Medical payments coverage

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Medical payments coverage, or MedPay, is a part of auto insurance that covers injuries that you or your passengers suffer or receive in a car accident. MedPay covers you no matter what caused the crash. It also covers you if you are injured while riding in someone else’s car or if you are injured by a car while on foot, riding a bicycle or while using public transportation.

When searching for ways to lower your car insurance premium, you may be tempted to remove medical payments coverage from your policy. After all, it may not be required in your state and sounds similar to your health insurance.

But you would be mistaken to write off MedPay as unnecessary. In fact, the very limitations of most health insurance policies, combined with the risks you can mitigate with this often-misunderstood optional coverage, argue strongly in favor of retaining, if not increasing, your MedPay.

What is medical payments coverage?

In a nutshell, medical payments coverage 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. Your medical payments coverage moves with you (walking, riding with a friend or on public transportation, in-state or out), as well as with your insured vehicles, regardless of who is driving. It carries no deductible or co-pay.

You might think your bodily injury liability coverage will cover those expenses, but that coverage only steps in for the medical bills of other parties you injure. It does not cover you. While another driver’s bodily injury liability coverage can help if you are injured in an accident that another insured driver caused, it may take months for their car insurance company to pay your medical bills. Your health insurance might pay, but increasingly, many health insurance policies come with high deductibles and co-pays that can stretch finances to the breaking point before the insurance settlement with the other driver is reached.

With MedPay, you can get immediate coverage to help with any medical bills you or your passengers face after an accident. Plus, your medical payments coverage can protect you if you get hit by a car while you are on foot or a passenger in another vehicle, too.

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How does MedPay work on auto insurance?

The beauty of MedPay is that it generally kicks in quickly to pay your medical bills, health insurance deductible and co-pays. 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 liability coverage, MedPay policy limits do not refer to the total available coverage limit, but instead to the amount available for each covered injured individual. For example, if you have a $5,000 MedPaylimit and you, your spouse and your two children are injured in an auto accident, each of you could collect up $5,000 in MedPay coverage for a total of $20,000. However, your insurer will not pay the same bills under both your MedPay and liability coverage.

If you live in one of the nearly 30 states that allow “stacking” of auto coverage, you may be able to stack your MedPay coverage by the number of vehicles on your auto policy. That means that if you own three insured vehicles and stack your $5,000 MedPay coverage, you would have a total of $15,000 in MedPay available to you or other covered individuals in an accident.

Medical payments coverage can be especially important for drivers without health insurance. However, MedPay should not be used as a substitute for health insurance. You must carry auto liability coverage in order to purchase MedPay, 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. Here are some of the coverages that MedPay provides:

  • Medical care: Your MedPay can cover the cost of doctor and hospital visits.
  • Health insurance deductibles and co-pays: A huge benefit of medical payments coverage is that it can allow you to use your existing health insurance coverage with no out-of-pocket cost. MedPay might cover any co-pays for your doctor visits, plus your health insurance deductible.
  • Emergency medical care: MedPay 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: Medical payments coverage also covers services to help you determine the extent of your injuries, like X-rays, or treatments required for you to heal, like surgery.

Medical payments coverage can go a long way to help you or your passengers if any of you gets hurt in a car accident.

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), you might be thinking this sounds a little familiar. That is because MedPay coverage is very similar to personal injury protection, or PIP, coverage. PIP coverage is generally required in no-fault states.

PIP coverage works similarly to MedPay, paying for medical expenses after an auto accident. But PIP coverage is generally further reaching than MedPay, covering things like wage reimbursement if you have to miss work because of your injuries.

Medical payments coverage does have one leg up on PIP, though. PIP requires a deductible, while MedPay does not.

How much does medical payments coverage cost?

The premium for MedPay is generally quite low, and the benefits you may receive from just one claim may be worth the peace of mind.

“For example, if your health insurance has a $1,000 deductible, a 20 percent co-pay and you have a $5,000 medical claim from an accident, with your health insurance you would typically pay $1,800 out of pocket,” says Christy Moulton Perry, director of product management for Great Northwest Insurance Co. “But with your MedPay, you would pay zero out of pocket. That’s a big difference.”

Despite the compelling arguments in favor of MedPay, nearly one in four State Farm drivers chooses to decline it in states where it is offered, according to spokesman Kip Diggs. Those who choose to do so can either afford to self-insure for the cost of items covered under MedPay 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 MedPay 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 (MedPay) 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.”

“I generally would never tell anybody that they don’t need it or don’t have use for it,” she says. “You need that MedPay.”

Frequently asked questions

What is the difference between bodily injury and medical payments?

The bodily injury liability portion of your auto insurance only pays for medical bills 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 your passengers. For that protection, you will need to look at medical payments coverage (MedPay) or personal injury protection (PIP), depending on your state.

Do you need medical coverage on car insurance?

It depends on the state in which you live. If you are a resident of one of the 12 no-fault states, you will be legally required to carry PIP coverage. State laws vary, and some states may require MedPay. But in other states, MedPay is optional. However, the low cost of MedPay makes it an attractive addition to your existing auto insurance policy.

How much MedPay coverage should I have?

It depends on your specific needs. If you have robust health insurance, you may not need much. That said, increasing your MedPay coverage limits usually comes with a low cost so it may make sense to carry more than you think you need. Talking to a licensed agent may help you determine the proper amount of medical payments coverage for your specific needs.

Do I need MedPay if I have health insurance?

Carrying medical payments coverage even if you have health insurance is often a good idea, especially if you have a high health insurance deductible or pricey co-pays. Your MedPay might be enough to cover your health insurance deductible and co-pays so you can use your health insurance with no out-of-pocket cost for yourself. Plus, MedPay extends to your passengers, so it is a good way to protect everyone who rides with you. Talking to a licensed agent about your specific situation might be helpful to determine the right MedPay level for you.

Written by
Kacie Goff
Personal Finance Contributor
Kacie Goff is a personal finance and insurance writer with over seven years of experience covering personal and commercial coverage options. She writes for Bankrate, The Simple Dollar, NextAdvisor, Varo Money, Coverage, Best Credit Cards and more. She's covered a broad range of policy types — including less-talked-about coverages like wrap insurance and E&O — and she specializes in auto, homeowners and life insurance.
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