What does subrogation in health insurance entail?

Subrogation in health insurance refers to the process by which an insurance company, after paying a claim to its insured, seeks reimbursement from a third party that may be responsible for the loss or injury that led to the claim. This mechanism is crucial because it helps prevent the insured from receiving a double recovery—collecting damages from both the insurer and the at-fault party—and ultimately helps keep insurance premiums down by ensuring that those who are truly responsible for the losses bear the financial burden.

The concept of subrogation enables insurers to recover costs by pursuing legal action against the party at fault, thereby maintaining fair financial responsibility in situations involving negligence or other forms of liability.

Understanding this process is essential, as it underlines the insurer's right to claim back what it has paid to the insured, which is a key part of managing claims efficiently and effectively.