How Best to Use Your Medical Payments Coverage

When handling a personal injury claim for an auto collision case, one of the questions I hear most frequently concerns the medical payments coverage, and how it relates to settling the personal injury claim. First off, medical payments coverage insurance (or “med pay”) is insurance coverage that pays you or others in your car for medical expenses, no matter who is at fault for the car wreck. It is usually included in your auto insurance policy—in fact, it’s mandatory in Wisconsin. It is generally limited to a dollar amount between $5,000 and $10,000, depending on the policy. In tragic cases, this money can also be used to cover funeral expenses.

How does this come into play in a personal injury case? My clients often want their medical bills to be covered exclusively by the at-fault party’s insurance provider. However, it is rare that the at-fault party’s insurance company will pay until the end of your case. This means, if you have several months of treatment, you will likely have bills or co-pays hanging in limbo until the case is resolved. Regardless of the size, it’s rare that a case is settled in less than six months. Unfortunately, many medical providers will not wait for payment, even when they know a personal injury attorney is working to get them paid. This is where medical payments coverage is most useful—to fill in the gaps that your health insurance will not cover. And obviously, if you do not have health insurance, it can be used to pay your bills in full.

Subrogation: What the heck is it?

Subrogation is the substitution of one person in the place of another with reference to a lawful claim, demand, or right, so that he or she who is substituted succeeds to the rights of the other in relation to the debt or claim, and its rights, remedies, or securities. Huh? Basically, subrogation is the process of the insurance company getting back the money it has paid. What that means in the med pay context is the insurance company has a right to get paid back the medical payments it made from their insured’s personal injury settlement. Why? Because the injured person’s settlement includes all of their medical bills. If they didn’t have to pay their insurance company back, they would get a double recovery since they would get their bills paid by their insurance and then get those bills paid again by the at-fault party’s insurance.

Part of my job is negotiating with your insurance company to reduce the amount of the med pay it gets back. Insurance companies usually will reduce the amount they are due because the case law here in Wisconsin (and many other states) allows for a reduction when I have done all of the work to collect their money, and because the client created a settlement fund from which all parties get paid.

What you should do with this information

You should sit down to talk with your insurance agent, to see if you have the appropriate amount of coverage. You should always make sure you have enough of every type of auto coverage out there: uninsured, underinsured, liability, and medical payments coverage. With the rising costs of healthcare, you may need to upgrade your coverage across the board to protect yourself. Because of the complexities of a personal injury case, including subrogation, you should always contact an attorney for advice should you find yourself in the unfortunate position of being injured in an auto collision.

Attorney Michael C Demo