I have Medicare and Medicaid, so do I really need to purchase Medical Payments on my car insurance? I live on a fixed income. My car isn’t worth much but the bank requires me to have auto insurance. I’ve heard that Medicare won’t pay for accident injuries but Medicaid will. So do I need Medical Payments (MedPay) coverage?
Medicare and Medicaid both pay medical bills after an accident all the time. But, they look to see if they can be paid back. For example, if you pursue a liability claim for injuries in a motor vehicle accident, federal and state laws grant Medicare and Medicaid a lien on any ultimate settlement.
Medicare and Medicaid Liens
That means that whether or not you’re aware of it, the law grants Medicaid and Medicare what’s called a third party right of recovery. An entire federal bureaucracy chases down Medicare liens. The Benefit Coordination and Recovery Center, or BCRC, took over the functions of what was called the Medicare Secondary Payor Recovery Center, MSPRC, until February, 2014.
The Medicare recovery system used to have regional offices, but now the entire USA is handled by one office in Oklahoma.
State officials chase down Medicaid payments related to accidents. They’re somewhat easier to deal with. But, they still have the job of recouping the payouts.
Failure to pay back such liens if there is a liability settlement for pain and suffering can threaten future benefits under these programs.
Medical Payments Auto Coverage
This is where medical payments coverage in your auto insurance policy comes in. The medical payments provision of your own auto policy provides the first line of coverage for your own medical bills caused by a motor vehicle accident. The medical payments provision, “med-pay” for short, also covers medical bills of passengers.
The cost on the average automobile insurance policy is relatively low. Coverage in increments of $5,000 of $10,000 does not cost a great deal more than the lowest coverage of $1,000. The advantage is the money doesn’t have to be paid back.
In “no-fault” states such as Massachusetts a coverage known as PIP or Personal Injury Protection provides certain basic medical bill coverage, but is often snarled in insurance company red tape. Here’s more on PIP problems. Med pay is the best option for payment of medical expenses arising from a car accident.
Insurance For Car or People?
Finally, is the value of your car the issue? We’re talking about you and family members and making sure their medical bills are paid if there’s an accident.
Never rest on the assumption you think you have “full coverage”. There’s really no such thing. Each individual provision has meaning, and comes with limits you can select.
Here’s more info on liens that attach to personal injury claims, holding up settlement.
© 2014 Andrew D. Myers.