MedPay or health insurance: who pays first after a crash

There is no single order that applies to every injured driver. medical payments coverage (MedPay) pays your crash-related medical bills up to its limit whoever caused the accident, usually with no deductible, and in practice many people use it to cover what their health plan leaves unpaid. Your health plan has its own rules about auto coverage. Medicare is different: it is legally the secondary payer when MedPay is available. The more important question for most people is not who pays first but who gets repaid later out of your settlement.

This article walks through how each payer thinks, what a reimbursement claim looks like, how the rules change for Medicare, Medicaid, self-funded employer plans and high-deductible plans, and what to say when you call. Rules differ by state and by policy, so the examples show how the mechanisms work rather than what your contract says.

The short answer by situation

The table is a map, not a ruling. Your policy wording, your health plan document and your state's law decide each row.

What MedPay does and does not do

MedPay is an optional coverage in most states and is required in a few. It is a first-party claim: you claim against your own insurer, not against the other driver. It pays reasonable medical and often funeral expenses for you and for passengers in your car who are hurt in a crash, regardless of fault. Because it is a no-fault payment, you do not have to prove who caused the crash, and most policies apply no deductible. Limits tend to be small compared with the cost of a hospital stay, and policies usually require the expense to be incurred within a set period after the accident, so read the declarations page and the coverage form for both numbers.

Federal Medicare rules use a definition that matches this coverage closely. Under 42 CFR 411.50, "no-fault insurance" is insurance that pays medical expenses for injuries sustained in the use or operation of an automobile regardless of who caused the accident, and the regulation notes it is sometimes called "medical payments coverage," "personal injury protection," or "medical expense coverage." You can read the text at Cornell's Legal Information Institute. That is why MedPay sits in the same legal category as personal injury protection even though it is usually much smaller. Our guide to Medical payments coverage (MedPay) explained covers the coverage in general, and Personal injury protection (PIP) explained covers PIP, which pays more broadly in no-fault states.

Two limits are worth knowing now:

• MedPay does not pay for the car. Vehicle damage is a collision or liability claim.
• MedPay does not pay twice. Many policies reduce MedPay by amounts the same policy has already paid for the same expense, such as under PIP, and say no one may collect duplicate payment for the same loss. Check your wording; payments by your health plan are a separate issue, covered next.

How your health plan thinks about a crash

A health plan pays claims under its contract. Two clauses matter after a crash.

Coordination of benefits. If you have more than one source of payment, the plan has rules about which one goes first. Many plans say they are secondary to any auto coverage, including MedPay, or exclude injuries covered by auto insurance. Others pay normally and sort it out later. Look for the phrases "motor vehicle accident," "other coverage" and "coordination of benefits" in the plan booklet.

Subrogation and reimbursement. If someone else caused your injuries and you recover money from them, the plan may claim back what it paid. Subrogation is the plan stepping into your shoes; reimbursement is the plan asserting a right to be repaid from your recovery. The details are in subrogation explained: how your insurer recovers your deductible, which describes the same idea for your auto insurer.

You will usually be asked to fill out an accident questionnaire, either by the plan or by the provider. Answer it truthfully. Hiding the crash risks denial of claims, and the plan will find the police report or the insurer's records later.

Does using MedPay leave a reimbursement claim?

It depends on two layers: your auto policy and your state's law.

The auto policy. Some MedPay coverage forms give the insurer a right to be repaid from your recovery against the at-fault driver, and some do not. Insurers in different states file different forms. Ask the MedPay adjuster: "If I settle with the other driver, will you claim reimbursement of what you paid me under MedPay?" and get the answer in writing.

State law. Some states prohibit or limit these claims. Pennsylvania's Motor Vehicle Financial Responsibility Law is a clear example. Section 1720 of Title 75 says that in actions arising from the use of a motor vehicle, there is no right of subrogation or reimbursement from a claimant's tort recovery for workers' compensation benefits (with a later partial repeal for that item), for required first-party benefits under sections 1711, 1712 and 1715, or for benefits paid or payable by a program, group contract or other arrangement under section 1719 on coordination of benefits. You can read the statute on the Pennsylvania General Assembly site. That is one state's choice. Many others allow reimbursement claims, and some apply a "made whole" doctrine that lets the injured person recover fully before the plan collects. Do not generalize the Pennsylvania rule to another state.

Federal law can override the state rule. The U.S. Supreme Court heard a Pennsylvania case about exactly this. In FMC Corp. v. Holliday, 498 U.S. 52 (decided November 27, 1990), an employer's self-funded health plan sought reimbursement from a worker's tort recovery after a car crash, and the worker relied on section 1720. The Court held that the federal employee benefits law, ERISA, preempted section 1720 as applied to a self-funded plan, because such plans are not treated as insurers for purposes of state insurance law. The Justia syllabus summarizes the holding. The practical result: two people hurt in the same Pennsylvania crash can face different outcomes. If one has an insured plan, section 1720 can bar a reimbursement claim; if the other is in a self-funded plan, the plan may be able to enforce its reimbursement clause.

A later Supreme Court decision adds to that. In US Airways, Inc. v. McCutchen (decided April 16, 2013), the plan paid $66,866 in medical expenses for a worker hurt in a car accident, and the Court held that in a suit to enforce an ERISA plan's reimbursement clause, the plan's terms govern; general unjust-enrichment ideas and doctrines such as the double-recovery or common-fund rules cannot override the contract. The Court's syllabus is on Cornell's site. Whether the plan pays its share of your legal fees or reduces its claim is therefore a question of what the plan says, not of general fairness.

Medicare and Medicaid are different

If you are on Medicare, the order is fixed by federal law, not by choice. Under 42 CFR 411.50(c), Medicare does not pay for services for which payment has been made, or can reasonably be expected to be made, under automobile no-fault insurance. So where you have MedPay, it is expected to pay first and Medicare is secondary.

Medicare can still pay in the meantime. The Centers for Medicare & Medicaid Services (CMS) explains on its non-group health plan recovery page that in some situations Medicare will initially pay so that you have timely access to care, and then seek repayment. A "conditional payment" is a payment Medicare makes for services another payer may be responsible for, and it must be repaid when you receive a settlement, judgment, award or other payment. Under 42 CFR 411.24(h), if you receive a primary payment, you must reimburse Medicare within 60 days (42 CFR 411.24). The CMS page also notes that recovery for Medicare Advantage (Part C) and drug plan (Part D) claims is the responsibility of the issuing plan, not CMS.

Note that the regulation defines liability insurance to include uninsured and underinsured motorist coverage, so a payment you receive under your own UM or UIM coverage can also trigger a Medicare repayment. Our article on medicare and car accident medical bills: who pays first covers the Medicare side in more depth, and Settlement paperwork: releases, liens and Medicare reimbursement covers what happens at settlement.

Medicaid programs generally treat other insurance as first and seek to recover what they spent from third parties, but the rules are set by each state. If you are on Medicaid, ask your caseworker or the plan before you accept a settlement.

High-deductible plans and MedPay as a gap-filler

A high-deductible health plan can leave you paying the first several thousand dollars of a crash bill. MedPay is often bought for exactly that reason, because it does not have a deductible and can pay the amounts your health plan assigns to you.

Here is a hypothetical, with invented numbers. You are hurt in a crash and the emergency room, imaging and a first follow-up visit have an allowed amount of $9,000 under your health plan. Your plan has a $2,500 deductible, you have met none of it, and it pays 80 percent after the deductible. Your MedPay limit is $5,000.

1. The plan applies the deductible: you owe $2,500.
2. On the remaining $6,500, the plan pays 80 percent, which is $5,200, and you owe 20 percent, $1,300.
3. Your share is $3,800. You submit that statement from the provider or the plan's explanation of benefits to your MedPay insurer.
4. MedPay pays the $3,800, leaving $1,200 of the MedPay limit for later bills.

Several caveats apply. Some MedPay forms pay only "reasonable expenses actually incurred," and your insurer may want itemized provider bills rather than an explanation of benefits; some will pay the provider directly and some will reimburse you. If your health plan treats itself as secondary to auto coverage, it may refuse to pay until MedPay is used up, which reverses the order shown here. And if you later recover from the at-fault driver, the plan, MedPay insurer or both may assert reimbursement rights, depending on the clauses and state law described above.

Federal tax rules add one more question for people who contribute to a health savings account. The statute on health savings accounts, 26 U.S.C. 223(c)(1)(B), says that eligibility is determined without regard to coverage for accidents, among other items. The statute is in Cornell's online U.S. Code. Whether a particular MedPay endorsement falls within "coverage for accidents" is a tax question, so ask a tax professional before assuming either way.

Passengers and other people in the car

MedPay on your policy typically covers occupants of your insured car, not only you, and covers them regardless of who caused the crash. That means a friend who rides with you can claim MedPay even if you were at fault, and their own health plan comes second or in sequence depending on its terms. Each person claims up to the per-person limit on your policy.

Passengers have other claims too. If you caused the crash, their injuries are also a claim against your bodily injury liability coverage, which is a third-party claim paid on the basis of fault. MedPay is the faster, smaller payment. If someone else caused the crash, the passenger can claim against that driver's liability insurer. The passenger's health plan may later seek reimbursement from any of those recoveries, so passengers should read the questionnaire from their plan just as you do.

If you are hit as a pedestrian or cyclist, many auto policies extend MedPay to the named insured and family members in that situation. Check the wording, since the answer is policy-specific.

What to do, in order

1. Get treated first. Do not delay care while deciding which payer goes first. Give the provider both your health card and your auto policy information.
2. Open a MedPay claim early. Report the crash and ask for the claim number, the limit and whether any time limit applies. The after-accident checklist and information form lists what to collect at the scene.
3. Read your health plan's auto language. Find the coordination of benefits and reimbursement sections, and ask HR whether the plan is insured or self-funded.
4. Keep every explanation of benefits and bill. MedPay adjusters and plan reimbursement units both ask for them.
5. Ask the MedPay adjuster the reimbursement question and write down the answer.
6. Tell both payers about each other. Hiding either one causes denials and delays later.
7. Before you settle with anyone, request payoff figures. Ask the health plan, the MedPay insurer and, for Medicare beneficiaries, the Benefits Coordination & Recovery Center for current amounts. Get them before signing a release, which ends your claim against the other driver.
8. Talk to a licensed attorney for a large recovery. Reimbursement claims, preemption and Medicare repayment are legal questions where the answer turns on your plan and your state. The state insurance department can help with disputes about your own insurer's handling.

Common questions

If I use MedPay, does my health plan have to pay less?

Not automatically. A health plan pays under its own contract. Some plans reduce or deny payment for expenses that auto coverage is responsible for, and some pay as if MedPay did not exist and rely on reimbursement later. Read the plan's coordination language rather than assuming.

Is MedPay a substitute for health insurance?

No. MedPay is an auto coverage with a small limit and a narrow purpose. It will not pay for illness, for ongoing care unrelated to the crash, or for care after the policy's time limit has run.

Will MedPay raise my premium if I use it?

Because you claim on your own policy and fault is not the question, many drivers assume it cannot. Whether a MedPay claim counts in rating depends on the insurer and the state, and an at-fault crash can affect your rate no matter which coverage pays the medical bills. Ask the insurer before you file. If your insurer later cuts off benefits after an exam, see PIP and MedPay benefit cutoffs after an independent medical exam.

Can the other driver's insurance pay my medical bills instead?

Only if the other driver was at fault and their liability coverage is available, and that is usually settled at the end of treatment, not as bills arrive. MedPay and health insurance exist so that you are not waiting for that settlement to get care.

What if I am on Medicare and have MedPay?

Tell Medicare and the providers about the MedPay coverage, expect MedPay to be treated as primary, and watch for a conditional payment letter and recovery demand. You are responsible for repaying Medicare within the regulation's 60-day period once you receive a primary payment.

Key takeaways

• MedPay is a first-party, no-fault coverage with a small limit and usually no deductible. Many people use it to cover the deductible and coinsurance their health plan leaves.
• Your health plan decides its own order through coordination-of-benefits and reimbursement clauses; self-funded employer plans follow the plan document even when state law would limit an insurer.
• Medicare treats MedPay as a primary payer, may pay conditionally, and must be repaid within 60 days of a primary payment. Medicaid recovery rules are set by each state.
• Whether MedPay payments leave a reimbursement claim depends on the policy form and state law. Pennsylvania restricts them for insured arrangements; other states do not.
• Ask each payer in writing about reimbursement and get payoff figures before you sign any release.