Auto insurance medical payments coverage handles medical expenses for you and your passengers, no matter who’s at fault in an accident. Typically, MedPay is an optional coverage type, which might lead one to wonder if you need medical payments on your car insurance policy. In most cases, MedPay is a low-cost option that can offer you financial security, especially if your medical insurance doesn’t cover all of your expenses following an accident. Bankrate can help you navigate determining whether you need MedPay and how it may benefit you to maintain medical payments coverage.
What is auto insurance medical payments coverage?
To put it simply, medical payments coverage in car insurance pays medical bills up to your coverage limit for you and any passengers riding in your vehicle in case of an accident, regardless of who is at fault. It might also pay if you’re hit by a car while walking or biking or if you are injured in an accident in someone else’s car, but generally the at-fault driver’s bodily injury coverage would pay first. MedPay coverage carries no deductible or copay.
You might think your bodily injury liability coverage will cover those expenses, but that coverage only steps in to cover bodily injuries that you cause to others if you’re the driver in an at-fault accident. It does not cover you or any passengers that are family members. While another driver’s bodily injury liability coverage can help if you are injured in an accident that another insured driver caused, determining liability can take time and your medical bills could pile up in the interim.
With auto medical payments coverage, you may be able to get faster coverage to help pay any medical bills you or your passengers face after an accident. Your health insurance might pay, but many health care plans have high deductibles and copays that can stretch your finances before the insurance settlement with the at-fault driver is reached.
How does MedPay work on auto insurance?
Medical payments coverage generally kicks in quickly to pay your medical bills, health insurance deductible and copays, up to the policy limits. It also covers other out-of-pocket costs that your health policy might not pay, including ambulance fees, chiropractic, dental, prosthetics and, in a worst-case scenario, funeral expenses.
Unlike auto liability insurance, the policy limits on MedPay coverage do not refer to the total available coverage limit but instead to the amount available for each injured individual. For example, if you have a $5,000 medical payments limit and you, your spouse and your two children are injured in an auto accident, each of you could collect up to $5,000 in medical payments coverage for a total of $20,000. However, your insurer will not pay the same bills under both your medical payments coverage and liability coverage.
Auto medical payments coverage can be especially important for drivers without health care insurance. However, medical payments should not be used as a substitute for health coverage. You must carry auto liability coverage in order to purchase medical payments coverage, and you have to be injured in an auto-related accident to use it.
What does MedPay cover?
If you are considering purchasing medical payments coverage, you are probably wondering what protections you will get. Medical payments coverage provides:
- Medical care: Your medical payments coverage can cover the cost of doctors and hospital expenses.
- Health care insurance deductibles and copays: A huge benefit of medical payments coverage is that it can pay for out-of-pocket costs that your medical insurance may leave behind. For example, medical payments coverage might cover any copays for your doctor visits, plus your health care insurance deductible, up to the policy limit.
- Emergency medical care: Medical payments coverage does not just step in for checkups after the accident. It can cover the cost of an ambulance trip or emergency medical services, which are often pricey but critical if you or any of your passengers are badly hurt in the accident.
- Specific diagnostics and treatments: If you need to undergo diagnostics, such as an X-ray, in order to determine the extent of your injuries or specific treatments like surgery or therapy, MedPay can also cover these costs.
You might be tempted to forgo medical payments coverage to save money on your car insurance, but medical payments coverage can go a long way to financially help you or your passengers if any of you gets hurt in a car accident.
What are the limits of medical payments coverage?
Medical payments coverage limits are up to you when you purchase insurance coverage. Standard insurance policies typically allow you to purchase between $1,000 and $100,000 in medical payments coverage. Remember that the limit is not the total for all individuals involved in an accident. Instead, the limit is the maximum amount paid for each person injured in an accident. Before you decide on a limit, you might want to revisit your health insurance policy to see how much emergency care coverage you have.
How is MedPay different from PIP?
If you live in one of the 12 “no-fault” states (Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania and Utah), the benefits of medical payments coverage may sound familiar. That is because the coverage is very similar to personal injury protection (PIP) coverage. PIP coverage is generally mandatory in no-fault states.
PIP coverage works similarly to medical payments coverage, paying for medical expenses after an auto accident. But PIP coverage is generally further reaching than medical payments coverage, covering things like wage reimbursement if you have to miss work because of your injuries.
How much does medical payments coverage cost?
The average cost of medical payments coverage is often quite low and the benefits you may receive from just one claim could offer financial peace of mind.
For example, if your health insurance has a $1,000 deductible, a 20 percent copay and you have a $5,000 medical claim from an accident, with your health insurance you would typically pay $1,800 out of pocket. But with your MedPay, you would pay $0 out of pocket. That’s a big difference.
— Christy Moulton Perry, Director of Product Management, Great Northwest Insurance Co.
Despite the compelling arguments in favor of medical payments coverage, nearly one in four State Farm drivers chooses to decline it in states where it is offered, according to company spokesman Kip Diggs. Those who choose to forgo the coverage can either afford to self-insure for the cost of items covered under medical payments coverage or are willing to take on the risk of possible out-of-pocket medical expenses in the event of an accident.
But Perry says a smarter move for many would be to boost coverage from the standard levels of $1,000 to $5,000 up to $10,000 or more. The cost to move from $2,000 to $10,000 in medical payments coverage on a Travelers auto policy is around $10 per year, according to agent Shawn Wainwright of Brown & Brown Insurance in Florida.
“Going up to $50,000 or even $100,000 usually costs very, very little and can be worth it,” Perry says. “I know one case where the driver only had $5,000 [in medical payments coverage] and had a serious accident in which she was disabled for a long time. A year and a half after her accident, her credit had been ruined because she had all of the hospital bills she couldn’t pay. Even though the other car insurance company acknowledged liability, she had to wait for the entire claim to be closed before she could get that recovery.”
How much medical payments coverage should I have?
The amount of medical payments coverage you should consider carrying depends on your specific needs. You may still be able to find cheap car insurance while including (or increasing your level of) medical payments coverage, as it’s usually a low-cost coverage. Talking to a licensed insurance agent may help you determine the proper amount of medical payments coverage for you.
Frequently asked questions
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If you have health insurance, your health insurance policy might cover your medical bills. If you have deductibles or copays, or you don’t have health insurance at all, you would most likely file a medical payments coverage claim.
Your insurance company will typically assign you a medical payments adjuster, who will access relevant medical records and hospital bills. Once your claim is submitted, the adjuster will examine your claim and ask for more information, deny the request, fully approve the claim or approve the claim with partial reimbursement.
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You will select your medical payments limits when you buy your insurance policy. Typically, you can purchase between $1,000 to $100,000 in medical payments coverage. Before you decide, keep in mind that the limit is the maximum amount paid for each person injured in an accident.
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The bodily injury liability portion of your car insurance only pays for medical bills to others if you cause an accident. In that case, it steps in to cover the resulting medical expenses for the other driver and their passengers. It does not cover your own medical bills, though, or those of any passengers that are family members. For that protection, you will need to look at medical payments coverage or personal injury protection (PIP), depending on your state.
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It depends on the state in which you live. If you are a resident of one of the 12 no-fault states, you will likely be legally required to carry PIP coverage. However, medical payments is typically optional. Even so, the low cost of medical payments coverage could make it an attractive addition to your existing auto insurance policy.
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Carrying medical payments coverage even if you have health care insurance is often a good idea, especially if you have a high health insurance deductible or pricey copays. Your medical payments coverage might be enough to cover your health insurance deductible and copays so you can use your health insurance with no out-of-pocket cost for yourself. Plus, medical payments coverage extends to your passengers, so it is a good way to financially protect everyone in your vehicle. Talking to a licensed agent about your specific situation might be helpful to determine the right medical payments coverage level for you.
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