6.3 Part B Medical Payments

Purpose of Part B

Part B - Medical Payments Coverage pays reasonable and necessary medical and funeral expenses for covered persons injured in a motor vehicle accident, regardless of fault. It is first-party coverage (it pays the insured's own household) and is written on a small per-person limit such as $1,000, $5,000, or $10,000 per person, per accident. Unlike Part A, there is no per-accident aggregate - the limit applies separately to each injured covered person.

Part B is a no-fault-style medical benefit within the PAP, but it is not the same as statutory PIP. In no-fault states, a Personal Injury Protection (PIP) endorsement often replaces or supplements Part B and adds lost-wages and essential-services benefits.

Who and What Is Covered

Covered persons under Part B fall into two groups:

Key points the exam tests:

• The named insured and resident family members are covered as pedestrians; mere occupants who are strangers are covered only while in your covered auto.
• Expenses must be incurred within 3 years of the accident.
• Funeral expenses are included within the limit.
• Part B is excess over (or coordinates with) other collectible medical coverage in many states and pays without regard to who caused the accident.

Exclusions and a Worked Example

Common Part B exclusions

• Injury while occupying a vehicle with fewer than four wheels (e.g., a motorcycle)
• Injury while the auto is used as a public or livery conveyance
• Injury occurring during the course of employment if workers compensation is available
• Injury while occupying a vehicle used in the auto business or while war, nuclear, or racing is involved
• Occupying a vehicle (other than your covered auto) that the insured owns but did not insure (the "owned but not scheduled" trap)

Worked example. Limit is $5,000 per person. The insured driver and two passengers are hurt. The driver incurs $7,200 in bills, Passenger A incurs $3,000, Passenger B incurs $6,500.

Because the limit is per person with no accident cap, Part B pays $13,000 total - far more than a single $5,000 limit would suggest. Each person's recovery is capped only at the individual $5,000 limit.

Coordination With Other Coverages

Part B is designed to dovetail with other medical sources rather than duplicate them. It often pays as excess over collectible workers compensation and, in some states, coordinates with health insurance to prevent double recovery. Because it pays regardless of fault, it provides fast medical money before liability is sorted out, then the insurer may pursue subrogation against an at-fault third party once the injured insured is made whole.

PIP vs. Med Pay

In no-fault states, statutory Personal Injury Protection (PIP) replaces or supplements Part B and broadens benefits to include lost wages, essential services, and survivor benefits in addition to medical and funeral costs. Med Pay, by contrast, is medical-and-funeral only. Illinois is a traditional tort (fault) state with no mandatory no-fault PIP, so Illinois drivers rely on Med Pay rather than PIP — a state-specific distinction the exam draws directly.

Worked Coordination Scenario

An insured with $5,000 Med Pay is injured on the job while driving for an employer; workers compensation covers $4,000 of $4,500 in bills. Because the injury arose in employment with workers comp available, Part B is excluded for that loss, so Med Pay pays nothing and workers comp is the source. Change the facts to an off-duty personal trip and Med Pay pays the $4,500 regardless of fault. The exam toggles the employment fact to test whether you remember the workers-comp exclusion under Part B.

Limit Structure and the Per-Person Logic

Part B limits are low and apply per person, per accident, with no aggregate cap — a structure that surprises candidates. A $10,000 Med Pay limit does not cap an accident at $10,000; it makes $10,000 available to each covered person independently. In a four-occupant accident, the policy could pay up to $40,000 in total medical benefits.

Why Producers Recommend Med Pay Even With Health Insurance

Med Pay fills gaps health insurance leaves: it pays deductibles and copays, covers passengers who may lack their own coverage, and pays funeral costs. Because it responds quickly and without fault determinations, it is inexpensive relative to the goodwill it buys after an accident. The exam frames Med Pay as fast, no-fault, first-party medical money that supplements — not replaces — health coverage and liability.

Subrogation After a Med Pay Payment

Because Med Pay pays regardless of fault, the insurer commonly holds a subrogation right against the at-fault third party once it has paid the insured's medical bills. Under the make-whole doctrine the injured insured is reimbursed first; only then does the insurer recover what it advanced. This keeps Med Pay consistent with the indemnity principle — the insured does not collect twice for the same medical expense from both Med Pay and the liable driver.