Med Pay Insurance Basics

October 06, 2014

The basics  of Medical Payments Coverage (Med Pay)

Medical Payments Coverage, more commonly known as Med Pay, is a type of health insurance coverage that can safeguard the finances of injured drivers, as well as any passengers in the vehicle of the insured driver.

In essence, Med Pay can cover medical bills such as hospitalization, various screenings and even funeral costs.

How Med Pay Works

If you or anyone in your vehicle sustains injuries from an auto accident, Med Pay is immediately available to assist with medical bills. In other words, if you’re not at fault for an accident, you don’t need to wait for the other driver’s insurance company to handle your costs. (But if they do, you may have return Med Pay funds.)

So how is Med Pay different than health insurance? It’s important to sit down and understand how both of your policies work, as it’s likely you’ll have sizeable gaps that Med Pay can cover. While the cost for Med Pay amounts to a small percentage of what your annual auto insurance policy costs, this coverage is capped – usually around $25,000. Because Med Pay is “no fault” coverage, it doesn’t matter who is found liable for an accident; you’ll receive compensation for applicable medical bills either way.

Here are some of the costs Med Pay may cover:

  • Ambulance costs
  • Hospitalization and surgery
  • Various tests and screenings, such as X-Rays
  • Funeral services
  • Some specialist costs, such as chiropractic and dental expenses

While bearing many similarities to Personal Injury Protection, or PIP, Med Pay features many distinctions that are important to note. For example, while PIP can cover up to 80 percent of lost wages, Med Pay does not offer a similar benefit. But while PIP carries a deductible, Med Pay does not.

One more note: if you drive a motorcycle, scooter or moped, you’ll want to choose Med Pay over PIP, as the latter doesn’t offer coverage for those vehicles.

Mandatory PIP states

There are 12 “no fault” states, where it’s mandatory for drivers to select either PIP or Med Pay. These states include:

  • Arkansas
  • Delaware
  • Florida
  • Hawaii
  • Kansas
  • Kentucky
  • Maryland
  • Massachusetts
  • Michigan
  • Minnesota
  • New Jersey
  • New York
  • North Dakota
  • Oregon
  • Pennsylvania
  • Utah
  • Washington
  • Texas

In Maryland, Washington and Texas, drivers can avoid mandatory coverage by signing a waiver.

Med Pay and PIP are considered redundant coverage, and while each offer distinct coverages features, drivers may choose one or the other. Med Pay may not offer as broad coverage as PIP, but its cost can be as low as $20 annually for each $10,000 of coverage, making it a sound investment and proactive measure to take against potentially expensive auto accident injuries.

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