PIP vs. MedPay vs. Health Insurance After a Car Accident

After a crash in one of the 12 no-fault states, your own PIP coverage pays your medical bills first. In the other 38 states and D.C., your health insurance usually pays as bills arrive, MedPay can cover the gaps, and the at-fault driver's insurer pays only when your claim settles.

Whoever pays first may later ask to be repaid from your settlement. That order of payment decides how much of a settlement you keep.

What does each coverage pay?

PIP (personal injury protection) is part of your own auto policy and pays no matter who caused the crash. The National Association of Insurance Commissioners notes PIP "can also cover lost wages and funeral costs up to your policy's limit," not just medical bills.

MedPay (medical payments coverage) is also first-party auto coverage, but narrower. It pays medical bills for you and your passengers up to a set limit, such as $5,000 per person, and generally does not replace lost income.

Health insurance pays covered treatment under your plan's deductible, copays and network rules. It never pays lost wages or pain and suffering, and most plans expect to be repaid if you later recover from the driver who hit you.

Which states are no-fault?

According to the Insurance Information Institute, 12 states have no-fault laws: Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania and Utah. Puerto Rico has one too.

Kentucky, New Jersey and Pennsylvania are "choice" states. Drivers there can pick traditional tort coverage instead of no-fault, which changes both premiums and the right to sue.

No-fault states limit lawsuits against the other driver until you pass a threshold. Florida, Michigan, New Jersey, New York and Pennsylvania use a verbal threshold based on how serious the injury is. The other 7 use a dollar threshold based on medical bills.

Which pays first in a no-fault state?

PIP pays first. Florida's statute, §627.736, says PIP benefits are "primary," except that workers' compensation benefits are credited against them.

Medicare also waits its turn. The Centers for Medicare and Medicaid Services states that no-fault insurance "pays Primary" for accident-related care and Medicare pays secondary.

New Jersey is the main exception. Drivers there can choose to make their health insurer primary, with PIP paying what the health plan does not. Medicare and Medicaid cannot be made primary, and letting the health plan lapse adds a $750 PIP deductible.

Once PIP runs out, your health insurance picks up covered treatment. Anything left, including pain and suffering, comes from the at-fault driver only if your injury meets your state's threshold. See our Florida, New York and Michigan pages for local lawyers.

How much PIP do no-fault states require?

Minimums differ sharply. These examples show the range.

• Florida: $10,000 in medical and disability benefits, plus a $5,000 death benefit. PIP pays 80% of reasonable medical expenses and 60% of lost income. If a provider finds no emergency medical condition, medical benefits are capped at $2,500, and you must start treatment within 14 days of the crash.
• New York: $50,000 per person in "basic economic loss" under Insurance Law §5102. Lost earnings pay up to $2,000 a month for 3 years, reduced by 20%. Other reasonable expenses pay up to $25 a day for 1 year.
• Michigan: Michigan's 2019 reform lets drivers choose a PIP medical level for policies issued or renewed after July 1, 2020. The state's options are unlimited, $500,000, $250,000, $250,000 with exclusions, $50,000 for Medicaid enrollees, or opting out if you have Medicare Parts A and B. If you choose nothing, you get unlimited.
• Pennsylvania: a $5,000 medical benefit minimum under 75 Pa.C.S. §1711.

Which pays first in an at-fault state?

In at-fault states such as California and Texas, the at-fault driver's liability insurer owes your damages. It usually pays once, at settlement, which can be many months after the crash.

Until then, your health insurance pays covered treatment as it happens. MedPay, if you bought it, can cover what health insurance leaves behind. With a $2,500 deductible and $5,000 in MedPay, for example, MedPay can absorb the deductible and some copays.

If you are on Medicare, the liability insurer is primary in theory. In practice, Medicare may make "conditional payments" when the liability insurer will not pay promptly. Under 42 U.S.C. §1395y(b)(2), Medicare must be repaid within 60 days of notice or interest can be charged.

Who replaces your lost paycheck?

Only PIP replaces wages quickly. Florida PIP pays 60% of lost income, and New York pays 80% of lost earnings up to $2,000 a month. Neither MedPay nor health insurance pays anything toward missed work.

In an at-fault state, lost wages wait for the liability settlement. If you have short-term disability through work, file that claim now. It may also carry a repayment clause, so keep the paperwork.

Your pay stubs and a letter from your employer listing missed days support both a PIP wage claim and the later liability claim. Our guide to types of damages shows how lost income fits into the full claim.

Will anyone want their money back?

Usually, yes. Health plans typically include subrogation or reimbursement clauses that give them a claim on your settlement for what they paid. Our guide to medical liens on a settlement covers how those claims are calculated and reduced.

Self-funded employer plans are harder to push back on. In FMC Corp. v. Holliday (1990), the Supreme Court held that ERISA shields self-funded plans from state laws that block reimbursement, including Pennsylvania's anti-subrogation rule.

Florida PIP works differently. Section 627.736 says "no insurer shall have a lien on any recovery in tort" for PIP benefits, so your PIP payments are not clawed back from your settlement.

MedPay rules depend on your policy and state. Read the MedPay section of your policy for a reimbursement clause before you sign any settlement release.

What should you do this week?

• Call your own auto insurer, open a claim and ask for your PIP and MedPay limits in writing.
• In Florida, get medical care within 14 days or you can lose PIP medical benefits.
• In a no-fault state, give your providers the PIP claim number. In an at-fault state, give them your health insurance card.
• Save every explanation of benefits and PIP payment log. They become the lien amounts later.
• If you talk to a lawyer, ask how they handle liens and whether their fee applies before or after lien reductions. Our guide to how contingency fees work explains the math.