A Guide to “Med Pay” Reimbursement in California

Medical Payments Coverage, known as Med Pay for short, is a type of optional car insurance in California that covers medical bills and funeral expenses for you and your passengers, regardless of who is at fault for an accident.

Other advantages of Med Pay insurance include that you and your family members can also claim damages (up to policy limits) if you or they are:

• Hit by a vehicle as a pedestrian,
• Injured while a passenger in someone else’s car, or
• Injured while taking public transportation.

The following chart compares Med Pay to standard automobile liability insurance:

	Med Pay	Liability Insurance
Purpose	Covers medical expenses for you and your passengers	Covers bodily injury and property damage to others
Fault	Pays regardless of fault	Only pays if you are at fault
Requirement	Optional	Mandatory
Minimum coverage	$1,000	$30,000 for bodily injury per person, $60,000 per accident for bodily injury, $15,000 for property damage
Deductable	No	Yes

In our experience, many drivers buy Med Pay without ever understanding how valuable it can be until after a crash. We regularly meet injured people who delayed treatment because they were worried about medical bills or deductibles.

Having Med Pay often lets you begin getting the care you need immediately instead of waiting for the liability claim to resolve, which can make both your recovery and legal case much stronger.

To help you better understand Med Pay insurance, our California personal injury lawyers discuss, below:

• 1. What is Med Pay?
• 2. Benefits
• 3. Do I need it?
• 4. Will my premiums go up?
• 5. What if I have health insurance?
• 6. Made Whole Doctrine
• 7. Policy Limits
• Frequently Asked Questions
• Additional Reading

1. What is Med Pay?

“Med Pay” is short for “medical payments coverage.” In California, it is optional first-party insurance that you can elect to add to your auto policy.

Med Pay covers reasonable and necessary bills when you or your family is injured in an accident involving a vehicle, regardless of who is at fault.¹

Examples of when Med Pay might apply include:

• You are injured in a truck accident while driving home from work;
• You suffer a spinal injury when you are injured in an accident while taking an Uber;
• A passenger on your motorcycle suffers a head injury after a car accident;
• Your child suffers a wrongful death in a bicycle accident;
• Your spouse is injured in a “pedestrian knockdown.”

From what we have seen, many people assume Med Pay works like the other driver’s insurance. It does not. Med Pay is your own coverage that can start paying eligible medical expenses right away, regardless of who caused the collision. That distinction can make a tremendous difference during the first few weeks after an accident.

2. Benefits

Payments made under Med Pay in California are made directly to a doctor or hospital. There is no need to pay most expenses out of pocket and submit the bills for Med Pay reimbursement or to wait while the insurer investigates the accident, even if you were at fault.

Other advantages of Med Pay include:

• No deductibles or co-pays; and
• No restriction on the type of provider you can visit; and
• Covers both you and your immediate family when:
  • You are a passenger in someone else’s vehicle, or
  • You are a pedestrian hit by a vehicle, or
  • You are injured while on public transportation.

Reimbursable Expenses

Med Pay covers (or reimburses) all reasonable and necessary medical bills and/or funeral expenses up to the policy limits. Such expenses can include (without limitation):

• Doctor’s bills;
• Hospital bills;
• Ambulance and EMT bills;
• Chiropractor or acupuncture bills;
• Physical or occupational therapy;
• X-rays and MRIs;
• Short- or long-term care (including home health care);
• Medical equipment (such as crutches);
• Prosthetics; and
• Dentist’s bills to fix broken teeth.

Non-Covered Expenses

California medical payments insurance does not cover:

• Car repair bills;
• Costs of property damage to fences, gates, etc.;
• Coverage in excess of policy limits;
• Expenses not related to the accident; or
• Accidents not involving a vehicle (for example, horseback riding accidents).

In cases we handle, one of the biggest advantages of Med Pay is that clients can focus on getting treatment instead of worrying about paying every bill out of pocket. That often means fewer interruptions in medical care and better documentation of injuries, both of which can be important if an injury claim later goes to settlement negotiations or trial.

3. Do I need it?

In California, Med Pay insurance is particularly good if you have no health insurance or if your insurance has high deductibles or co-pays.

Even if you have good health insurance, you may wish to purchase Med Pay. Med Pay also covers passengers in your vehicle, whether or not they have health insurance.

Plus unlike many health plans, it has no limit on the types of services or providers you can use.

Finally, Med Pay coverage is “per incident,” not per year. So there are no yearly caps such as are found in many policies of health insurance.

We generally encourage clients to consider adding Med Pay if it fits their budget. Even people with excellent health insurance are often surprised by deductibles, co-pays, ambulance bills, or providers that are not fully covered. Med Pay frequently fills those gaps when they are needed most.

4. Will my premiums go up?

In California, an insurer cannot raise rates when you make a claim and were not at fault.² If you were at fault, it is up to the insurer whether to raise your rates.

5. What if I have health insurance?

In California, Med Pay may be preferable to your health insurance if you have not yet met the yearly deductible or when you have large co-pays.

Note that Med Pay insurance is “per incident.” This means it will not affect any yearly or lifetime cap on payments you might have under your health insurance policy.

Even when clients have strong health insurance, we often recommend reviewing whether Med Pay can still help. Every policy is different, but we have seen Med Pay cover expenses that otherwise would have come directly out of a client’s pocket while the injury claim was still pending.

Medical Liens

Some doctors and facilities may accept a medical lien following an accident. A lien is a legally binding contract that allows the provider to get paid from any judgment or settlement you get from a third party.

Not all providers are willing to accept a medical lien instead of insurance or cash. Plus you are still responsible for paying the bills if the final disposition is not in your favor.

This makes using Med Pay preferable to a medical lien in most situations.

Telling Your Insurance Company

If you were at fault for an accident and the other party was not injured (or injured only slightly), you may be tempted not to put a claim through your auto insurer.

However, California law requires you to report an accident to the DMV if anyone was injured (no matter how minor).³ Most insurance policies also have a similar requirement.

You may wish to read our article, 15 Steps to Take After a Car Accident in California.

6. Made Whole Doctrine

Most Med Pay policies give the insurer the right to reimbursement. This is to prevent you from recovering money for medical bills from a third party and pocketing it instead of reimbursing your auto insurer.

However, most California Med Pay coverage is subject to California’s “Made Whole” rule. Under this rule, you must be “made whole” for your damages from the accident before having to repay your auto insurer a dime.⁴

Note that some health insurance policies provide explicitly that the “made whole” rule does not apply.⁵ For example, such a provision may state:

“Health Plan shall be entitled to reimbursement regardless of whether the total amount of the recovery of the insured on account of an injury or illness is less than the actual loss suffered by the insured. The proceeds of any judgment or settlement obtained by Health Plan or the insured shall first be applied to satisfy Health Plan’s claims, liens, and other rights.”⁶

An experienced California injury lawyer can read through your insurance policy and help you negotiate a settlement that will leave you something left over for your out-of-pocket expenses and pain and suffering.

Reimbursement issues are often much more complicated than insurance companies initially suggest. In our experience, many clients assume they have to repay every dollar of Med Pay benefits immediately after settling. In reality, California law and the specific policy language frequently require a much closer analysis before any reimbursement is made.

7. Policy Limits

By law, all companies selling motor vehicle insurance in California must offer optional Med Pay coverage with policy limits of at least $1,000.

Most insurers offer higher limits as well — typically $2,000, $5,000, $10,000, and $25,000.⁷

Some large insurers such as State Farm offer Med Pay coverage of up to $100,000. How much you should purchase depends on your budget and what other types of insurance you have.

We recommend you purchase as much Med Pay as you can afford.

Frequently Asked Questions

Does my Med Pay insurance company sue the at-fault driver to recover what it paid?

Generally, no. Because California does not allow personal injury claims to be assigned to an insurance company, a Med Pay carrier ordinarily cannot pursue the at-fault driver directly for bodily injury payments. Instead, if the policy provides reimbursement rights, the insurer typically seeks repayment from its own insured’s settlement or judgment after the injury claim concludes.

In our experience, this surprises many clients. They assume their insurance company will “fight the other driver’s insurer” over Med Pay benefits. Instead, reimbursement questions usually arise only after the personal injury claim settles, which is why it is important to understand your policy before agreeing to reimburse anything.

What is the Common Fund Doctrine in California Med Pay cases?

The Common Fund Doctrine generally provides that when your attorney’s work creates the settlement fund from which the insurance company seeks reimbursement, the insurer usually must bear a proportionate share of the attorney’s fees. This prevents the insurer from receiving the benefit of your lawyer’s work without contributing to the cost of obtaining the recovery.

From what we have seen, many reimbursement demands ignore this issue entirely. We frequently review reimbursement claims to determine whether the insurer has properly reduced its claim to account for the attorney’s efforts that produced the settlement in the first place.

Can my Med Pay reimbursement be reduced?

Yes. Depending on the circumstances, California’s Made Whole Doctrine, the Common Fund Doctrine, the language of the insurance policy, and the amount recovered from the at-fault party may all affect whether reimbursement is owed and, if so, how much. Each case depends on its own facts and policy language.

We tell clients not to assume the first reimbursement demand is the final answer. In many cases we have handled, there are legitimate legal arguments for reducing or even eliminating the amount an insurer is seeking to recover.

Why does my own insurance company want reimbursement if I was not at fault?

Med Pay is first-party insurance that pays your medical expenses promptly regardless of fault. Many policies include reimbursement provisions designed to prevent a double recovery if you later obtain compensation for the same medical expenses from the at-fault party. California law, however, places important limits on when and how those reimbursement rights may be exercised.

Clients often tell us this feels unfair because they have been paying premiums for years. We understand. One of our jobs is explaining when reimbursement is legally allowed and making sure insurers follow California law before they recover anything from an injury settlement.

Should I accept Med Pay benefits if I expect to file a personal injury claim?

Usually yes. Med Pay can help pay reasonable medical expenses immediately while your injury claim is pending. Whether any reimbursement will later be required depends on your policy, the amount of your recovery, and California reimbursement rules—not simply on the fact that you used the coverage.

In our experience, injured people sometimes avoid using Med Pay because they are worried they will “have to give it all back.” We generally tell clients that getting appropriate medical treatment early is usually far more important than speculating about reimbursement issues that may never arise or may ultimately be negotiated down.

Additional Reading

For more information, refer to our related articles:

• How to get “Medical Bills” paid after a California accident – Your options for paying for your doctor’s bills and medical expenses.
• California Doesn’t Have PIP Insurance – Here’s Why – Explains why California does not offer personal injury protection insurance.
• “Subrogation” in California Personal Injury Claims – How It Works – Overview on how subrogation works in California.
• A Guide to “Bodily Injury Liability” Insurance in California – What you need to know about how bodily injury liability insurance operates.
• “Uninsured Motorist” Coverage in California – How It Works – What UM/UIM insurance is and why you should have it.

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