What does "subrogation" refer to in health insurance?

Subrogation in health insurance specifically refers to the procedure by which an insurance company seeks reimbursement from a third party that may be responsible for a loss after the insurer has already paid a claim to a policyholder. This process ensures that the insurer can recover costs when another party's negligence or liability is involved. For instance, if a person is injured in an accident caused by someone else's wrongdoing, their health insurance may initially cover medical expenses. Later, the insurance company has the right to pursue reimbursement from the at-fault party's insurance or the responsible individual directly.

The concept of subrogation helps keep insurance premiums lower because it allows insurers to recoup losses, thus preventing the costs from being solely borne by the insurance provider or the policyholder. This practice ensures accountability and allows for a fair distribution of costs associated with accidents and liabilities. Understanding subrogation is crucial for recognizing the financial mechanisms at play within health insurance and the role of insurers in managing financial responsibilities related to claims.