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Medical and Health Insurance Subrogation Explained
How medical and health insurance subrogation works: when a health plan can recover the medical costs it paid from an injured member's third-party settlement, and why plan type decides the rules.
6 min readUpdated July 27, 2026
Medical subrogation is how a health plan recovers what it paid for an injury when someone else was at fault. If a member is hurt in a crash and their plan covers the treatment, the plan can seek reimbursement out of the member's settlement with the at-fault party. The rules turn heavily on what kind of plan it is.
Plan type decides the rules
Self-funded employer health plans are generally governed by ERISA, a federal law whose reimbursement rights can override state made-whole and common-fund defenses, depending on the plan's language. Fully insured plans and government programs follow different rules, often shaped by state law. Because the plan document frequently controls, reading it is where medical subrogation analysis begins.
Recovery from the member's settlement
Medical subrogation usually attaches to the member's recovery from the third party rather than a direct claim by the plan. That makes coordination with the member's own claim, and the applicable made-whole and common-fund rules, central to how much the plan actually collects.
What is the difference between medical subrogation and reimbursement?+
Subrogation lets a plan step into the member's claim against the at-fault party; reimbursement is a contractual right to be repaid out of what the member recovers. Many health plans carry both, and which one applies affects when and how much the plan collects.
Does ERISA change medical subrogation?+
Often significantly. Self-funded ERISA plans can enforce reimbursement terms that override state made-whole and common-fund defenses, subject to the plan's language. That is why identifying the plan type is the first step.
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