(This is the second in a series of articles exploring the common coverages on California auto insurance policies. Subscribe to our blog, or follow us on Twitter or Facebook to be notified when the subsequent articles are published.)
This article in our ongoing coverage series deals with Medical Payments coverage (also known as Med Pay). This is one of the least expensive and most under appreciated coverages available on the typical personal auto policy.
Imagine you’re driving down the road with your best friend, carefree, radio on, windows down, hair flowing in the breeze… (Am I getting carried away yet?) Suddenly, a rabbit bolts in front of you (those of you who live in the High Desert know all about suicidal jackrabbits); you swerve and then CRASH, right into a telephone pole. Unfortunately, the accident is determined to be your fault (rabbits cannot be held legally responsible in California; they have a very strong lobby in Sacramento… I mean what lawmaker can say no to a cute little bunny?). Since your insurance includes Liability coverage, the medical bills of your friend are covered, no problem. What about yours though? Where do you get your bills paid? Have no fear, Med Pay is here! Well, not here, but on your policy!
Medical Payments coverage pays even if the accident is your fault.
See, Med Pay pays for your medical expenses and those of anyone in your car, regardless of who causes the accident. This is important because this is the only coverage that pays for YOUR medical expenses should you cause the accident. As mentioned this coverage is quite inexpensive and is an important part of covering yourself properly. Med Pay is usually excess to your other coverage but some companies even offer primary Med Pay. I know, I know… This is starting to sound like insurance technical mumbo jumbo. Don’t worry, I’ll explain this later in the article.
If you are wondering if you have Med Pay, look at the Declarations Page of your policy where the coverages and premiums are listed. Medical Payments is sometimes near the top of the coverages, sometimes not. If there is a premium listed next to the Medical Payments line, you have the coverage. If you have the coverage, there will also be a limit listed there representing how much they will pay per person
You may be thinking “I have health insurance, so I don’t need that coverage.” You’re so astute, I like that about you. However, there are many circumstances where Med Pay is beneficial, even if you have other health insurance.
What if your passenger does not have health insurance?
The first and most obvious circumstance is if your passenger does not have health insurance and for some reason cannot collect under Liability coverage (for example, they are a household member or a driver on the policy).
MedPay pays for things your health insurance doesn’t.
Second, Med Pay will pay for those things that your other health insurance doesn’t cover, deductibles, co-pays, etc. being the most obvious examples. If you are on a PPO or a low cost HMO, this can be substantial.
MedPay helps you overcome HMO stinginess.
Third, if you have an HMO plan, they often will not pay for as much treatment as is common for some injuries. The very nature of an HMO is to ration health care to keep their costs down. With Med Pay, you can go outside your HMO for treatment and not have it come out of your pocket.
Now as promised, I am going to get a little technical. Your eyes may glaze over at some of this, but it’s very important come claim time. There are actually two kinds of Med Pay, Excess (the most common) and Primary. Primary is only offered by a few companies anymore, but it can be found. The two types are explained below:
Excess Med Pay: With Excess Med Pay, as mentioned above, it pays what your health insurance coverage doesn’t. This means that it pays those expenses in excess of what other insurance pays. One of the most useful features of Med Pay is that it can pay the bills that you incur receiving physical therapy while your case is still pending. Now here is the catch, with Excess Med Pay, you often have to prove that your health insurance has denied a bill before it will pay. As mentioned, it only pays what your regular health insurance doesn’t.
Primary Med Pay: With Primary Med Pay, it pays from dollar one regardless of whether you have other health insurance. This makes for a much easier claim if you have a medical provider not willing to wait to get paid.
If they pay it forward, you pay it back.
With almost all Medical Payments coverage, there is a reimbursement stipulation in the policy that if the other party causes the accident and they pay your medical bills too, you have to pay back your insurance company for anything they paid under Medical Payments coverage. I say almost all Medical Payments coverage because there is such a thing as…
Super MedPay: Non-Reimbursable, but a dying breed.
There is another MedPay that exists, known as Primary, Non-Reimbursable Medical Payments coverage. Unfortunately very few (if any) companies still offer that coverage in California. One of the last holdouts, Mercury Insurance, has stopped offering that coverage as of July 2013. (Their reasoning? It’s too complicated. Too complicated??? I am sorry but if the agents cannot be bothered to educate their clients, they are simply not doing their job.) Why am I so worked up about Non-Reimbursable MedPay? Read on.
To illustrate how much of a difference this can make, let’s have a hypothetical accident, shall we?
Sitting at a light, we get rear-ended by some guy not paying attention. Big impact, snaps our head and shoulders to and fro, injuring the muscles, classic whiplash scenario. We go to the doctor who does x-rays, diagnoses us as having soft tissue injuries and prescribes a course of physical therapy. When all is said and done, we end up with $5,000 in medical bills. If we settle with the other party’s insurance company for $12,000 for medical bills, lost earnings and the ever popular “pain and suffering”, with Reimbursable Med Pay, we collect $17,000 ($12,000 from the other party, $5,000 from our company) we clear $7,000 after the doctor is paid ($5,000) and our insurance company is reimbursed (another $5,000) for the Med Pay.
Same scenario, but we have Primary Non-Reimbursable Med Pay so we only have to pay the doctor, not our insurance company; we clear $12,000, a full 71% more!
Let’s take it a step further: If we hire a lawyer to handle the matter for us, after the doctor and lawyer are paid, Reimbursable Med Pay leaves us with $3,000, Primary Med Pay $6,390, a 113% difference. Now you start to see how much of a difference the reimbursement provision of Med Pay can make!
Let me leave you with this: Check your Med Pay, how much you carry and whether or not it is excess or primary and if they offer Primary Non-Reimbursable MedPay. Better yet, call your agent and ask him/her. If you don’t have an agent or if your agent does not know what you are talking about (you’d be surprised at how many don’t), may I suggest you take advantage of some of the many links on this page to contact us!
Oh and watch out for those bunnies!
We hope you enjoyed this article. If you have any questions about Medical Payments coverage or auto insurance in general, please feel free to contact us.