February 22nd, 2019
FYI: Medical Payments Coverage on Auto Insurance Policies
If you own a car in WV, OH or PA, state law requires that you carry liability insurance in certain minimum coverage limits. Most folks are aware of that fact. What folks often forget, however, are the other coverages that frequently appear in their auto insurance policies. One such often-overlooked coverage is medical payments, or “med pay” coverage.
Simply put, med pay coverage serves to reimburse anyone who is riding in a covered automobile, and while riding in that automobile suffers an injury that requires medical treatment. You send your medical bills in to your insurance carrier, and assuming they are found to be reasonable and related to the accident that caused the injury, the insurance company will send you a check. It’s as simple as that. The maximum available med pay coverage can range from $500 up to $50,000 or more. What’s more, it isn’t expensive. It’s something I always recommend that my clients take advantage of. Even for folks who are covered by health insurance, med pay coverage can be very beneficial. Even where health insurance applies, how many times have you received a hefty bill from the hospital for co-pays or charges that aren’t covered by your policy? In almost every case, there is going to be a charge that you are responsible to pay. In that circumstance, and again assuming your treatment arose from an injury suffered while riding in a covered automobile, the med pay coverage can be a big, big help.
There is, however, a little “hitch” you need to be aware of, and it’s happening more and more frequently these days. Let’s assume you are injured in an accident that is your own fault. You are taken to the emergency room, and a battery of tests is run. MRI exams, CT scans, X-Rays, the whole nine yards. You are discharged to go home, with a hospital bill that totals $7,500. If that hospital turns that bill into your health insurance company, they are going to be paid something around half of the total charge. That’s the deal hospitals negotiate with health insurance companies, and they are not allowed to bill you for the difference between what they charge and what your health insurer will pay. Of course, the hospitals would prefer to come up with a way to collect 100% of their charges up front. That’s where your med pay coverage comes in. In more and more cases, hospitals are sending their bills to your med pay carrier FIRST, before they submit to the health insurer. Why? Because they have no deal to accept a reduced price from the med pay carrier. In the case above, if their bill for treating you is $,7500, and you have sufficient med pay coverage limits, the hospital will collect the entire $7,500. They bill your health insurance company, and they collect half. They bill your med pay carrier, they collect 100%. Not hard to figure which way they want to go.
So, here is the problem. Let’s say your hospital bill is $7,500, but your med pay coverage is only $2,000. The hospital first bills your auto carrier, collects the entire $2000 available under your med pay, and then submits the balance of $5,500 to your health insurer. You have an 80/20 health policy, so you owe a little over $1000 of the balance. Normally, you could use your med pay coverage to cover that. But in the case at hand, the hospital already exhausted your med pay benefits. If the hospital had billed your health insurer first (as you undoubtedly expected them to do), you would end up paying nothing yourself. But when they bill your med pay first, you are going to have to make that entire balance payment out of your own pocket, a difference of over $1,000.
How can you avoid such a result? Contact your auto carrier as soon as possible after the accident, and advise them, IN WRITING, that any benefits available under your med pay coverage are to be paid directly to you.
Should you have any questions about med pay or any other auto insurance coverages, feel free to contact any of the attorneys here at Bordas & Bordas.