Medicare and car accident medical bills: who pays first

When you are on Medicare and hurt in a crash, auto coverage that is built to pay medical bills, such as medical payments coverage or personal injury protection, is generally supposed to pay before Medicare does. Medicare is the "secondary payer." When the bills belong to a fault claim against another driver, Medicare may pay them first as a conditional payment so you are not left with unpaid hospital bills, and then it must be repaid out of the settlement.

This is federal law, not an insurer policy, and it applies in every state. What differs by state is which auto coverages exist and in what order they pay. The sections below cover the rule, the three kinds of auto coverage involved, how Medicare gets repaid, what a Medicare Advantage plan does, and a worked example with invented numbers.

The rule: Medicare is the secondary payer

The Medicare Secondary Payer statute says that Medicare payment may not be made for an item or service to the extent that payment has been made, or can reasonably be expected to be made, under an automobile or liability insurance policy or plan (including a self-insured plan) or under no-fault insurance (42 U.S.C. 1395y(b)(2)). Those coverages are called "primary plans."

Two features of the rule matter in practice.

First, the other coverage does not get to opt out. The federal regulations say that Medicare benefits are secondary to benefits payable by a primary payer even if state law or the primary payer states that its benefits are secondary to Medicare (42 CFR 411.32). A policy clause that tries to put itself behind Medicare does not change the order.

Second, the statute gives Medicare a way to avoid leaving patients stranded. Medicare may make a conditional payment when a primary plan has not made, or cannot reasonably be expected to make, payment promptly, and the payment is conditioned on reimbursement. This is the part that creates the repayment obligation described below.

Three auto coverages, three different positions

The regulation that defines the terms (42 CFR 411.50) is useful because it uses auto insurance vocabulary. It treats liability insurance and no-fault insurance separately.

The practical consequence is that your own med-pay or PIP is the first place the hospital should send the bill, if you carry it. That is true even when you are on Medicare and even when the other driver caused the crash.

Whether the policy will pay the part Medicare leaves unpaid, such as deductibles and coinsurance, depends on the policy's terms and the state. Ask the insurer in writing how its medical coverage coordinates with Medicare. The MedPay or health insurance: who pays first after a crash article covers the same question for people on private health plans.

What "conditional payment" means

In a fault claim, the at-fault driver's insurer does not pay your medical bills as they arise. It pays, if at all, at the end, in a settlement or judgment, which may be months or years later. A hospital cannot wait that long, so Medicare pays the covered bills as a conditional payment.

The regulation defines "promptly" for liability insurance as payment within 120 days after the earlier of the date a claim is filed with the insurer (or a lien is filed against a potential settlement) and the date the service was furnished or, for inpatient hospital services, the date of discharge (42 CFR 411.50). A liability payment that has not been made promptly, or cannot be expected promptly, is the trigger for Medicare to step in.

The word "conditional" is the whole point. A separate regulation says Medicare may initiate recovery as soon as it learns that payment has been made or could be made under any liability or no-fault insurance (42 CFR 411.24). When you later receive money from the liability claim, Medicare expects to be paid back out of it.

How Medicare gets repaid from a settlement

The rules in the federal regulations are specific, and they favor knowing the numbers early.

• Who must repay. If the beneficiary or another party receives a primary payment, they must reimburse Medicare within 60 days (42 CFR 411.24(h)). The statute adds that if reimbursement is not made before the 60-day period that begins on the date notice or related information is received, the government may charge interest on the amount (42 U.S.C. 1395y(b)(2)(B)(ii)).
• Who can be pursued. Medicare has a direct right of action against the primary payer, and also a right to recover from any entity that has received a primary payment, including the beneficiary, a provider, an attorney, or a private insurer (42 CFR 411.24(e) and (g)). If Medicare is not reimbursed, the liability insurer can be required to reimburse it even though it already paid the beneficiary (411.24(i)).
• A reduction for the cost of getting the settlement. Medicare reduces its recovery to take account of the cost of procuring the settlement when those costs were incurred because the claim was disputed and are borne by the party Medicare seeks to recover from (42 CFR 411.37). When Medicare's payments are less than the settlement, the formula is: find the ratio of procurement costs (attorney fees and case expenses) to the total settlement, apply that ratio to the Medicare payment, and subtract the result from the Medicare payment.

None of that requires you to calculate a number yourself. Your attorney, if you have one, and Medicare's recovery contractor handle the specific amount. But it explains why a settlement offer is not the same as money in your pocket.

What to do if you are a Medicare enrollee in a crash

CMS tells people to contact the Benefits Coordination & Recovery Center (BCRC) first when they have a pending liability, no-fault or workers' compensation case, and says to do so if you take legal action over a medical claim or are in an automobile accident (CMS, Liability, No-Fault and Workers' Compensation Reporting, last modified September 2024). CMS lists what to have ready:

1. Your details: full name, Medicare number, gender and date of birth, address and phone number.
2. The case: the type of claim, the name and address of the insurer, a description of the injury, and the date of the accident.
3. Your attorney's details, if you have one: name, address and phone number.

After you report, the BCRC applies the information to Medicare's record and starts the recovery process if you will have to reimburse Medicare.

Insurers have their own duty. The statute requires an applicable plan, which includes a liability insurer, no-fault insurer or self-insurer, to determine whether a claimant is entitled to Medicare benefits and, if so, to submit information about the claimant to the Secretary of Health and Human Services (42 U.S.C. 1395y(b)(8)). That is why an adjuster may ask for your Medicare number even when you did not volunteer that you are enrolled. Provide it; withholding it does not make the Medicare interest go away.

A scripted list of questions for the adjuster or your own insurer:

• "Do I have medical payments coverage or personal injury protection on this policy, and what is the limit?"
• "Will it pay deductibles and coinsurance that Medicare leaves, or only the bills Medicare does not cover?"
• "Who should the hospital bill first, and how do I give the hospital this policy information?"
• "Has Medicare been notified of this claim, and can you tell me when the insurer reported it?"
• "If a settlement is offered, will the paperwork identify Medicare's interest and who pays it?"

How a no-fault state changes the order

In a no-fault state, the injured person's own personal injury protection is the first payer, regardless of who caused the crash, and the right to sue the other driver is limited. That fits Medicare's rule neatly: the no-fault policy is primary, and Medicare covers what it covers after that.

Florida shows how this works in numbers. The state's PIP statute requires an insurer to provide PIP to a limit of $10,000 in medical and disability benefits, with medical benefits of 80 percent of all reasonable expenses for medically necessary medical services if the person receives initial services and care within 14 days after the crash, and reimbursement limited to $2,500 where a provider determines there was no emergency medical condition (Fla. Stat. 627.736, 2025 text). The statute also lets insurers limit reimbursement to 80 percent of a schedule that is itself tied to Medicare: 200 percent of the Medicare Part A prospective payment for hospital inpatient services other than emergency care, for example, and 200 percent of the Part B fee schedule for many other services. So a Floridian on Medicare has $10,000 of PIP that pays first, at 80 percent, for treatment received promptly, and then Medicare as the secondary payer for what the PIP did not cover, in line with the secondary payment rules.

Michigan and New Jersey have their own no-fault systems, with different benefit levels and different rules about whether health coverage or PIP pays first. See Florida PIP: the 14-day deadline and the emergency condition cap, New Jersey PIP: the health-insurance-primary choice and Michigan PIP: the fee schedule, attendant care limits and the MCCA, and check your state with the state car insurance requirements lookup.

What changes with a Medicare Advantage plan

If your Medicare coverage is a Medicare Advantage (Part C) plan, the secondary payer rules still apply, and the plan takes on the recovery role. The regulation says CMS does not pay for services to the extent that Medicare is not the primary payer, requires each plan to identify primary payers and the amounts they owe, and lets the plan bill the no-fault or liability insurer, or the enrollee to the extent the enrollee has been paid (42 CFR 422.108). It also says the Medicare Advantage organization exercises the same rights to recover from a primary plan that the government does, and that these rules override state laws that would otherwise apply to the plan.

So after a crash, the plan may contact you or your attorney about repayment instead of, or in addition to, the BCRC. Report the crash to your plan as well as to Original Medicare's recovery contractor if your plan asks. The mechanism is the same; the recipient of the repayment is different.

A worked example with invented numbers

Everything below is hypothetical. It shows the structure, not what any insurer or Medicare would pay.

Say Dolores, 71, is injured when another driver runs a red light. She lives in a state with no PIP requirement but carries $5,000 of medical payments coverage on her own policy. She has Original Medicare.

1. The hospital bill. The hospital bills $52,000 for the emergency visit and a three-night stay. Medicare's approved amount for the covered services is far lower than the billed charge, because providers who accept Medicare accept its approved amounts. Say Medicare's payments over the whole course of treatment, made while the liability claim is pending, come to $20,000.
2. Med-pay goes first. The hospital, told that Dolores has med-pay, bills that coverage first. Say it pays $5,000, its limit, toward the covered bills. Medicare then pays, as the secondary payer, for the covered remainder; the $20,000 above is the total Medicare ends up paying.
3. The liability claim. Months later, the other driver's insurer settles Dolores's injury claim for $60,000. Her attorney's fee and case costs total $20,000.
4. Medicare's repayment. Under the 411.37(c) method, the ratio of procurement costs to the settlement is $20,000 / $60,000, or one third. Applied to Medicare's $20,000, Medicare's share of the cost of getting the settlement is about $6,667. Medicare's recovery is $20,000 minus $6,667, or about $13,333.
5. What is left. From the $60,000: $20,000 for fees and costs, about $13,333 to Medicare, leaving about $26,667 before any other expense, such as a health plan lien or unpaid cost-sharing.

The med-pay payment is separate from the settlement. Whether the med-pay carrier can seek reimbursement from the liability settlement depends on the policy and state law. The point of the example is the order, not the dollars: med-pay first, Medicare second, then repayment out of the liability recovery with a reduction for procurement costs.

Mistakes people make

• Treating Medicare as a reason to skip med-pay or PIP. Medicare and the auto medical coverage are designed to be used in a set order. Declining PIP where it is optional, or dropping med-pay to save a small premium, removes the primary payer.
• Ignoring the conditional payment letter. Medicare's letters about its payments are not advisory. Missing the repayment window can lead to interest and to recovery from several parties.
• Settling without asking what Medicare paid. An attorney will request the conditional payment amount. If you are unrepresented, call the BCRC before agreeing to a number.
• Assuming the settlement terms bind Medicare. The regulation lets CMS recover from any party that received a primary payment, so a private agreement about who pays does not remove the government's right.
• Not telling the insurer you have Medicare. The insurer must report; the earlier the information is accurate, the fewer corrections later.

For fuller treatment of liens, releases and who signs what at settlement, see Settlement paperwork: releases, liens and Medicare reimbursement, and for how billed and paid amounts differ, Billed vs paid medical bills: collateral source rule and LOPs.

Common questions

If the other driver caused the crash, why does Medicare pay anything?

Because the other driver's insurer usually has not paid by the time you are treated. Medicare is allowed to make conditional payments in that situation and then recover from the settlement. If you recover nothing from the liability claim, there is no payment for Medicare to take from, but the details depend on your case, and an attorney or the BCRC can explain them.

Does med-pay reduce what I owe Medicare?

It can change what Medicare paid in the first place. Because med-pay is primary, a bill paid by med-pay is not a Medicare conditional payment. Only what Medicare paid is subject to recovery.

Do I have to use my Medicare card at the hospital?

Hospitals ask for all insurance. Give them the auto policy information (claim number, adjuster, med-pay or PIP) along with your Medicare card, so the bill goes to the right payer first. Tell them it was a car accident.

Are Medicare Advantage plans treated differently?

The payer order is the same. The plan, not the BCRC, often handles recovery. See the section above, and ask your plan which department handles accident claims.

Who can tell me what applies in my state and my case?

A licensed attorney who handles Medicare Secondary Payer issues, your state insurance department for the auto coverage side, and the BCRC for the Medicare side. This article is general information.

Key takeaways

• Medicare is the secondary payer when auto medical coverage (PIP, med-pay) or liability coverage applies; federal regulation says a primary payer cannot make itself secondary by policy language or state law.
• In fault claims, Medicare may pay conditionally when the liability insurer has not paid promptly, then must be repaid from the settlement, generally within 60 days of receipt, with a reduction for the cost of procuring the settlement.
• Report the crash to the Benefits Coordination & Recovery Center, and give accurate Medicare information to every insurer, because insurers must report Medicare beneficiaries.
• Medicare Advantage plans follow the same payer order and can recover in the same way.
• Keep med-pay or PIP where it is optional; it is the first payer, and it is the coverage most likely to help with what Medicare does not pay.