One in four middle-class Americans has unpaid medical debt. And although health insurance can help protect you against medical debt, you may not have enough coverage. This is where medical payments coverage, as part of your automobile insurance, can help.

Medical payments coverage can provide extra protection and peace of mind in case you or someone else is injured, as the result of a car accident. If you or your passenger is injured, it can cover the cost of your treatment, so you’re not left to deal with long-term medical debt, once you recover from your accident.

What Is Medical Payments Coverage?

Medical payments coverage is also known as MedPay. It’s optional coverage for an auto insurance policy that will cover medical expenses related to automobile accidents. This kind of coverage is also available on most homeowners’ and renters’ insurance policies, to cover injuries in your home or apartment, as well.  MedPay covers you, your passengers, and pedestrians who may be injured in the accident.

Medical payments coverage can also cover you if you’re a passenger in someone else’s vehicle or get injured by another vehicle as a public transport rider, bike rider, or pedestrian. It supplements your health insurance, covering any gaps in coverage so you’re not left with large unpaid bills.   

Medical Payments Coverage Limits

Medical payments coverage comes with limits on how much the insurance company will pay out. While you can choose coverage limits that run up to $10,000 or more, you’ll still be liable for out-of-pocket expenses if the medical bills total more than your coverage limits.

Deciding how much medical payments coverage you need is tricky, so we recommend you research how much your current health insurance covers and then look for gaps that can be covered with medical payments coverage.

Let’s say you’re injured in an accident, and your health insurance pays after a $5,000 deductible. If you have a MedPay plan with a coverage amount of $4,000, you can use that to help pay the health insurance deductible. Once you reach the deductible, your health insurance will then cover the remaining costs, subject to any coinsurance your policy has specified.

What Is Covered

Here is a list of some things that MedPay can help cover:

  • Surgery
  • Hospital visits
  • Ambulance rides
  • Dental work
  • Prosthetic limbs
  • Health insurance copays
  • Funeral costs in case of a fatal accident

What Isn’t Covered

Medical payments coverage will not cover the following:

  • Treatment of injuries unrelated to the accident
  • Treatment for other drivers injured in an accident who were not riding in your vehicle
  • Wage reimbursement
  • Child care or transportation costs
  • Costs exceeding the policy’s coverage limit

Things To Consider Before You Get Medical Payments Coverage

When deciding whether to get medical payments coverage, consider your health insurance's current coverage. MedPay can cover a portion of your copays and deductibles, and your health insurance policy can cover the rest.

Brad Reichert, founder and managing director of Reichert Asset Management LLC, gives his thoughts on this type of medical coverage based on his expertise as a financial advisor. “With the average cost of a hospital room running just under $3,000 per day, this comparatively inexpensive medical insurance coverage may be worth it, especially if you drive quite a bit in a large city or if you drive with passengers in your vehicle on a regular basis,” Reichert says.

“Having this supplemental coverage is especially valuable if you have a high-deductible health plan because the medical payments coverage can help cover the costs of your initial deductible, which can run into the several thousands of dollars each calendar year,” Reichert adds.

Another factor to consider is the way medical debt impacts your financial history. Medical debt affects your credit score for seven years unless you pay it off, or if the original amount of your medical bill was less than $500 in total. While healthcare providers don’t report to credit bureaus, debt collectors can report information related to medical payments that have been sent to collections, which is reflected in your credit history. If you’d like to avoid the stress of debt and minimize your risks, additional coverage may be worth considering.

Medical Payments Coverage Option for Homeowners Insurance

Just like with a car insurance policy, you can also opt for medical payments coverage on your homeowners insurance policy. The add-on will cover the medical expenses of non-family members and pets injured in your home, or on your property, regardless of whose fault it is.

Coverage limits range from $1,000 to $5,000 for each injured person. Homeowners’ and renters’ insurance also offers extra protection against judgments from lawsuits that may result from accidents on your property.

Medical Payments Insurance vs. Bodily Injury Liability Insurance vs. Personal Injury Protection

Bodily injury liability insurance covers the costs of treatment for injuries sustained to an individual in another car, in an accident where you’re at fault. Other than medical treatments, it also covers funeral expenses, legal fees, and compensation for lost wages and physical pain, which are not covered by medical payments insurance.

Personal injury protection (PIP) is mandatory in some states where no-fault insurance is required. PIP offers coverage for the same treatments and injuries that are covered by medical payments insurance. However, PIP usually has higher limits and offers coverage for lost wages and rehabilitation, which aren’t covered by medical payments insurance.

Final Thoughts To Consider About Medical Payments Coverage

If you already have personal injury protection insurance, you don’t need MedPay. However, additional car insurance coverage may be worth considering if you’re concerned about out-of-pocket expenses and don’t want to risk medical debt.

Getting the right coverage of car insurance without overpaying on premiums can be tricky, but not impossible. Work with an experienced insurance agent who can analyze your unique situation and suggest whether you need medical payments coverage and how much.