The Patient Protection and Affordable Care Act ("Obamacare") has been officially green lighted by the election. Insurers, employers and states are scrambling to figure out how to implement the drastic changes to come. But the question some are asking is how will the new law affect auto insurance? Specifically, the medical payments option.
Most auto policies offer the medical payments option to give drivers an added margin of health insurance coverage. Coverages vary from a minimum of $500 all the way up to $100K. Medical payments coverage is often added since the option costs just $3 to $4 a month in a typical policy. Coverage usually includes medical expenses of policyholders and even passengers in a number of instances, regardless of who caused the accident. The policy options often cover medical expenses if a policyholder or a household member is struck by a car as a pedestrian; if the policyholder is injured driving another person’s vehicle; or if a policyholder or family member is injured in another car.
Many people believe that if they have health insurance through an employer or other private health insurance plan, they don’t need the medical coverage option. Not so. The fact is, a personal health insurance policy won’t pay for medical expenses that resulted from a car accident, nor will it pay for injuries suffered by a passenger.
On the other side of the coin, since deductibles and co-pays for many “after accident” medical services are now free--without a deductible—will people feel the need to add the medical care option to their auto policy? What’s more, since the new healthcare law eliminates lifetime limits for medical costs, those injured in an auto accident could conceivably stay in a hospital without being turned away or kicked out, or troubled by concerns over what their health care provider intends to pay. And lest we not forget that guaranteed coverage for preexisting conditions starts in 2014, which would prompt even more individuals to skip the medical care coverage option on their auto policy.
So will the medical care option become obsolete? Probably not. For one thing, many people (passengers and/or family members) may elect not to enroll in Obamacare, choosing instead to pay the fine (or tax). Adding a medical care option would protect passengers, providing extra money to supplement any incidental expenses and help compensate them for any extra losses like lost wages, which are not covered by Obamacare.
For an additional perspective, check out this post from Kenneth J. Allen & Associates, which offers some interesting insight and a number of informative links.
Photo courtesy of MorgueFile.com
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