Using your PIP insurance after a crash: 5 things you need to know

Personal Injury Protection (PIP) is a type of car insurance that pays for medical bills, wage loss, and other costs after a car crash. Some policies refer to this benefit as medpay. This coverage is mandatory in Oregon insurance policies, but not in Washington: check your Policy Declarations page to see if PIP is included.

The basics of Personal Injury Protection coverage

Regardless of fault or cause, most people involved in a serious crash find that they need to access their own car insurance policy to cover medical bills and expenses. PIP money is usually the first piece of insurance available.

In Washington State, PIP coverage must include:

  • $10,000 – $35,000 for medical and hospital bills;
  • $10,000 – $35,000 for lost wages;
  • $5,000 – $14,600 in service benefits for home and transportation assistance, and
  • $2000 for funeral expenses, if the crash was fatal.

Here’s what you need to know about using your PIP insurance policy to cover medical bills after a collision.

1. PIP is primary coverage.

If you have PIP—or Medical Payment coverage—you will want to give this information to your doctors and medical providers. PIP is considered primary coverage after a car crash; your health insurance becomes secondary coverage.

If, for example, you have Personal Injury Protection coverage of $50,000, your health insurance coverage wouldn’t kick in until you’d exhausted the full $50,000 of PIP.

Once all your coverage has been used, the PIP carrier will issue a letter advising that the coverage is “exhausted”.

2. Car insurance companies usually pay higher rates. 

Car insurance companies often have to pay more than health insurance companies pay for the same medical care. Your health insurance company can negotiate “in-network” rates with medical providers, who agree to the reduced rates because they know the insurer is directing patients to their offices.

Your car insurance company, conversely, will pay “out of network” rates with medical providers. The cost of your post-injury care will be the full sticker price.

For example, a recent NPR investigation found that the hospital and surgery bills paid by a car insurance company for a man injured in a crash were about eight times higher than Medicare would have paid for the exact same care.

Surprise: The Charge For His Spine Surgery After A Car Crash Topped $700,000

This can be problematic when PIP runs out.

3. Insurance pays bills as they are received, not in the order of care. 

Your car insurance company pays bills as they receive them. This can become a problem when the medical bills for a serious injury quickly use all of your PIP.

For example, PIP might pay a bill for physical therapy that would have been covered by your health insurance, simply because they received those bills before the hospital bill—which may not be covered by your health insurance.

Be aware that you need to track every invoice for every medical provider. If you are working with a personal injury attorney, they should help you make sure that all of the medical bills have been documented and paid.

4. The insurance companies do not coordinate care.

When you have used up all of the available PIP, then your health insurance can start paying your medical bills.

People often forget that the medical care that is covered by PIP may not be covered by their health insurer when PIP runs out.

For example, if your health insurance doesn’t have an in-network rate at the hospital where you have surgery after a car crash, you could end up paying a lot more money out of your own pocket.

If you need continuing medical care or a surgical procedure after a car crash, make sure the providers are in-network for health insurance.

5. You might have to pay it back. 

If your own car insurance company pays your bills and expenses after a crash, they can try to recover their costs from the insurance company of the person who caused the crash.

You may need to reimburse your insurance company for PIP if you win a settlement or verdict from a lawsuit related to your crash injuries. The same is true for your health insurance company.

There are some exceptions to reimbursement rules, but in general, insurers are entitled to be paid back out of a settlement or trial verdict. This complicated process of reimbursement is called subrogation.

When you work with a personal injury lawyer, they should negotiate bills and work with any lien holders to minimize what you have to pay back.

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