Medical bills are the number one reason Americans go bankrupt.1 While health insurance is a great defense to protect yourself from financial ruin, sometimes it’s not enough. That’s where medical payments coverage can help. If you get injured in a car accident, medical payments coverage can fill in some of those gaps with an extra layer of protection.
But what the heck is medical payments coverage? Is it just another type of health insurance? And do you really need it?
Well, we’re going to answer all your questions. about medical payments coverage.
Let’s jump in!
What Is Medical Payments Coverage?
Medical payments coverage, also called MedPay (or medical expense coverage), is a type of auto insurance that helps pay for medical expenses if you get in an accident. It doesn’t matter who caused the accident, so you’re covered no matter what (nice!). And people are still covered even if someone else is driving the insured vehicle or if you get hit walking or riding your bike.
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MedPay is optional and is not available in all 50 states. It works alongside your health insurance plan, and you can even use it to help pay your health insurance copays and deductible after a car accident.
What Does MedPay Cover?
Here are some of the (expensive) things medical payments coverage can help cover:
- Visits to the hospital
- Prosthetic limbs
- Rides in an ambulance or costs related to emergency services
- Rehabilitation and nursing services
- Dental work
Here’s how it works. If you got in an accident, you would first pay the medical expenses and then file a claim to be reimbursed. You can have MedPay added to your health insurance plan or you can have it set up to reimburse you directly, depending on your insurance company and where you live.
What’s the Difference Between Personal Injury Protection (PIP) and MedPay?
Medical payments coverage and personal injury protection are kind of like siblings in the auto insurance family. PIP is like the stronger big brother and MedPay is like the younger sister. This is because PIP provides better coverage with higher limits. PIP pays for things like lost wages, childcare or even funeral expenses from worst-case scenarios. The only downsides are that PIP premiums are higher than MedPay’s and PIP normally comes with a deductible.
Both types of auto insurance help fill in the gaps for you and anyone riding with you from unexpected medical costs that your health insurance company won’t cover. However, MedPay is optional while personal injury protection is required in certain states.
There’s also an order to which claims are filed first. If you get in a car accident and you have PIP, you have to file a claim with that policy first. After that’s used up, you can then file a claim with your MedPay policy. Then, after you hit your MedPay limit, you can start using your own health insurance plan.
Do I Need MedPay if I Have Health Insurance?
It depends. Some health insurance plans offer good protection from car accident injuries. Other plans leave gaps.
You should consider how much your deductible is and how much you usually have in savings to pay for out-of-pocket medical expenses. An ambulance ride and visit to the emergency room can add up quickly. If you have a high-deductible health insurance plan, you might be facing thousands of dollars from your own pocket. If this is the case, you might want to look into adding medical payments coverage to give you extra coverage.
Work with your insurance agent to see what your gaps might be.
What’s the Difference Between Liability Coverage and Medical Payments Coverage?
Trying to figure out how much car insurance you need can be hard, especially with all the terms. Like, what’s the difference between medical payments coverage and bodily injury liability? We know it’s complicated. But stick with us.
Medical payments auto insurance covers expenses related to medical bills. Liability is different. First, while MedPay isn’t required, liability insurance is in most states.
And second, liability won’t pay for you or your passengers’ medical costs after an accident. Instead, bodily injury liability covers the other person’s medical bills. The other side to this coin is that if you get injured in a wreck that is someone else’s fault, the other driver’s liability coverage can help pay for your bills.
Medical Payments Coverage Limits
Like many types of insurance, MedPay comes with certain limits on how much the insurer will pay out. These limits are in place so the insurance company doesn’t go out of business. Although you can choose your limit, the downside to lower limits is that, if your claim is over the limit, you’ll be stuck with out-of-pocket costs.
The best way to choose the right limit is to do some research on how much your health insurance will cover if you’re injured in an accident. Look for gaps. You should also think about what you might end up paying for accident-related medical expenses. Let’s say you had to go to the emergency room. Your health insurance only starts after you pay your $4,000 deductible. But a MedPay plan with a limit of $3,000 would allow you to use that to help pay your health insurance deductible.
Medical Payments Coverage for Homeowners Insurance
Medical payments coverage can also be added to your homeowners insurance policy. It covers medical expenses for non-family members who are injured on your property. And just like MedPay for auto insurance, it doesn’t matter whose fault it is. (Who tripped who? Who cares!)
Adding this to your homeowners insurance policy can give you an extra layer of security in the event of small accidents. Coverage limits normally range from $1,000 up to $5,000 and apply to each person injured, not total expenses per accident.
MedPay for home insurance can also prevent people from suing you. If they know they can submit their medical bills to your MedPay, they’re less likely to bother with a lawsuit. Besides incidents on your property, it can also pay for medical costs if your dog bites your neighbor (bad dog!).
Get the Right Coverage
Getting the right level of auto insurance, while also not overpaying for stuff you don’t need, is tricky. It can be hard to thread that insurance needle. But it is possible. Especially if you work with an insurance agent who can walk you through your unique situation.
That’s why we recommend working with one of our insurance agents who is part of our Endorsed Local Providers (ELP) program. They are RamseyTrusted and have the heart of a teacher. They can look at your auto insurance needs, as well as what type of medical payments or PIP coverage is available, and help you get set up so you have peace of mind.