Understanding Your Michigan Auto Insurance Medical Coverage

Michigan auto insurance law requires drivers to have personal injury protection (PIP) insurance, which covers medical expenses and other costs associated with auto accident injuries. The medical portion of Michigan auto insurance is constituted of the PIP coverage options that drivers can choose from based on their budget and insurance needs. These options include unlimited coverage, up to $500,000 in coverage, up to $250,000 in coverage, up to $250,000 with medical exclusion(s), up to $50,000 in coverage, and a PIP medical opt-out for those with Medicare (Parts A and B). The new auto insurance law in Michigan allows drivers to choose a coverage level that suits their needs and budget, instead of the previously mandatory unlimited PIP coverage.

Personal Injury Protection (PIP)

In Michigan, PIP benefits are guaranteed by the No-Fault law and are payable regardless of whether the driver was at fault. These benefits include medical expenses, lost wages, replacement services, and attendant care. Medical expenses covered by PIP can include doctor visits, hospitalisation, surgeries, procedures, medications, rehabilitation, and medical equipment. Lost wages are reimbursed at 85% of the driver's normal salary, up to a monthly maximum. Replacement services cover the cost of everyday tasks that the driver is unable to perform due to their injuries, such as housekeeping, laundry, and meal preparation. Attendant care provides assistance with activities of daily living and can be provided in the driver's home or in a facility.

Prior to July 1, 2020, Michigan law required all drivers to carry unlimited PIP coverage. However, under the new auto insurance law, drivers now have the option to choose from different coverage levels based on their needs and budget. The available coverage levels include $50,000, $250,000, and $500,000 per person per accident, as well as an unlimited option. Drivers who are enrolled in Medicare or Medicaid may also have the option to opt out of PIP coverage entirely. It is important to note that the selected coverage level will determine the maximum amount that the insurance company will pay for medical care and treatment.

The cost of PIP insurance in Michigan depends on various factors, including the level of coverage chosen, the driver's driving history, age, and income. While Michigan still has the highest average cost for car insurance in the country, the recent auto insurance reforms are expected to provide financial relief to drivers by giving them more options for coverage levels.

PIP medical coverage options

Michigan's new auto insurance law has made changes to Personal Injury Protection (PIP) coverage, allowing drivers to choose from different coverage levels. These changes apply to policies issued or renewed after July 1, 2020.

Previously, Michigan required all drivers to purchase unlimited PIP coverage, which proved too expensive for many. Now, drivers can choose a coverage level that suits their needs and budget, with six PIP medical coverage options available:

• Up to $500,000 in coverage
• Up to $250,000 in coverage
• Up to $250,000 in coverage with PIP medical exclusion(s) – This option is available if the named insured has non-Medicare health coverage that covers auto accident injuries, and/or if household members have health insurance that will cover such injuries.
• Up to $50,000 in coverage – This option is available if the named insured is enrolled in Medicaid, and their household members have another auto insurance policy, Medicaid, or other health insurance that covers auto accident injuries.
• PIP medical opt-out – This option is available if the named insured has Medicare Parts A and B, and any household members have another auto insurance policy or health insurance that covers auto accident injuries.
• Unlimited PIP medical coverage – This option is selected by default if no other PIP medical option is chosen.

The PIP medical coverage chosen will determine the maximum amount paid per person per accident by the driver's auto insurance company for an injured person's expenses. Drivers may need to consult their health insurance provider or employer to determine if their health insurance covers auto accident injuries and to obtain any necessary documentation.

It is important to carefully consider one's financial situation and needs when choosing a PIP coverage level, as choosing a lower level of coverage may result in personal financial responsibility for medical costs that exceed the coverage limit.

No-fault auto insurance

Before the Michigan No-Fault insurance law was passed in 1973, Michigan had been a tort liability state. In 2019, the Legislature made historic changes to the auto insurance law that affected every driver, including allowing PIP Choice for the first time ever in Michigan.

If you are injured in a car accident, an auto insurance company pays your medical bills and lost wages regardless of whether you were at fault. Either your own insurer or the legally responsible company will pay once you file an application for benefits.

For more than 40 years, the Michigan No-Fault insurance law has required drivers to purchase “unlimited” PIP (Personal Injury Protection) medical benefits which would cover any and all car accident-related medical care and treatment for as long as it was “reasonably necessary” for the injured person’s care, recovery, or rehabilitation. Under the new law, after July 1, 2020, drivers must select whether they wish to continue with “unlimited” coverage or whether they’d like to cap their coverage at $50,000 (if they are enrolled in Medicaid), $250,000, or $500,000.

Opt-out

For drivers who are on Medicare, they have the option, after July 1, 2020, of opting out altogether from PIP medical benefits coverage. The intent behind this change is that these drivers would turn to Medicare for medical coverage for injuries suffered in a car accident.

Attendant care

Under the Michigan No-Fault insurance law, after July 1, 2021, auto insurance companies will not be obligated to pay for more than 56 hours per week of in-home, family-provided attendant care.

Fee schedule

Starting July 1, 2021, doctors, hospitals, clinics, and other medical providers will have to conform their charges for medical care, treatment, and services to the new Medicare-based fee schedule, which will be a percentage of what is payable under Medicare.

Bodily injury liability coverage

Starting on July 2, 2020, drivers will be required to carry bodily injury liability insurance in the amounts “of not less than $250,000 because of bodily injury to or death of 1 person in any 1 accident” and “of not less than $500,000 because of bodily injury to or death of 2 or more persons in any 1 accident.” Importantly, however, the law also provides that a driver “may choose to purchase lower limits” of $50,000 and $100,000.

Qualified health coverage

In order for drivers to be able to select certain coverage levels and options that will become available after July 1, 2020, drivers and/or their family members may need to have health insurance coverage that qualifies as “qualified health coverage.”

Qualified Health Coverage (QHC)

The Michigan auto insurance reform law that came into effect on July 1, 2020, allows drivers to opt out of buying Personal Injury Protection (PIP) as long as their health insurance covers auto injuries and has a deductible of $6,579 or less. This health insurance plan is considered Qualified Health Coverage (QHC).

QHC ensures that auto accident injuries will be covered. To be considered QHC, a health insurance plan must be either Medicare Parts A & B (which could also be a Medicare Advantage plan) or a health insurance policy with a deductible of $6,000 or less that does not limit or exclude auto accident injuries.

If you are enrolled in Medicare Parts A and B or have a health insurance plan that meets the QHC requirements, you can opt out of PIP. However, you must show your auto insurance agent proper documentation, such as a letter confirming your QHC. Your health insurer should be able to provide you with this documentation.

It is important to note that opting out of PIP could result in a costly change in the event of an auto accident. Carefully consider your options before making any changes to your auto insurance policy.

Opting out of PIP

Personal Injury Protection (PIP) is a mandatory requirement in Michigan, also known as "no-fault insurance". It covers the medical bills for you and your passengers after a car accident, as well as accidents when you are a passenger in someone else's car or when you are hit by a car as a pedestrian or cyclist.

There are limited reasons a Michigan driver can opt out of PIP coverage. Most drivers do not have the option to opt out of PIP benefits, however, there are some exceptions for those who receive Medicare benefits. To opt out of PIP, the insured person must meet the following criteria:

• The insured person must have both Medicare Parts A and B.
• All other household members must also have another Michigan auto insurance policy or other qualified health coverage.

In other words, Medicare enrollees can opt out if they do not have anyone else in their household that needs PIP coverage. It is important to note that those on Medicaid do not have the option to completely opt out of PIP. Instead, they can choose a lower amount of PIP coverage, such as $50,000 in PIP.

If you choose to opt out of PIP, you will save money by not paying insurance premiums. However, it is important to understand that Medicare does not provide the same benefits as PIP, and you may not have as many options for compensation if you are in an accident. For example, Medicare will not cover lost wages or household services in most situations.

Before deciding to opt out of PIP, it is crucial to understand the differences between PIP and Medicare coverage. While Medicare covers just medical care, PIP provides reimbursement for other types of losses, such as long-term care, residential treatment programs, case management services, and vehicle modifications. These services can be crucial for individuals who have experienced serious injuries in a car accident.

While opting out of PIP may seem appealing due to the potential cost savings, it is generally not recommended. PIP coverage can provide valuable benefits and peace of mind in the event of a car accident. It is important to carefully consider your personal circumstances and the potential risks before making a decision.

Frequently asked questions