Who pays your medical bills after a car accident

The usual order of payment#

Who pays first depends on your state, your policies and the terms of each plan. This is the order that applies in many cases:

1. Your own PIP or MedPay. Coverage on your own auto policy pays first in most cases, whoever caused the crash.
2. Your health insurance, Medicare or Medicaid. It pays under its own rules once auto coverage is used up, or if you have none.
3. You. Deductibles, copays and anything no plan covers are your responsibility while the claim is open.
4. The at-fault driver's liability insurer. It pays once, at settlement or judgment, up to its policy limits.
5. Your uninsured or underinsured motorist coverage, if the at-fault driver has no insurance or too little.
6. Repayment. Health plans, Medicare, Medicaid and some hospitals may be repaid out of the settlement through a lien or subrogation.

Our who pays my medical bills tool walks through the order for your state and your coverage.

PIP and MedPay: your own policy pays first#

Personal injury protectionPersonal injury protection (PIP). Coverage under your own policy that pays medical bills and some lost income after a crash, whoever caused it. Glossary (PIP) and medical payments coverageMedical payments coverage (MedPay). Optional or required coverage on your own auto policy that pays medical bills after a crash, up to a set limit, whoever caused it. Unlike PIP, it usually does not pay lost income. Glossary (MedPay) both pay medical bills after a crash, up to a limit, whoever was at fault. PIP is broader: depending on the state, it can also pay part of your lost income and other costs. MedPay usually covers medical and funeral costs only.

Whether you have either depends on your state and your policy:

State rules can include conditions. In Florida, PIP pays 80% of reasonable medical expenses, but only if you get initial care within 14 days after the crash. If a provider decides you did not have an emergency medical condition, the medical benefit is limited to $2,500. In New York, a no-fault claim must be filed within 30 days after the accident.

Health insurance#

Once PIP or MedPay is used up, or if you have none, your health insurance pays under the terms of your plan. You still owe the usual deductibles and copays, and network rules still apply. Some plans pay only after auto coverage has paid its share, so the order of payment can be part of the plan's own rules.

Using health insurance has two practical effects. In-network providers paid by a health plan generally accept the plan's negotiated rate. And the plan may have a right to be repaid from your settlement for what it paid; see medical liens and subrogation.

Medicare and Medicaid#

Medicare is a secondary payer when other coverage applies. Under federal rules, with limited exceptions, Medicare does not pay until the beneficiary has used up their no-fault benefits. For a liability claim, Medicare may make a "conditional payment" when the liability insurer is not expected to pay promptly, which the rules define as within 120 days after the earlier of the claim filing or the date of service.

Those payments are not free. Medicare must be repaid its conditional payments when a settlement, judgment or award is paid. Medicare sends a demand letter for the amount it says it is owed, and interest is charged if the debt is not resolved 60 days after that letter. CMS asks beneficiaries to contact its Benefits Coordination & Recovery Center whenever they have a pending liability or no-fault claim, so the amount can be checked before a settlement is paid out.

Medicaid works in a similar direction. Medicaid is generally the payer of last resort: when a third party such as an at-fault driver's insurer is liable, the state Medicaid agency must seek repayment. If you are on Medicaid, the agency may contact you about the claim, and its repayment comes out of the settlement.

The at-fault driver's liability insurer#

The other driver's bodily injury liabilityBodily injury liability. The part of a driver's auto policy that pays for injuries they cause to other people. Glossary coverage is meant to pay your injury losses, including medical bills. But it pays you, not your providers, and usually only once: when you sign a releaseRelease. The document you sign when you settle. It usually ends your right to claim more for the same crash, so read it carefully. Glossary at settlement or win a judgment. It has no general duty to pay your bills as they come in.

That payment is limited by the at-fault driver's policy limits. Minimums vary by state: for example, $30,000 per person in Texas, $25,000 in New York and $30,000 in California. Check your state's minimum on our state-by-state guide. If the driver had no insurance or too little, your own uninsured or underinsured motorist coverage may pay the difference; see uninsured driver accidents.

Hospital liens#

Many states let a hospital claim part of an injury settlement for unpaid emergency care, through a hospital lienLien. A legal claim on part of your settlement by someone who paid for your care, such as a hospital, health plan or Medicare. Glossary. The rules differ a great deal. In Texas, a hospital lien attaches only if you were admitted within 72 hours of the crash, and it can never be more than 50% of what you recover. Our guide to medical liens and subrogation covers liens in more detail.

Letters of protection#

A letter of protection is an agreement under which a doctor or clinic treats you now and waits to be paid from your settlement or judgment. Florida's law defines it as an arrangement in which a provider treats in exchange for a promise of payment from a judgment or settlement, whatever the document is called. They can be an option for people without health insurance, or whose coverage has run out.

A letter of protection can make treatment possible when nothing else will pay. It also has consequences worth understanding before signing:

• You may still owe the bill if the claim recovers less than expected, or nothing. Read what the letter says about that.
• The charges may be higher than a health plan would pay, and the bill comes out of your settlement.
• The other side may look at it. In Florida, to claim medical bills for care under a letter of protection, you must disclose a copy of the letter of protection and itemized, coded bills for the medical care. Other states have their own rules on what juries may hear.
• The provider may sell the debt. Some providers transfer the right to be paid to a third party, which then collects from the settlement.

When you cannot pay yet#

If bills arrive before anything else pays, you still have options. Many providers will set up a payment plan, or wait for a short time if you show that a claim is open. Many hospitals have financial assistance programs; the billing office can tell you how to apply. Keep every bill, statement and letter in your claim file, so that each one can be matched to a payment later; the claim file checklist lists what to keep.