There are multiple forms of insurance that can cover the cost of medical care after an accident: health insurance, personal injury protection (PIP) and medical payments (MedPay). If you have PIP or MedPay as part of your auto insurance coverage, you'll typically use those first before going to your health insurance company. Drivers without PIP coverage can still use health insurance to pay for injuries after a car accident, but there are some advantages to adding PIP or MedPay to your car insurance policy.
Do I Use Health Insurance or PIP in a Car Accident?
If you require medical care after a car accident, you should use up any PIP and MedPay auto insurance coverage you have before you file a claim to your health insurance.
There are two reasons for this: The first is that PIP and MedPay coverage usually do not have a deductible—a dollar amount you must pay before insurance "kicks in"—unless you've specifically opted for one. But most health insurance plans do have an out-of-pocket deductible. This means if you get medical treatment for a car accident and the cost for treatment doesn't exceed your PIP/MedPay coverage limits, you might not have to pay anything at all. But if you send the bill to your health insurance company, you'll likely have to pay a deductible, among other possible fees.
The second reason is that most health insurance plans have a "subrogation clause." This clause states that if you are legally owed any money relating to reimbursement of health care costs, your health insurance company is entitled to that money to recoup its expenses. And PIP coverage, as well as money from a liability claim, both fall into this category. So using your PIP/MedPay allotment first saves a step.
The good news is, you can usually put your health and car insurance companies in contact with one another, and they will sort out who should pay what. And if you have more than one source of funds, such as PIP and health insurance, it'll typically work out in your favor, so you'll pay less than if you only had one or the other. For example, in Florida, PIP is required by law but only covers 80% of your health care costs. If you get a doctor's bill for $1,000 after an accident, your car insurance will cover $800. And your health insurance provider will usually pay the remaining $200.
Some States Have Exceptions
There are a few no-fault states in which you can choose to limit your PIP coverage and rely on your health insurance after a car accident, in order to reduce the cost of car insurance. In New Jersey, drivers have the option of selecting their health insurance to be their primary provider for medical expenses. This means that your health insurance will cover medical bills first, and PIP medical coverage will only kick in if your care costs exceed your health plan limits.
In Michigan, where unlimited PIP coverage contributes to very high auto insurance premiums, you can coordinate your health and car insurance policies to reduce your premiums. If you choose this option, your MI health insurer would take care of your hospital and doctor bills, while PIP would cover lost wages and rehabilitation costs. Note that recipients of Medicaid and Medicare may not coordinate health and automobile insurance.
What are PIP and MedPay?
Personal injury protection (PIP) is a form of automobile insurance that reimburses you for medical expenses and some other costs, like lost income, after a car accident. Unlike other types of car insurance, you do not need to prove the other driver was at fault, and you'll usually see swift reimbursement as soon as you file your claim. PIP is mandatory in 12 states and optional in seven others. States that require PIP are called no-fault states. PIP limits generally start at $10,000 but can reach over $100,000—and in Michigan, PIP is unlimited. Sometimes PIP only covers a certain percentage of your medical expenses—for example, in Florida it's 80%. Additionally, some states allow you to have a PIP deductible in exchange for lower car insurance rates.
Medical payments coverage, or MedPay, is very similar to PIP. It typically applies to medical and funeral costs, but not lost wages or living expenses. It is sometimes sold as an add-on to PIP coverage, or a less-expensive alternative to PIP. MedPay is mandatory in three states. In some states where both PIP and MedPay are optional coverages, you may only be able to choose one or the other, not both.
Can You Use Health Insurance if You Do Not Have PIP or MedPay?
If you do not have PIP or MedPay coverage on your car insurance, you may use your health insurance to pay for any medical bills resulting from a car accident. If you live in a tort state, you also have the option of filing a claim against the other driver's insurance to pay for medical expenses. But be aware that it can take a long time to sort who was at fault in the accident, and you are not guaranteed a payout.
It's best to forward copies of your car accident medical bills to your health insurance company as you receive them. If you do decide to file a liability claim to cover medical costs later, you may need to reimburse your health insurance company for any expenses they've incurred through a process called subrogation. Subrogation is a common clause in health insurance policies that allows your health insurance company to recoup its losses if you receive any money for health expenses, such as from a liability claim or lawsuit. Note that under subrogation, even if you do not make a liability insurance claim, your health insurance provider has the option to do so on your behalf.
Should You Get PIP or MedPay if You Have Health Insurance?
While health insurance, PIP and MedPay all help you pay for medical expenses after a car accident, they each serve a different purpose. You may want to consider adding PIP or MedPay to your car insurance coverages, even if you're not required by state law to do so.
For one, PIP and MedPay can also help pay for the deductible on your health insurance. If you anticipate having to use your health insurance, like if your PIP or MedPay allowances run low, you can use the last of your MedPay allotment to pay your health insurance deductible. PIP and MedPay will also cover expenses associated with a funeral, which health insurance does not. While it may be unpleasant to consider, funerals are expensive—something that can add more financial stress to an already upsetting situation for your family. PIP and MedPay will cover those costs.
Additionally, PIP and MedPay provide coverage for passengers injured in your vehicle. If you find yourself in the car often with nonimmediate family, it may be a benefit to have PIP or MedPay cover their injuries in the event of an accident.
Next, PIP, but not MedPay, usually covers lost wages due to injury. For example, if you break your leg in a car crash and you work in construction, you may not be able to work. PIP will pay you the wages you would have otherwise earned up to a certain limit, per your policy. In New York state, for instance, standard PIP coverage provides 80% of your earnings, up to $2,000 per month, with a maximum payout of $50,000. Health insurance policies do not have this provision. However, it's worth noting that short- and long-term disability insurance, if you have it, would both provide coverage in this situation.
Lastly, there is simply a degree of peace of mind in knowing you have a second source of coverage to pay for a potentially expensive injury. Medical bills can pile up after a car accident, and having an extra $50,000 worth of PIP or MedPay coverage can make a difference. You'll also have a backup in the event your health insurance company denies your claim.
Why You Might Not Need to add PIP or MedPay
Not everyone should add PIP to their car insurance coverage, however, and the decision is ultimately up to you. Ask yourself the following questions:
- How likely am I to get in a car accident that requires medical care?
- How generous is my health insurance plan?
- Would I be able to afford the medical expenses of a car crash if my health insurance did not cover them?
- Is the additional expense worth the peace of mind it provides?
PIP and MedPay provide an assortment of financial protections that go beyond those provided by health insurance, but they only apply if you're in a car accident. If you have comprehensive health insurance and have other insurance coverage—like disability and/or life insurance—that provide coverage redundant to PIP, adding additional PIP coverage may not be necessary. But if you don't have these additional protections and are concerned about paying for medical care after a car crash, especially if you drive a lot, the peace of mind may be worth the extra expense.
Differences Between Health Insurance, Personal Injury Protection and Medical Payments Coverage
|Is there a deductible?||Usually yes||Sometimes||No|
|Funeral costs covered?||No||Yes||Yes|
|Lost wages covered?||No||Yes||No|
|Living expenses covered?||No||Yes||No|
|Who is eligible to make a claim?||Only people named on your policy||Anyone named on the policy or riding in the car||Anyone named on the policy or riding in the car|