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HEALTH Insurance
HEALTH INSURANCE INSIGHTS

If you live in a state that is considered "no fault" you are required to purchase either Personal Injury Protection (PIP) or Medical Payments (MedPay)

Personal Injury Protection (PIP) and Medical Payments (MedPay) insurance pay for immediate and necessary medical services following a car accident that results in injury. Insurers take care of their clients’ expenses, regardless of who is at fault, which helps accident victims pay for medical care promptly.

KEY TAKEAWAYS
  • Medical Payments (MedPay) and Personal Injury Protection (PIP) insurance helps pay for medical services after a car accident.
  • PIP and MedPay coverage are optional in most states.
  • MedPay is inexpensive, while it's harder to gauge the cost of PIP since it's baked into an auto policy's coverage. 

PIP vs. MedPay insurance

Both PIP and MedPay cover injuries to their driver policyholders and their passengers in an accident. However, they function differently.

What is Personal injury protection (PIP)?

PIP insurance pays for an insured’s medical and other injury-related costs, regardless of which driver was at fault.

MedPay

PIP coverage varies between states, but can include:

  • Medical expenses: Ambulance/paramedic, doctors and surgeons, hospitalization, nursing care, medication, drugs and medical supplies, psychiatric care, imaging, laboratory tests, rehabilitation, prostheses, dental care, optical treatment and chiropractic services. Not all states require 100% reimbursement; there may be a copayment required.
  • Funeral expenses: Ceremonies, burial expenses and cremation.
  • Lost wages: Some or all of wages lost because of injury. PIP may also cover the cost of temporary employees for self-employed insureds.
  • Child care and household expenses: PIP can pay for service providers when injuries make it impossible to care for children or maintain the home.
  • Survivors’ Loss: PIP can cover the breadwinner’s income for surviving dependents.

When you’re injured in an accident, you file a claim with your own insurer for PIP benefits – there’s no need to deal with the other driver’s insurer. Notice that PIP does not compensate you for pain and suffering.

In no-fault states, you can sue the other driver for these and other losses, but only when injuries are deemed severe or when medical expenses meet pre-defined thresholds – you can’t claim pain and suffering for minor injuries.

What is Medical payments coverage (MedPay)?

Medical Payments (MedPay) is similar to PIP, but much less comprehensive.

It’s optional in all but two states. MedPay covers medical expenses for the insured, other drivers listed on the insurance policy, members of the insured’s household and passengers.

Depending on your state law, coverage and insurance company, MedPay can supplement your health insurance coverage or function as primary medical coverage after an accident. If it’s considered supplemental, your health insurance would be used first to cover your injuries, then the MedPay would kick in for deductibles and co-pays. If it’s primary, MedPay is tapped first to cover the immediate medical costs, and then your health coverage takes care of the excess or ongoing expenses.

MedPay is designed to complement standard liability coverage. Some drivers use it to “beef up” their PIP policies. While its coverage is limited, MedPay has a couple of advantages that make it worth considering:

  • It pays medical costs quickly, regardless of fault. In a tort state, you’re responsible for your medical costs if you’re at fault. If the other driver is at fault, you may have to fight to get your losses covered. In court, this can take months or even years.
  • MedPay has no deductible or co-pay, unlike most health insurance plans.
  • You’re covered if injured as someone else’s passenger, if you’re taking public transportation or if you’re injured by another driver while walking or cycling.

How do PIP and MedPay work?

PIP and MedPay insurance benefits depend on whether or not the state in which the insured person lives is a no-fault or traditional tort liability state.

Most states are tort liability states, and in those, the at-fault driver’s insurer pays the accident victim for property damage and personal injuries. In no-fault states (and three tort liability states), personal injuries are covered by PIP policies.See map below.

PIP policies do not pay for damage to the cars involved or to other property. In nearly all no-fault states, at-fault drivers (or their insurers) are responsible for damage to other cars or property.

They must purchase liability coverage in addition to PIP, and they need to buy collision coverage if they want damage to their own car covered.

Where are MedPay and/or PIP required?

PIP is required in all no-fault states, and minimum coverage requirements vary. In addition, PIP is mandatory in Oregon, Delaware and Maryland. When required in a tort state, PIP does not limit the insured’s ability to sue an at-fault driver.

MedPay is required in two tort states, Maine and New Hampshire.

In all other states, both PIP and MedPay are optional.

PIP and MedPay states

Cost of PIP and MedPay insurance

Med Pay is relatively inexpensive, adding about $5 per month to the cost of many policies. This is because its use is limited and its maximum payout is low, in the range of $5,000 to $10,000 per person.

MedPay cost

The cost of PIP coverage varies a great deal between states. This makes sense when you consider the wide range of mandatory coverage that must be purchased. The chart below shows required coverage for the 12 no-fault states.

Limits range from a low of $2,500 per accident to unlimited medical expenses and permanent injury benefits of $250,000. Because PIP is just one part of the mandatory coverage in no-fault states, its cost isn’t easy to break out. However, it's possible to compare the total average cost of auto insurance in no-fault states and tort states.

  • Five PIP-mandatory states, Delaware, Florida, Maryland, New Jersey and Michigan, have average costs that are significantly higher than the national average. Delaware’s are 21% above average, Florida’s premiums are 25% higher, Maryland’s are 21% over, New Jersey’s are 44% higher and Michigan’s are 107% above average, at $2,378 per year.
  • Hawaii, Kansas, New York, North Dakota and Utah enjoy much lower than average premiums: Hawaiians pay 21% less, Kansans 14%, New Yorkers 21%, North Dakotans 9% and Utah drivers pay 20% less.
  • Drivers in Kentucky, Oregon, Massachusetts, Minnesota, Pennsylvania all pay the national average or very close to it.

According to the Insurance Information Institute, fraud and too-generous payouts have become an issue in several states, including New York, Florida and Michigan. They're probably a factor in the high costs paid by drivers in those states. However, these figures are the total cost of all coverage in states where PIP is required. Optional PIP, added to a standard insurance policy, can be highly affordable, ranging from $20 to $50 a month.

Minimum PIP coverage levels required by state

StateCoverage
Delaware$15k per person, $30k per accident, $5k funeral
Florida$10k per person
Hawaii$10k per person
Kansas$4.5k per person medical, $4.5k rehab, $2k funeral, $900 per month income, $25 per day for household
Kentucky$10k per person
Maryland$2.5k per accident
Massachusetts$8k per person
MichiganCoverage options include, $50,000, $250,000, $500,000 or lifetime PIP options or opt out of PIP coverage. To opt out, you must have Medicare Parts A & B and any other household members have an auto polcy with PIP or health insurance that covers auto accidents. To get $50,000 of PIP, you must be enrolled in Medicaid and household members must have auto policy with PIP, be on Medicaid or another health insurer.
Minnesota$20k medical, $20k loss of income
New Jersey$15k per person, $250k severe / permanent injury, $2k funeral, 80% lost income up to $2k per month, $25 / day household
New York$50k per person, $2k funeral, 80% lost income to $2k/month, $25 per day household
North Dakota$30k per person
Oregon$15k per person
Pennsylvania$5k per accident
Utah$3k per person, $1.5k funeral, $3k death benefit, $250 / week lost income, $20 / day household

Doubling up: Does optional PIP and MedPay make sense?

If you live in a no-fault state, you’re already paying for PIP. Adding MedPay may make little sense because the scope of its coverage is narrower than that of PIP.

However, MedPay is cheap, and there are some benefits that you might want. For example, MedPay’s lack of deductible can be a plus, especially if your PIP or health insurance policies come with high deductibles.

Kevin Lynch, an associate professor of insurance at The American College in Bryn Mawr, Pennsylvania, says that if you already have health insurance, MedPay and PIP may be redundant. Even so, it could still be a worthwhile purchase, he says, because "Your having health insurance is not going to benefit other people in your car if you have an accident," especially if they don't have health insurance. Medical payments coverage can help cover their bills.

In addition, health insurance may not cover all your expenses related to a car accident. For example, deductibles under health insurance policies sold through the Affordable Care Act marketplaces often reach $5,000 or more. Medical payments and PIP would help pay that.

PIP also offers benefits beyond simple health coverage. The lost income reimbursement can be a valuable coverage addition. While short-term and long-term disability policies could compensate you for lost income, Lynch says, they are taxable benefits don’t usually replace 100 percent of your income.

"The PIP coverage is a nontaxable payment and would help you in making up for the difference in lost wages," he says.

Lost income, even for just a few weeks, can severely impact people's finances, says Brooks Gregory, a financial adviser with Peachtree Planning in Atlanta. For that reason, he generally recommends buying the extra insurance. If you can purchase PIP and medical coverage auto insurance inexpensively, it can help protect you in a worst-case scenario, says Gregory.

"It's not the type of coverage that someone needs to get overly excessive with, but for small health claims related to a car accident, it is a great benefit to have.”

How to file a MedPay or PIP claim

Let’s take a look at how to file a MedPay or PIP claim.

To file a MedPay claim, contact your car insurance company about the accident. You also want to provide the auto insurance information to your health care provider, including your doctor and the hospital.

The health care providers may bill the car insurance company directly. If they bill you instead, you can request reimbursement from the auto insurer.

The auto insurance company may also work with your health insurance company to cover the bills.

Make sure you keep track of all of your medical expenses, so you can get full reimbursement from the car insurance company.

Meanwhile, a PIP claim has a similar claims process. Notify your auto insurance company as soon after the accident as you can. The insurer will pay the medical expenses and lost earnings up to your policy’s limit.

States with two-part medical bill limits are set up so injured drivers with health insurance have PIP pick up a smaller amount of the medical bills and the health insurance pays the remainder.

If the injuries cost more than your no-fault limit, you’re responsible for paying the amount. People with health insurance will get help paying medical bills. If not, you’ll have to work with your providers to pay the amount beyond your insurance policy's limits.

Insurance coverage calculator helps you decide

Buying optional PIP or MedPay insurance is a personal decision. Use the Insurance.com car insurance coverage calculator to determine what works best for you. Answer six to 10 questions and receive a MedPay coverage recommendation.

The calculator automatically considers your state’s requirements, and you’ll also get suggested coverage levels and recommendations on types of auto insurance, based on your answers.

If you're interested in quotes for all kinds of insurance, including car and health (along with life, home and more), visit Insurance.com where you can get multiple quotes from leading car insurance companies.

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