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Medical payments (also known as medical expense or MedPay) coverage helps pay for medical and funeral expenses associated with auto accidents. It is an option available with auto insurance policies and usually covers expenses for the policyholder, passengers, and family members driving the insured vehicle at the time of an accident. The policy can also extend to cover any injuries you sustain outside of a car, as we'll explain below. Coverage applies no matter who is at fault.
There are a number of expenses related to an automobile accident that can fall under your insurance policy's medical payments coverage. These typically relate to any costs incurred for medical care that you, or any covered member of 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
- Dental procedures needed as a result of an accident
- Injuries sustained as a pedestrian or riding a bicycle if a vehicle hits you
One characteristic that's noteworthy about MedPay is that the coverage follows the policyholder. In other words, if you’re walking, riding in a friend’s vehicle, or using public transportation, your medical payments coverage remains active. This applies both in and out of the state you're insured in too.
There are situations where medical payments coverage will not apply. For example, while medical payments insurance covers personal automobiles, it cannot be applied to trailers or other equipment attached to them.
There are two ways that MedPay works: through direct reimbursement as primary coverage, or as a supplement to your existing health insurance coverage. It depends on your auto and home insurance policies, and whether you live in a no-fault state. Customer service and claims representatives at major insurers weren't able to provide a conclusive answer; it appears that GEICO would consider health insurance the primary coverage, while Progressive and State Farm representatives indicated that MedPay would pay out first. Check your policy to be sure.
Typically, if a driver has medical bills that would be covered under MedPay, they would pay for them up front, and then their auto insurance company reimburses them dollar for dollar. There are no deductibles or co-pays that you have to meet. When MedPay is secondary, your health insurance policy would pay for the majority of your medical bills, and you could use your MedPay to pay for your deductibles or co-pays so that your health insurance can kick in.
The limit is usually fairly low and intended to cover immediate medical and funeral expenses as a result of an accident or to supplement other insurances. MedPay also will not apply to a person injured during their employment when worker’s compensation should apply, and is not meant to replace health insurance.
The three coverages overlap, and the answer depends on how your health insurance policy is structured, and which state you live in. You might want to consider medical payments coverage even if you have health insurance and personal injury protection (PIP).
Health insurance typically pays for medical expenses related to your health. However, some healthcare policies do not cover injuries sustained in a car accident, which could leave a driver with high out-of-pocket expenses. Medical payments coverage could help offset those expenses, and would make if drivers want additional peace of mind. If your health insurance covers vehicle accidents, you'd likely have to pay a co-pay or pay up to your deductible before your insurer will pay for the rest. MedPay can reimburse you for those deductibles and co-pays if you get billed. You'll have to consider the extra cost of MedPay each month against the amount of deductible you have. If you have a platinum or gold health insurance plan, you likely have zero deductibles to hit, and if your policy will cover automobile accidents, you do not need MedPay.
Personal Injury Protection (PIP), which is mandatory in no-fault states, and optional in other states, covers more than MedPay does. MedPay is primarily concerned with direct medical or surgical care, while PIP covers that along with psychiatric and rehabilitative care and lost wages. In states where PIP isn't required, the question comes down to the health insurance vs. MedPay discussion above. In states where PIP is required, you might consider the cost of increasing your PIP limit against the MedPay benefit to see which one makes more financial sense for you (keeping in mind the difference in coverage). Drivers with PIP may still consider purchasing medical payments coverage because PIP is subject to claim limits. If a driver’s medical bill exceeds their PIP limit, they would have to pay for the overage out-of-pocket, which MedPay can help to pay for. In this case, you could recover for rehab and lost wages (especially if you earn a high salary) under PIP, and get reimbursement from MedPay for hospital and doctor visits.
An exception to the above is the state of Michigan, which is the only no-fault auto insurance state with no limit on medical expenses. In the event a policyholder exceeds the medical expense limit of their insurer, the insurer would continue to pay for their and the Michigan Catastrophic Claims Association (MCCA) would reimburse the insurance company. The policyholder would not be responsible for any out-of-pocket expenses. Michigan is probably the only state where you would not need MedPay.
Policyholders choose a limit, or maximum dollar amount, that their medical payments coverage will pay out, and that determines the increased cost of their auto insurance policy. The higher the limit a policyholder wants, the more the option will increase their auto insurance rates. You can choose to add medical payments coverage to a policy at any time. It’s simple as a few clicks online or calling your agent.
Below are some examples of coverage limits per incident and the additional cost added to a monthly premium for a sample 30-year old married man driving a Toyota Camry in Indiana. Costs run from an additional $2 a month to $37 a month depending on the amount of MedPay protection you get. Your MedPay costs will differ, and your decision should be based on the total cost of your policy.
|Coverage Limit per Incident||GEICO||State Farm||Allstate||Esurance||Progressive*|
*Notes: Progressive limits are per person, and not per incident
The most common coverage limits for MedPay are $1,000, $2,000, $5,000, $10,000 and $25,000 across the five companies we surveyed. GEICO offered more limit options on the lower end of the range, from $500, and then in $1,000 increments from $1,000 to $5,000. State Farm offered more limits on the higher end, including medical payments up to $50,000 and $100,000.