insurance companies rip you off by “saving you money”. One of those “savings” is to elect the health insurance primary option. After a recent car accident case where a client had to pay thousands out of pocket, we wanted to remind everyone why this option is a really bad idea.

Related:  Auto Negligence; Insurance is not just about price; Personal injury; No-Fault claims; New Jersey Auto Insurance Buyer’s Guide.


Car insurance policies and the laws that govern them are often very important in personal injury cases involving car accidents.  Because of this, we have become very familiar with the auto insurance laws and the different types of coverage.

New Jersey Car Insurance: Health Insurance for PIP Option

Traditionally, if a person is injured in a car accident then that person’s own car insurance company would pay for all medical treatments for injuries caused by the crash that were reasonable and necessary. One option that could “save money” is to select “health insurance primary” as an option.  This means that your health insurance company will pay for your medical treatments instead of your car insurance company.  This may seem like a good choice for people with good health insurance and it will definitely lower the cost of the insurance.  But it is our opinion that the savings is never worth the loss of benefits.

Health Insurance Primary Option and High Out-of-Pocket Costs

The huge problem with electing the health-insurance-primary option when purchasing car insurance is that it can lead to very high out-of-pocket costs. With a traditional PIP policy, the maximum co-pay and deductible that anyone would have to pay (if they purchase a Standard policy without any discount options) is $1,250 – that is a $250 deductible and 20% co-pay for the first $5,000 in treatment costs. So it doesn’t matter if you have $6,000 in treatment during a 6 month period or $206,000 in treatment over a 6 year period – the co-pay and deductible will still max out at $1,250. With a health insurance primary option, you are bound by the co-pay and deductible that applies to your health insurance. These days, it is not uncommon for people to have a $1,000 or $2,000 deductible on their health coverage each year. That means that if treatment lasts over several years, the patient would be responsible for thousands of dollars in deductibles. And they would also have to pay co-pays, which may be very expensive (a co-pay or co-insurance of 20% may apply to your health plan for all treatments with a specialist, for example).

The second way that this option will cost you money is that you may have to reimburse your own health insurance carrier for the money that they paid for treatment. Yes, you read that correctly – in certain cases the patient has to actually pay back the insurance company for the costs of treatment. This could apply if you are injured in a car accident and you receive a settlement or jury verdict.

For decades, health insurance companies have been adding to their policy language a clause that requires the patient to reimburse the insurance company if the patient wins money in a law suit. By law in New Jersey, a health insurance carrier is NOT allowed to collect those reimbursements. However, under Federal law, an ERISA-qualified plan is often allowed to get reimbursed. ERISA plans are usually not “insurance” – an employer (like a school, larger unionized company, hospital network, etc.) essentially puts aside a pile of money to pay employee benefits. But the employees all think they have “insurance” since they have an insurance card that says Horizon, Aetna, etc. Usually, this makes no difference, but if you are hurt in a car accident, receive treatment, receive payments for the treatment from an ERISA-qualified plan, and file a lawsuit, the plan administrator will probably send you and your lawyer a BILL telling them to pay back thousands of dollars from any settlement.

What is even worse is that if you are in a car crash and the other driver is 100% at fault YOU ARE STILL RESPONSIBLE for all of these costs out of your own pocket. By law, even high co-pays and deductibles and medical liens from ERISA plans are NOT collectible from the person who injured the patient. We agree that this is incredibly unjust, but it is the reality of the law in New Jersey. Insurance companies save money, regular folks pay for it.

Remember, the insurance companies have teams of skilled attorneys who are aggressively representing their interests, and you should too.  If you have any question or you or a loved one have been hurt in an accident, please do not hesitate to contact us for a 100% free consultation.

Raff & Raff, LLP
Attorneys at Law
30 Church Street
Paterson, NJ 07505

Tel: (973) 742-1917
Fax: (973) 742-2454


Based in Paterson, New Jersey, Raff & Raff, LLP services clients in the communities of Bloomingdale, Clifton, Haledon, Hawthorne, Little Falls, Passaic, Paterson, Pompton Lakes, Prospect Park, Ringwood, Totowa, Wanaque, Wayne, West Milford, Woodland Park, Allendale, Alpine, Bergenfield, Bogota, Carlstadt, Cliffside Park, Closter, Cresskill, Demarest, Dumont, East Rutherford, Edgewater, Elmwood Park, Emerson, Englewood, Fair Lawn, Fort Lee, Franklin Lakes, Garfield, Glenn Rock, Hackensack, Hasbrouck Heights, Haworth, Hillsdale, Ho-Ho-Kus, Leonia, Little Ferry, Lodi, Lyndhurst, Mahwah, Maywood, Midland Park, Montvale, Moonachie, New Milford, North Arlington, Northvale, Norwood, Oakland, Old Tappan, Oradell, Palisades Park, Paramus, Park Ridge, Ramsey, Ridgefield, Ridgewood, River Edge, River Vale, Rochelle Park, Rockleigh, Rutherford, Saddle Brook, Saddle River, Teaneck, Tenafly, Teterboro, Waldwick, Wallington, Westwood, Wood-Ridge, Woodcliff Lake, Wyckoff, Belleville, Bloomfield, Caldwell, Cedar Grove, Orange, Essex Fells, Fairfield, Glen Ridge, Irvington, Livingston, Maplewood, Millburn, Montclair, Newark, North Caldwell, Nutley, Roseland, Verona, Bayonne, Jersey City, Hoboken, Union City, West New York, Guttenberg, Secaucus, Kearney, Harrison, North Bergen, Weehawken, Elizabeth, Linden, Plainsfield, Rahway, Union, Scotch Plains, Clark, Cranford, Hillside, Westfield, Roselle, and surrounding areas.