Effective July 1, 2020, the new Michigan no-fault auto insurance reform law goes into effect, and for the first time, Michigan drivers will be able to select the appropriate amount of Personal Injury Protection (PIP) Medical coverage that they want when purchasing auto insurance. This means that under certain circumstances, drivers may choose to opt-out of PIP coverage entirely or exclude specific household members IF their health insurance covers auto injuries.
What This Means for Consumers and Their Health Plans
The new law is aimed to maximize coverage while providing financial relief in the form of lower insurance rates. Some healthcare plans default to your auto policy first, and some exclude medical expenses related to injuries related to an auto accident altogether.
In most cases, your auto policy will provide the most comprehensive coverage, so it’s important for you to understand that coverage of medical expenses by your healthcare plan related to an auto accident will more than likely not be as comprehensive as the medical expense coverage in your auto policy.
In addition, if drivers choose to opt-out, the entire PIP medical portion of their premium will be eliminated and the excluded members will not have PIP medical coverage under the policy.
Choosing the Right Level of Coverage for You and Your Family.
Consumers need to get a plan in place now, which means understanding all options and coverage well enough to know what is covered in the event of a catastrophic accident and what isn’t, as this will impact what level of coverage to elect.
We recommend that you begin working with your health coverage provider and auto insurers, reviewing all necessary forms and documents, such as full Public Act No.21, DIFS Bulletin 2020-01-INS, your specific health plan provider forms – ‘meets QHC’, ‘does not meet QHC’, ‘coverage under Medicare Parts A & B’, and any other necessary documents.
Can I choose a lower Personal Injury Protection (PIP) limit, and let my health insurance cover the rest?
You can, however many insurance agencies have advised against it for the following reasons:
Personal health policies don’t cover as many types of medical expenses as PIP does. If someone were seriously injured in an auto accident in addition to high deductibles and limitations on certain coverages. This means more out-of-pocket expenses for you. PIP covers medical-related expenses that a personal health plan won’t cover such as:
Attendant care at home or in the facility
Modifications to your home and auto to help you better live with disabilities as a result of an accident.
Personal Health Insurance Policies
Here are a few helpful suggestions to ensure you are well informed as you make decisions in the coming weeks:
If you have another medical plan such as BCBS, BCN, Priority Health, ask your agent to quote “coordinated medical”. This is where your personal health plan agrees to cover medical costs from auto accident injuries and is willing to be “primary” and pay claims “first” and your auto policy’s PIP coverage will pick up remaining co-pays, deductibles, out-of-network, fees, etc..
All insurance carriers have, at the ready, coverage letters for beneficiaries. If you would like or are required to produce a letter, contact the Customer Service department (phone number typically indicated on the back of your card), and request a letter specifically regarding your medical coverage to provide to your auto carrier to make decisions regarding PIP insurance.
If your benefits are employer-provided, please note that most Human Resource or Benefits teams are not able to answer specific questions about how your coverage will work with this new law as the health coverage and plan remains unchanged.
This information is general and provided for educational purposes only. It is not intended to provide legal advice. You should not act on this information without consulting legal counsel or other knowledgeable advisors.