Who Pays Your Medical Bills After a Car Accident in Colorado?
Understand MedPay coverage, health insurance subrogation, letters of protection, and the critical mistakes that can cost you thousands when managing medical bills after a Colorado car crash.
After a car accident in Colorado, medical bills can pile up fast — ambulance rides, emergency room visits, imaging, surgery, physical therapy. The average ER visit alone costs over $2,000. Understanding who pays these bills, when, and how the payment source affects your settlement is critical to protecting your financial recovery.
Immediate Medical Treatment: MedPay Coverage
Medical Payments coverage (MedPay) is your first line of defense after a Colorado car accident. MedPay is an optional no-fault coverage on your own auto insurance policy that pays medical bills regardless of who caused the accident.
MedPay Key Facts
- ✓ Typical limits: $5,000 to $25,000 per person
- ✓ Pays regardless of fault — no blame determination needed
- ✓ Covers ambulance, ER, surgery, dental, physical therapy, and more
- ✓ No subrogation in most Colorado policies — you keep the full amount
- ✓ Covers deductibles and copays your health insurance does not
- ✓ Pays quickly, often within days of submitting bills
If you have MedPay on your policy, file a claim immediately after an accident. Because MedPay typically does not have subrogation rights in Colorado, the insurer cannot recover these payments from your settlement later — making it essentially "free money" for your medical treatment.
Health Insurance and Subrogation Rights
Once MedPay is exhausted (or if you do not carry it), your health insurance becomes the primary payer for accident-related medical treatment. However, there is a significant catch: subrogation.
Subrogation is the legal right of your health insurer to be reimbursed from your personal injury settlement. If your health insurance pays $30,000 in accident-related medical bills and you later receive a settlement, your insurer will assert a $30,000 subrogation claim against your settlement proceeds.
Important: Colorado Subrogation Protections
Colorado CRS 10-1-135 requires insurers to reduce their subrogation claim proportionally when you incur attorney fees to recover the settlement. If your attorney takes a 33% contingency fee, the insurer must reduce their subrogation claim by the same 33%. An experienced attorney can often negotiate this amount down even further.
Letters of Protection and Attorney Liens
If you do not have MedPay or health insurance — or if your treatment needs exceed your coverage — a letter of protection (LOP) may allow you to receive medical treatment now and pay later from your settlement.
A letter of protection is a written guarantee from your attorney to a medical provider stating that the provider will be paid from the settlement proceeds. Many Colorado medical providers accept LOPs for accident-related treatment because they know the personal injury claim will eventually produce funds for payment.
When Letters of Protection Make Sense
- • You have no health insurance or MedPay
- • Your health insurance deductible is too high to afford
- • You need specialized treatment not covered by your plan
- • MedPay is exhausted and bills continue to accumulate
Who Pays When You Are Not at Fault
When the other driver is 100% at fault, their bodily injury liability insurance ultimately pays your medical bills as part of your settlement or judgment. However, this payment does not come immediately — it comes at the end of the claims process, which can take months or years.
In the meantime, you still need to pay for treatment. The practical payment sequence is:
- MedPay covers the first $5,000–$25,000
- Health insurance covers remaining bills (subject to subrogation)
- Letters of protection for bills beyond coverage
- At-fault driver's liability insurance reimburses everything at settlement
Who Pays When You Are Partially at Fault
Under Colorado's comparative fault rule, your recovery is reduced by your fault percentage. If you are 30% at fault, you can only recover 70% of your medical bills from the other driver's insurance. You are responsible for the remaining 30%.
This makes it even more critical to use MedPay first (no subrogation) and to negotiate health insurance subrogation claims aggressively with the help of an attorney.
The Danger of Settling Medical Bills Too Early
One of the most costly mistakes accident victims make is settling their claim before they have reached maximum medical improvement (MMI) — the point where your condition has stabilized and no further improvement is expected.
Warning: Early Settlement Risks
- ✗ You may not yet know the full extent of your injuries
- ✗ Future surgery or therapy costs will not be covered
- ✗ Signing a release bars you from reopening the claim
- ✗ Insurance companies push for early settlement to save money
Use our settlement calculator to understand what your case may be worth before accepting any offer. And if you are unsure whether you need an attorney, read our guide on when to hire a car accident lawyer.
You can also search for your accident in our database to get the official details of your crash record, or find a Colorado car accident attorney who offers free case reviews.
Frequently Asked Questions
What is MedPay and how does it work in Colorado?
MedPay (Medical Payments coverage) is an optional no-fault auto insurance coverage in Colorado that pays your medical bills regardless of who caused the accident. It typically covers $5,000 to $25,000 in medical expenses per person. MedPay is especially valuable because it pays quickly, covers deductibles and copays your health insurance does not, and has no subrogation rights in most Colorado policies.
Can my health insurance company take money from my car accident settlement?
Yes. This is called subrogation. If your health insurance pays your accident-related medical bills, they have a legal right to be reimbursed from your settlement. However, Colorado law (CRS 10-1-135) provides protections and requires the insurer to reduce their claim proportionally if you incur attorney fees to recover the settlement. An attorney can often negotiate the subrogation amount down significantly.
What is a letter of protection (LOP)?
A letter of protection is a written agreement between your attorney and a medical provider stating that the provider will be paid from the proceeds of your personal injury settlement or verdict. This allows you to receive medical treatment now without paying out of pocket, which is critical if you lack health insurance or MedPay coverage.
Should I use my health insurance or MedPay first?
In most cases, you should use MedPay first because it has no subrogation rights in Colorado, meaning the MedPay insurer typically cannot recover those payments from your settlement. After MedPay is exhausted, use your health insurance for remaining bills. This strategy maximizes the amount you keep from your settlement.
What happens to my medical bills if my settlement takes months or years?
During the settlement process, your medical bills may go to collections, which can damage your credit. Options to prevent this include: using MedPay or health insurance to pay upfront, obtaining letters of protection from providers, negotiating payment plans with providers, and having your attorney communicate with providers about the pending claim.
CrashStory Editorial Team
This article is for informational purposes only and does not constitute legal advice. The information is based on Colorado statutes and CDOT data available at the time of writing. Laws and regulations change. Consult a qualified Colorado attorney for advice specific to your situation. Last updated: January 10, 2025.
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