What is Medical Payments Coverage?

Medical payment coverage is an optional insurance coverage available on your auto insurance policy that helps to cover the cost of medical payments and funeral expenses associated with a car accident. Not everyone will purchase Medical Payments Coverage (also known Med Pay) but there are several benefits for customers that do. Med Pay will help cover medical bills that your health insurance does not cover (for example if you have co pays or deductibles) and will also cover you if the person who caused the accident does not have insurance or if their insurance company is not paying for your bills up front (for example if you are in the middle of litigation with other party). Med Pay may cover part or all of your medical expenses.

What and who does Med Pay cover?
There are several expenses that are covered in the event of an accident. These expenses typically relate to costs that are incurred for medical care that you, or any member covered under your policy sustain in a motor vehicle accident. They include:

- EMT and ambulance fees
- Hospital visits and stays, doctor visits
- Surgery and X-Rays
- Professional nursing services and care
- Prostheses
- Dental procedures needed as a result of an accident
- Injuries sustained as a pedestrian or riding a bicycle if a vehicle hits you
- Funerals

One thing that is worth noting about Med Pay is that it follows the insured individual. The coverage applies to you (as the policy holder), occupants of your vehicle, or anyone driving the insured parties vehicle with the owner's permission. If you are hit by a negligent driver, the other driver's Med Pay will not cover your medical bills.

Med Pay also helps to cover you, the insured, outside of your personal vehicle. If you are injured by a vehicle while walking, riding a bike, as passenger in your friends vehicle and even if you are injured while on public transportation, Med Pay coverage will apply. It is active in the state in which you are insured and you are also covered if you are out of state when an incident happens.

There are some instances that medical payments coverage does not apply. While Med Pay covers your personal vehicle, it does cover campers, trailers or any other items attached to your vehicle.

How does medical payments coverage work?
Med Pay works in one of two ways. First, it may act like primary insurance and pay your medical bills first through reimbursement. You would pay your medical expenses upfront and Med Pay would pay you back dollar per dollar for any money you paid out of pocket. You won't need to meet any deductibles or co-pays in this scenario.

The second way Med Pay works is as a supplement to your existing health insurance policy. If for example you were in an accident, your primary insurance will pay the majority of your medical bills and you can use Med Pay toward co-pays or deductibles. If you have a high deductible health insurance plan, Med Pay may be a great option to consider adding to your auto insurance policy.

There are several factors that come into play when figuring out which one of these two ways Med Pay will cover your medical expenses. It depends on the type of coverage you have on your auto and home insurance policies, as well as if you live in a no-fault state in which case it is mandatory to have Personal Liability Coverage. It is important to talk to your insurance agent about Med Pay as there are varying view points on how Med Pay works. Some insurance companies consider your primary health insurance as the first to payout medical expenses while other insurance companies believe Med Pay is the primary payer. Ask your agent how your insurance company manages it's Med Pay plan.

Med Pay is not unlimited and in may cases may be a very limited amount. It is meant for payout of immediate medical coverage and funeral expenses related to a car accident. Med Pay does not cover you if you are injured on the job as workman's compensation is the plan for covering these incidents and Med Pay is not a substitute for health care insurance.

Do I need Med Pay if I have Health Insurance or Personal Liability Insurance?
All three coverages will overlap so the question then becomes, how is your health insurance structured and which state do you live in?

Health insurance pays for medical expenses related to your health. Some policies will not cover medical expenses incurred due to a car accident which can leave you to pay high medical care expenses. In a case like this, Med Pay will help cover those expenses and give you some peace of mind. If your health insurance does cover medical costs that are associated with a car accident, you may have a deductibles or co-pays you would have to pay out of pocket. Med Pay would reimburse you for those out of pocket expenses if you are billed. Does Med Pay make sense for you? It is important to review your health insurance deductible verses the extra monthly cost of Med Pay. If you have a healthcare plan that has no deductibles or co-pays and covers medical bills as result of a car accident, then Med Pay might not make sense for you.

If you live in a no-fault car insurance state (no-fault insurance helps cover medical expenses no matter who is at fault for an accident), you are required to carry Personal Injury Protection Insurance (also known as PIP). PIP covers more than Med Pay does. While Med Pay is concerned with direct medical and surgical care, PIP encompasses psychiatric services, rehabilitative services and lost wages as well as direct medical and surgical care. In states where PIP is not required, the question comes down to health insurance versus Med Pay as explained above. In states where having PIP is required, you may want to up your PIP limits against Med Pay benefits to see which makes the most financial sense for you. Drivers that are required to have PIP may want to purchase Med Pay as PIP has claim limits and Med Pay can bridge the gap. For example, if your medical bills exceed the limits of PIP, you will most likely have out of pocket expenses. Med Pay will reimburse you for those out of pocket expenses. In this case PIP would cover your rehabilitation and lost wages and Med Pay would reimburse your doctors and hospital visits.

The only exception to the rule is Michigan which is the only state that has no-fault insurance without medical expense limits. It is the only state in which you most likely do not need Med Pay. Contact your insurance agent for more information.

How much does Medical Payments Insurance Cost?
The cost of Med Pay depends on the amount of coverage you wish to have. You choose a limit, or maximum dollar amount, that Med Pay will payout for medical expenses. This will determine how much your auto insurance policy will increase. The higher the limit, the higher your auto insurance will increase. You can add Med Pay to your policy at anytime with a quick call to your insurance agent.

* A quick note about Med Pay in your state. Med Pay maximums and payout structures vary from state to state. This article provides a general overview on how Medical Payments Insurance works. It is important to contact your insurance agent to understand how Med Pay works in your state.