Medicare Vs Auto Insurance: Who Pays First?

In Michigan, auto insurance companies are the primary payer for car accident-related medical expenses. However, Medicare recipients who are injured in a crash are treated like any other motorist, and their accident-related medical expenses are covered under the Personal Injury Protection (PIP) portion of their Michigan No-Fault policy. As of July 1, 2020, individuals covered by Medicare Parts A and B can opt out of PIP medical coverage if certain conditions are met. If Medicare recipients opt out of PIP benefits, they will not be able to receive any No-Fault coverage through the Assigned Claims Plan.

Opting out of PIP coverage with Medicare

Under the old Michigan No-Fault insurance, which was adopted in 1973, car accidents were not covered by Medicare. This meant that Medicare recipients had to charge their auto accident-related medical expenses to their Personal Injury Protection (PIP) coverage. However, new laws that came into effect on July 1, 2020, changed this rule. Now, individuals who are covered by Medicare Parts A and B can opt out of PIP medical coverage entirely, provided certain conditions are met.

If you are enrolled in Medicare Parts A and B, you may opt out of PIP medical coverage. To do so, your spouse and any resident relatives covered by the policy must have their own "qualified health coverage" for auto accident injuries. "Qualified health coverage" includes enrollment in both Medicare Parts A and B, or a healthcare plan that does not exclude or limit coverage for accident-related injuries. This can include private health insurance or a different No-Fault policy with PIP medical coverage. Additionally, the annual individual deductible for the healthcare plan must be $6,000 or less.

It is important to note that if you opt out of PIP coverage and are injured in a motor vehicle accident, you will not be able to receive any No-Fault coverage through the Assigned Claims Plan. However, you may be entitled to Assigned Claims Plan (ACP) coverage if injured as a non-occupant or pedestrian, with a maximum benefit of $250,000.

Understanding the Differences between Medicare and No-Fault Coverage

Before opting out of PIP coverage, it is crucial to understand the differences between Medicare and No-Fault coverage. Unlimited lifetime PIP medical coverage pays for all reasonable and necessary accident-related expenses, with no limits on the duration of treatment as long as it is needed for recovery. In contrast, Medicare only pays for specific services and has limitations on many of them, such as rehabilitative therapy.

• In-home attendant care
• Transportation to and from medical appointments
• Long-term custodial care
• Electric wheelchairs
• Certain specialized therapies for traumatic brain injuries
• Home and vehicle modifications

Medicare offers the following services on a limited basis:

• Intermittent skilled nursing facility (SNF) care
• Long-term rehabilitation therapy
• Speech and language therapy

Recommendations

While opting out of PIP coverage may seem appealing, especially during times of financial hardship, it is generally not recommended. Medicare offers very limited services in terms of the scope of care available for individuals seriously injured in motor vehicle accidents. Michigan's unlimited, lifetime No-Fault system provides more robust coverage in the event of an accident.

To ensure the best protection for yourself and your family, it is advisable to purchase the following insurance coverages:

• Unlimited, lifetime No-Fault coverage
• Significant amounts of liability coverage
• Significant amounts of underinsured and uninsured motorist coverages
• Avoid managed care plans
• Avoid step-down policies

Medicare as primary payer for car accidents

In the United States, Medicare is a federal health insurance program that covers inpatient hospital care and a range of outpatient medical services for people over 65 and those with certain disabilities. When it comes to car accidents, the question of whether Medicare is the primary payer depends on various factors, and the rules can vary by state.

In most states, car insurance is the primary source of coverage for car accident injuries. Liability insurance, which is responsible for injuries caused by another driver's fault, typically serves as the primary payer. However, in "no-fault" states or where Personal Injury Protection (PIP) insurance is mandatory, PIP coverage becomes the primary payer for medical expenses, regardless of fault. PIP insurance should be the initial source of payment for injury-related costs.

Medicare can act as a secondary payer if car insurance coverage doesn't fully cover medical expenses. It follows coordination of benefits rules to ensure it doesn't pay for costs that should be covered by primary insurance. Medicare can step in to fill gaps, especially when car insurance limits have been exceeded or when it covers services that car insurance doesn't.

In Michigan, the interplay between Medicare and No-Fault auto insurance for car accident victims is particularly complex. Under the previous No-Fault insurance system, Medicare typically did not cover auto accidents. However, as of July 1, 2020, new laws were implemented, allowing motorists to choose from six different levels of PIP benefits. Individuals covered by Medicare Parts A and B can now opt out of PIP medical coverage entirely if certain conditions are met.

According to the Michigan Insurance Commissioner, Medicare will cover auto accident injuries for enrollees who opt out of PIP medical benefits and have no other available coverage. Additionally, if a Medicare enrollee is injured and exhausts their PIP medical limits, Medicare will pay for covered services if no other coverage is available. Nevertheless, Medicare has generally not been the primary payer for auto accident-related injuries in Michigan due to the availability of No-Fault insurance. This is consistent with the federal "Medicare Secondary Payer" rule, which states that Medicare will not pay for items or services when payment can reasonably be expected from automobile insurance or No-Fault insurance.

In summary, while Medicare can provide coverage for car accident injuries, the specific circumstances, state laws, and insurance coverage options will determine whether it serves as the primary or secondary payer. It is important for individuals to understand their insurance coverage and the coordination of benefits rules in their state to ensure they receive the necessary medical care and coverage in the event of a car accident.

No-fault insurance and coordination of benefits

No-fault insurance is a type of insurance that covers healthcare services and property damage resulting from an accident, regardless of who is at fault. It can be found as part of automobile insurance policies, homeowners' insurance policies, and commercial insurance plans. In the context of coordination of benefits, no-fault insurance plays a crucial role in determining which insurance provider acts as the primary payer and which acts as the secondary payer when an individual has multiple insurance coverages.

When an individual has Medicare and other insurance coverage, such as no-fault insurance, coordination rules come into play to decide the order of payment. The "primary payer" pays first, covering what it owes on the individual's bills, and then the "secondary payer" pays the remainder. In some cases, there may also be a third payer. Medicare may serve as the secondary payer to no-fault insurance, liability insurance, or workers' compensation.

The coordination of benefits can vary depending on the state and specific insurance policies. For example, in Michigan, individuals cannot coordinate their No-Fault coverage with Medicare or Medicaid. Federal law, specifically the "Medicare Secondary Payer" rule, prohibits making Medicare or Medicaid the primary payer for car accident-related medical expenses. As a result, No-Fault insurance becomes the secondary payer once the individual's health insurance coverage is exhausted.

On the other hand, in New York, there is coordination between no-fault insurance and workers' compensation. In a case where an individual was injured in a motor vehicle accident during their employment, they received benefits from their employer's workers' compensation insurer for medical expenses and lost wages. Additionally, they filed a claim with the no-fault insurer of the vehicle they were occupying. The no-fault insurer provided wage loss reimbursement and had an aggregate limit for payments to a single individual per accident. In this scenario, the workers' compensation insurer covered most of the expenses, and the no-fault insurer paid the difference, adhering to the state's No-Fault Law and Insurance Law.

It's important to note that the laws and regulations regarding no-fault insurance and the coordination of benefits can be complex and may vary across states. It is always advisable to consult official sources or legal professionals for specific information regarding insurance coverage and coordination of benefits in a particular state.

Michigan auto insurance law and reasonable efforts

In Michigan, car insurance laws require vehicle owners to carry No-Fault auto insurance, which covers personal injuries, property damage, and liability for bodily injury. These coverages help pay for medical bills and lost wages, as well as legal liability if a driver injures another person or causes property damage.

Michigan is a no-fault state, which means that drivers file claims with their own insurer, even if another driver caused the accident. In such cases, Personal Injury Protection (PIP) and Property Protection Insurance (PPI) coverages help pay for the expenses incurred in the accident upfront. The insurer then recovers the costs from the at-fault party's insurer.

Under Michigan's No-Fault auto insurance law, a car accident victim with coordinated coverage must make "reasonable efforts" to seek payment of accident-related medical expenses through their health insurance company before their No-Fault auto insurance company is obligated to pay. The Michigan Court of Appeals has clarified that "reasonable efforts" do not include "appealing a health insurer's medical necessity determination."

The law refers to this as an "exclusion" that is "reasonably related to other health and accident coverage." This means that drivers can choose to coordinate their health insurance with their auto insurance to reduce their auto insurance premium. In this case, the health insurance is the primary payer for car accident-related medical expenses, and the No-Fault insurance becomes the secondary payer once the health insurance coverage is exhausted.

It is important to note that Medicare and Medicaid recipients in Michigan have different coverage options and cannot make Medicare or Medicaid the primary payer for car accident-related expenses due to federal law.

Medicare and Medicaid coverage differences

In Michigan, a person can coordinate their health insurance with their auto insurance so that their health insurance is the primary payer for car accident-related medical expenses. However, this coordination of benefits is not allowed with Medicare or Medicaid due to the "Medicare Secondary Payer" rule.

Now, Medicare and Medicaid are both government-provided health care programs, but they have several differences. Here are the key differences between the two:

Medicare:

• Medicare is a federal health insurance program for Americans aged 65 and above or those with certain disabilities.
• It is managed by the federal government, specifically the Centers for Medicare & Medicaid Services, and has set standards for costs and coverage across the United States.
• Medicare enrollees share the costs of coverage through monthly premiums, co-pays, and deductibles.
• There are four types of Medicare: Part A (hospital insurance), Part B (medical insurance), Medicare Advantage Part C (voluntary private insurance), and Part D (prescription drug coverage).
• Medicare offers a range of coverage options, including unlimited and limited Personal Injury Protection (PIP) medical coverage for auto accidents.

Medicaid:

• Medicaid is a joint federal and state program that provides health insurance for individuals and families with limited income and resources.
• Each state manages its own Medicaid program, so eligibility requirements and benefits can vary.
• Medicaid enrollees typically have minimal or no out-of-pocket costs for covered health care expenses.
• Medicaid offers benefits not usually covered by Medicare, such as nursing home care and personal care services.
• To apply for Medicaid, individuals can go through their state Medicaid agency or the Health Insurance Marketplace at any time of year.

Frequently asked questions