In this article 6 sections
After a car accident, the medical bills often show up long before any settlement does. An ambulance ride, an emergency room visit, imaging, and follow-up care can add up fast, and the at-fault driver’s insurer usually won’t pay as you go. It typically pays once, at the end, in exchange for a release.
That gap is where medical payments coverage, usually called MedPay, can help. It is one of the most useful and least understood parts of a California auto policy. Many people don’t know whether they have it, how much it pays, or what happens to that money when their injury claim settles.
This post explains what MedPay is, how it fits with your health insurance and your claim against the at-fault driver, and how reimbursement and liens can affect what you keep.
What MedPay Is
MedPay is coverage on your own auto policy that pays medical expenses for people injured in an accident, up to a set limit. According to the California Department of Insurance (CDI), it can pay for immediate medical care “no matter who is at fault,” and it covers you and passengers in the car you are driving. Your policy defines exactly who is covered, which may include household members in other situations.
Two key points:
- It is optional. California requires liability coverage, not MedPay. CDI says you may be offered MedPay but can choose not to buy it.
- Limits vary. CDI says the minimum MedPay limit you can buy is $1,000 per injured person, and you can ask for higher limits.
Because MedPay doesn’t depend on fault, you generally don’t have to prove the other driver caused the crash before it pays. That makes it useful early on, while liability is still being sorted out.
How it differs from “no-fault” states
Some states require personal injury protection (PIP), a broader no-fault coverage. California does not. MedPay here is limited to medical expenses as defined in your policy, and California’s fault-based system still lets you pursue the at-fault driver for your damages.
How MedPay Fits With Your Other Coverage
After a crash in California, several sources may pay toward your medical care:
- Your MedPay, up to its limit, regardless of fault.
- Your health insurance, Medi-Cal, or Medicare, under their own rules.
- The at-fault driver’s liability insurance, usually through a settlement or judgment at the end of the claim.
- Your uninsured/underinsured motorist (UM/UIM) coverage, if the at-fault driver had no insurance or too little.
The order and amounts depend on each policy’s terms. Many people use MedPay to cover deductibles, copays, and treatment their health plan won’t pay quickly.
MedPay and UM/UIM
If you also make a UM claim, your MedPay may reduce it. California Insurance Code section 11580.2(e) allows a policy to provide that UM damages are reduced by amounts paid or due under the policy’s automobile medical payment coverage. Not every policy includes that offset, so the policy language controls. Our post on why UM/UIM coverage matters for California drivers explains how that coverage works and why the limits matter.
MedPay and Medicare
If you are on Medicare, federal law makes Medicare a secondary payer when an auto or no-fault insurance policy has paid or can reasonably be expected to pay. Federal regulations define “no-fault insurance” to include coverage “sometimes called ‘medical payments coverage.’” In practice, that means MedPay may be expected to pay first, and if Medicare pays conditionally, it generally must be reimbursed once the primary coverage or a settlement pays.
Reimbursement: When MedPay Wants Its Money Back
MedPay pays regardless of fault, but that doesn’t always mean the money is yours to keep after a settlement. Many auto policies include a reimbursement or subrogation provision. In general terms:
- Subrogation lets your insurer, after paying you, pursue the at-fault driver or that driver’s insurer for what it paid.
- Reimbursement lets your insurer recover what it paid out of your settlement with the at-fault driver.
Whether your insurer has either right, and how much, depends mainly on your policy’s wording and on California law. This is contract-based, so read your policy or have a lawyer read it. Reimbursement claims are frequently open to negotiation, especially when the settlement doesn’t fully cover your losses.
Liens Against Your Settlement
Other payers may also have legal rights to be repaid from your injury recovery. A few of the most common in California:
Medi-Cal
If Medi-Cal paid for treatment of your injuries, California law gives the state a right to recover the reasonable value of those benefits from a liable third party, or from a carrier under a UM policy (Welfare and Institutions Code section 14124.71). Key rules:
- A settlement isn’t final until the state gets notice and a reasonable opportunity to perfect and satisfy its lien (section 14124.76).
- Notice of the action and settlement must be given to the state, including by your attorney and the liable insurer (sections 14124.73 and 14124.79).
- The state’s recovery is limited to the part of the settlement that represents medical expenses (section 14124.76), and it can never exceed what you recover after deducting attorney’s fees and litigation costs (section 14124.78).
Hospital liens
Under Civil Code section 3045.1, a hospital that treats you after an accident may have a lien on damages you recover from the person responsible, up to its reasonable and necessary charges. Under section 3045.4, a payer that has received proper notice and pays you without honoring the lien can be liable to the hospital, up to what could be satisfied from 50 percent of the recovery after prior liens.
Health plans
Health plans and health insurers often include reimbursement rights in their contracts. California Civil Code section 3040 limits many of these liens: for example, if you hired an attorney, a covered lien generally can’t exceed one-third of what you receive, and it is subject to reduction for your attorney’s fees and, if a judgment finds you partly at fault, by that percentage. Section 3040 does not apply to Medi-Cal or hospital liens, and it does not make enforceable a lien from an employee benefit plan that federal law preempts. Plans governed by federal law can follow different rules, which is why the plan documents matter.
Medicare
As noted above, Medicare generally must be repaid for conditional payments related to the injury out of the primary coverage or settlement.
How to Use MedPay Well
- Check your declarations page. Find out whether you carry MedPay and the limit. If you don’t have it, ask your agent about adding it.
- Report the claim promptly. Notify your insurer of the accident and open a MedPay claim. Check your policy for any time limits on when expenses must be incurred or submitted.
- Send itemized bills and records. MedPay adjusters review whether treatment is reasonable and related to the accident. Documentation matters here, as we discussed in our post on shockwave therapy and MedPay.
- Keep a running list of who paid what. MedPay, health insurance, Medi-Cal, or Medicare payments all need to be accounted for at settlement.
- Don’t sign releases casually. A release with the at-fault driver can affect your insurer’s subrogation rights and its willingness to pay. Talk to a lawyer before signing.
- Tell your attorney about every payer. Liens and reimbursement claims are much easier to resolve when they are identified early.
How We Approach MedPay and Liens
Getting a fair settlement is only half the job. What you actually take home depends on how MedPay reimbursement, health plan claims, and statutory liens are handled. We start by identifying every payer, reviewing the policy and plan language that governs repayment, and negotiating those claims as part of resolving the case. John Reardon spent nearly two decades treating injured patients as a chiropractor before becoming a lawyer, so we read medical bills and records with a clinician’s eye. Learn more about our car accident practice.
If you were hurt in a California car accident and have questions about MedPay, medical bills, or liens, contact Reardon Stodolka for a free consultation at 657.522.7122. You pay nothing unless we recover compensation for you.