Michigan's New Insurance Bill: Signed, Sealed, And Delivered

Michigan's new auto insurance law, signed by Governor Gretchen Whitmer, introduces significant changes to the state's no-fault auto insurance system. The reform, which has been in the works for 46 years, aims to reduce the state's highest-in-the-nation insurance rates by offering drivers more choices and lowering costs. The law also strengthens consumer protections and maintains the highest coverage options in the country. These changes apply to policies issued or renewed after July 1, 2020, and are expected to benefit all drivers in Michigan.

The bill provides five options for personal injury protection coverage

The new auto insurance bill in Michigan, signed into law by Governor Gretchen Whitmer, offers drivers five options for personal injury protection (PIP) coverage. These options are:

• Unlimited medical benefits, which have been offered previously.
• $250,000 limit with medical exclusions (possible for household members who have health insurance that covers auto accidents).
• $50,000 limit (only available if the driver is on Medicaid).
• PIP medical opt-out (only available if the driver is on Medicare).
• Opting out of PIP coverage entirely (only if the driver has Medicare Parts A and B, and members of their household have health insurance that covers accident-related injuries with a deductible of $6,000 or less, or Medicare Parts A and B).

Personal injury protection, also known as "no-fault insurance", covers medical expenses and lost wages for the policyholder and their passengers if they are injured in an accident, regardless of who is at fault. In addition to medical expenses, PIP can also cover funeral expenses, household services, disability and rehabilitation costs.

The new bill will provide Michigan drivers with significant reductions in premiums, which are currently the highest in the nation. The savings in the PIP portion of insurance policies are guaranteed for eight years and range from 10% to 100%. The PIP portion accounts for about 40% to 50% of an insurance bill.

The bill bans insurance companies from using non-driving factors to set rates

The new insurance bill in Michigan, signed into law by Governor Gretchen Whitmer, includes a provision that bans insurance companies from using non-driving factors to set rates. This means that insurance companies will no longer be able to consider certain personal characteristics and demographics when determining insurance prices for drivers.

Specifically, insurance companies will be prohibited from using the following factors to set rates: sex, marital status, home ownership, education level, occupation, postal zone/ZIP codes, and credit score. This change aims to address the issue of high insurance rates in Michigan, which have been attributed to the inclusion of unlimited lifetime medical benefits in the state's no-fault auto insurance system.

While insurance companies will still be able to use some non-driving factors, such as age and territorial rates, the new bill significantly limits the number of factors that can influence rates. This move towards fairer rate-setting practices is expected to provide significant savings for Michigan drivers, with reductions guaranteed for eight years.

The prohibition on using non-driving factors to set rates went into effect on July 1, 2020, alongside other changes from the insurance reform. These changes include giving drivers more choices for personal injury protection coverage and implementing new fee schedules for medical providers.

The bill will save drivers between 10% and 100% on a portion of their insurance bill

Michigan's auto insurance reform bill, which was signed into law by Governor Gretchen Whitmer in May 2020, is expected to save drivers between 10% and 100% on a portion of their insurance bill. The bill, which has bipartisan support, aims to reduce the state's high insurance premiums by giving drivers the option to forego unlimited medical coverage for crash injuries.

The Personal Injury Protection (PIP) portion of an insurance policy, which accounts for about 40% to 50% of the total cost, will see the most significant savings. Drivers who choose to maintain unlimited lifetime benefits will save 10%, while senior citizens and drivers with qualifying health care benefits who opt out of PIP coverage completely will save 100%. The savings for other levels of PIP coverage, ranging from $50,000 to $500,000, will be between 20% and 45%.

In addition to the savings on PIP coverage, there will also be additional savings on the annual Michigan Catastrophic Claims Association (MCCA) fee. This fee, which covers unlimited lifetime medical benefits for people severely injured in car crashes, will be reduced from the scheduled increase to $220 in July 2020. For people who choose lower rates of personal injury coverage, the fee will be $43 per year, while those who opt for unlimited benefits will likely see an increase in the fee.

The bill also includes provisions that prohibit insurance companies from using non-driving factors such as credit scores, ZIP codes, marital status, and gender when determining rates. However, there are some loopholes in these provisions, as insurance companies can still use credit reports and base rates on "territories" which could be as small as a Census tract.

The insurance reform bill is expected to provide significant reductions in Michigan's insurance premiums, which are currently the highest in the nation. The bill guarantees rate reductions for every Michigan motorist for eight years and offers drivers more choices and flexibility in their insurance coverage.

The bill includes a managed care option for consumers

The new Michigan No-Fault law includes a managed care option for consumers looking to buy or renew their Michigan auto insurance policy. This new medical care option took effect on June 11, 2019.

The managed care option is not mandatory for unlimited No-Fault medical coverage. However, some insurance agents and auto insurance companies are falsely telling drivers that if they want to purchase the "unlimited" No-Fault medical coverage option, they must also agree to accept the "managed care option". This is not only terrible advice but also goes against Michigan's auto No-Fault insurance law.

The managed care option allows a claims adjuster to control your medical care and treatment options. It also requires you to see only doctors pre-approved by your insurance company. The option will also require you to get the insurance company's pre-authorisation for any necessary medical treatment, including surgeries.

Drivers who choose this option must be provided with a "written disclosure statement" that includes the "estimated range of the percentage of the discount provided by the managed care option".

The bill will close loopholes in insurance coverage for mental health and substance use disorder treatments

On May 24, 2024, it was reported that a significant insurance bill had been signed into law in Michigan, addressing and closing existing loopholes in insurance coverage for mental health and substance use disorder treatments. This new legislation represents a pivotal step forward in the state's ongoing efforts to enhance parity in healthcare services and ensure equitable access to essential treatments for all residents.

The bill specifically targets disparities in insurance coverage for mental health and substance use disorder treatments, areas where loopholes and inconsistencies in coverage have historically created barriers to care. By closing these loopholes, the bill aims to provide clearer and more comprehensive coverage for individuals seeking treatment for these conditions.

One of the key aspects of the bill is its focus on ensuring that insurance plans offer equitable coverage for mental health services. This includes coverage for a diverse range of treatment options, such as psychotherapy, medication management, and inpatient or outpatient programs. The bill mandates that insurance providers clearly outline the specific mental health services covered under their plans, providing transparency and assurance to individuals seeking care.

Additionally, the legislation addresses substance use disorder treatments, another area where coverage gaps have traditionally existed. It ensures that insurance plans provide comprehensive coverage for a variety of treatment approaches, including medication-assisted treatment, inpatient detoxification, and outpatient rehabilitation programs. By doing so, individuals struggling with substance use disorders will have improved access to the full continuum of care needed for successful recovery.

The bill also includes provisions to enhance enforcement and oversight of insurance providers to ensure their compliance with the new regulations. This may involve regular audits and reviews of insurance plan offerings to confirm that they meet the mandated standards for mental health and substance use disorder coverage. Stronger enforcement mechanisms will help hold insurance companies accountable and deter future non-compliance.

Overall, the signing of this bill signifies Michigan's commitment to prioritizing the mental health and well-being of its residents. By closing loopholes and ensuring comprehensive insurance coverage for mental health and substance use disorder treatments, the state is taking a proactive approach to addressing the needs of individuals with these conditions. This legislation represents a significant step forward in the ongoing journey toward achieving parity in healthcare services and improving access to vital mental health resources.

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