Why Do You Need PIP Even If You Have Health Insurance?
When deciding the coverages and limits on your auto insurance policy, many people assume that because you have health insurance, you should first list your health insurer to cover your medical expenses in the event of an accident. Then your auto insurer would provide secondary coverage through Personal Injury Protection (PIP).
However, what many people do not know is that your health insurance may not provide enough or even any coverage for injuries sustained from an auto accident. Selecting your health insurance as primary may reduce your auto insurance premium, but the savings may not outweigh the benefits of having your auto insurer listed first.
Everyone has different auto insurance and health insurance coverage amounts and policy deductibles, but it is important to understand why having your auto insurance company listed as primary for health care coverage and having your health insurance as secondary is recommended.
What is PIP?
Personal Injury Protection (PIP) is a type of auto insurance coverage that provides medical coverage if the policyholder is injured in an accident. This type of auto insurance coverage is included on all auto insurance policies sold in New Jersey and Pennsylvania.
Why? Both New Jersey and Pennsylvania are “no-fault” states which means that regardless of who caused the accident, your auto insurance will provide coverage for your medical bills. In New Jersey, PIP coverage ranges from $15,000 to $250,000 per person.
Regardless of what PIP deductible you choose, you will have to pay a 20% co-payment for your medical expenses between the deductible selected and $5,000. This means you pay 20%, and your auto insurer pays 80%.
Here is an example:
John is involved in an auto accident that results in $10,000 of medical expenses. He pays the minimum $250 deductible plus $950 (20% of the $4,750 from the first $5,000), and his auto insurer pays the remaining $8,800.
When you list your auto insurance as primary and your health insurance as secondary for PIP coverage, this means that your auto insurer will provide coverage for your medical bills first. Then your health insurer will provide coverage for any medical bills with a balance. You will be responsible for any remaining balances not covered by your auto and health insurance.
Extra PIP Coverage
If you select your auto insurance as primary for PIP coverage, you have the option to include extra benefit options to your coverage that are not offered by your health insurance for auto accidents:
- Lost Wages if you cannot work due to accident-related injuries.
- Essential Services which include services that you normally do yourself (i.e., cleaning your house, doing laundry) but cannot do due to your injuries from the auto accident.
- Death Benefit which provides benefits not collected under the lost wages and essential services coverage to your family members if you die from an auto accident.
- Funeral Expense Benefit which pays for your funeral expenses up to the limit that you choose if you die from an auto accident.
Health Insurance as Primary
To save on your auto insurance premium, auto insurance companies will tell you to use your health insurance as a primary source of medical coverage if you are injured in an auto accident. However, all health insurance policies are different and may not provide adequate coverage for injuries from an auto accident or cover auto accident injuries at all. Medicare and Medicaid cannot be used as primary health care coverage on your auto insurance.
In addition, many health insurance plans require you to reimburse the company if you obtain a recovery from the party responsible for your injuries. Payments through PIP are only reimbursable if you obtain a monetary recovery from an accident with a commercial vehicle.
Unlike PIP coverage, health insurance does not cover non-medical expenses such as lost wages and funeral costs.
If you are still considering using your health insurance as primary medical coverage, you should make sure that your health insurance company covers injuries from auto accidents.
At Trimble & Register, we understand that no one can predict the severity of your injuries or the costs of your medical bills when you have been in an auto accident. Choosing your health insurance as primary medical coverage on your auto insurance may initially save you money on your premium but leave you with limited benefits.
We recommended paying the extra money for your auto insurance to provide coverage on your medical bills first and for you to benefit from the additional coverage that your auto insurance offers such as lost wages, essential services, death benefits, and funeral expenses.
You can always check your auto insurance declaration page to see who is listed as primary for PIP coverage.
If you have been in an auto accident that was not your fault, schedule your free consultation with our office by calling (856) 232-9500.