6.3 Part B Medical Payments

What Medical Payments Coverage Is

Part B - Medical Payments, commonly called MedPay, is first-party, no-fault coverage. It pays reasonable charges for necessary medical and funeral services arising from bodily injury caused by an auto accident, regardless of who was at fault. Expenses must be incurred within three years of the accident date - a frequently tested number.

Why MedPay Exists Alongside Liability

Liability (Part A) protects the insured's assets from claims by others; Medical Payments protects the insured's own people and pays immediately. The two answer different questions: who pays the people in my car? versus who pays the people I injured?

MedPay is especially valuable when:

• Fault is disputed and a liability payout could take months or years.
• The insured's passengers have high deductibles or no health coverage.
• The injured insured was at fault and therefore cannot recover from anyone else - MedPay still pays because it is no-fault.

That no-fault feature is the single biggest distinction tested against Part A, which pays only when someone is legally liable.

What Part B Pays - and Does Not Pay

Covered services include physician and hospital bills, surgery, diagnostic X-rays, ambulance, professional nursing, prosthetic devices, dental care for accidental injury, and funeral expenses.

MedPay does not pay:

• Lost wages - recovered through Part A from an at-fault party.
• Pain and suffering - a liability (Part A) item, not a first-party benefit.

Worked example. A passenger incurs $4,200 in ER bills, $900 in follow-up therapy, and claims $1,500 in lost wages. With a $5,000 per-person MedPay limit, Part B pays the $5,100 medical capped at $5,000; the $1,500 wage loss is not a MedPay item.

Who Is Covered Under Part B

Part B splits insureds into two groups:

• You and family members are covered while occupying any auto (yours or a non-owned auto) and when struck as a pedestrian by a motor vehicle designed for use on public roads.
• Any other person is covered only while occupying your covered auto.

Tested trap: the named insured walking through a parking lot and struck by a car is covered under Part B. A non-family guest struck while walking is not, because guests are covered only as occupants of your covered auto.

Limit Selection and Producer Counseling

Typical MedPay limits run from $1,000 to $10,000 per person, with some insurers offering up to $25,000 or more. Because MedPay is inexpensive relative to liability, producers often recommend a meaningful limit so that passengers' immediate bills are covered without a fault fight.

Key counseling points the exam expects a producer to know:

• MedPay overlaps with health insurance; an insured with rich health coverage may choose a lower MedPay limit.
• MedPay is the only PAP coverage that pays the insured's own medical bills when the insured is at fault and there is no other liable party.
• In PIP/no-fault states, the producer must explain how mandatory PIP interacts with optional MedPay so the insured does not pay twice for the same benefit.

Coordination, Exclusions, and the No-Fault Overlap

MedPay is excess or coordinated with health insurance under many policies, and subrogation generally does not apply to first-party medical benefits unless state law allows it.

Key exclusions include injuries:

• Sustained while a vehicle is used as a public or livery conveyance.
• While occupying a vehicle used as a residence or premises.
• Arising in the course of employment if workers compensation benefits are available.
• From war, nuclear hazard, or racing.

In no-fault (PIP) states, Personal Injury Protection (PIP) often replaces or supplements MedPay and may add wage-loss and essential-services benefits that pure MedPay does not provide.

How Part B Coordinates With Other Coverages

MedPay is intentionally broad and fast, but it is rarely the only source of recovery. Understanding its priority order is tested.

• Against the at-fault driver, the insured can still pursue Part A liability of the responsible party for full damages, including pain and suffering; MedPay paid to the insured may be subject to reimbursement out of any liability recovery in some states.
• Against the insured's health insurance, policies vary on whether MedPay is primary or excess; many auto policies make MedPay primary for accident injuries.
• For the insured's own UM/UIM claim (Part C), MedPay and Part C are coordinated so the insured is not paid twice for the same medical bill.

The practical value of MedPay is timing: it pays bills immediately, before any fault dispute is resolved.

Worked Limit Scenario and a Common Trap

MedPay limits are per person, so each injured occupant has the full limit available - not a shared per-accident pool.

Worked example. A PAP carries $10,000 MedPay per person. The insured and two passengers are hurt:

The trap: a candidate who treats $10,000 as a per-accident limit would wrongly cap total payment at $10,000. Because the limit is per person, the insurer pays $19,200 in total here.