Michigan Pip Insurance: What's Changing?

Michigan's auto insurance law has undergone significant changes, including the introduction of Personal Injury Protection (PIP) choice, opt-outs, and increased bodily injury liability coverage. The reforms aim to lower insurance costs for Michigan drivers, who previously had to pay mandatory unlimited PIP medical benefits, resulting in high premiums. Now, drivers can choose from different PIP coverage levels, including $50,000 for Medicaid enrollees, $250,000, $500,000, or unlimited coverage. Additionally, drivers with Medicare can opt out of PIP medical benefits entirely. These changes took effect on July 2, 2020, and insurance companies are required to reduce PIP premium rates and guarantee an eight-year rate reduction.

The Michigan Catastrophic Claims Association (MCCA)

The MCCA fee is an essential component of Michigan's auto insurance system. It is added to each vehicle's insurance policy to fund the MCCA, which provides unlimited personal injury protection benefits to individuals involved in catastrophic accidents. The fee covers the costs of these catastrophic claims, ensuring victims receive the necessary medical care and support. The fee is collected by insurance companies in Michigan and is typically included as a separate line item on insurance premium statements.

The MCCA fee is subject to annual adjustments, depending on the MCCA board's assessment of anticipated costs. For example, in 2023, the MCCA decided to raise its annual per-vehicle assessments on all Michigan auto insurance policies. The fee amount for each vehicle is a fixed rate and does not change based on vehicle type or insurance company.

The primary purpose of the MCCA fee is to provide funding for catastrophic claims that exceed the limits of individual auto insurance policies. This ensures that individuals involved in severe accidents have access to necessary medical treatment, rehabilitation, and long-term care without financial limitations.

Opting out of No-Fault medical coverage

Michigan's No-Fault insurance law has undergone significant changes in recent years, offering drivers more choices and flexibility while also aiming to reduce the financial burden of high insurance premiums. One notable change is the option for drivers to opt out of No-Fault medical coverage, specifically the Personal Injury Protection (PIP) benefits. Here are some key points about opting out of No-Fault medical coverage in Michigan:

Eligibility for Opting Out

To be eligible to opt out of No-Fault medical coverage, individuals must meet certain criteria. For seniors or those covered under Medicare:

• They must be covered under both Parts A and B of Medicare.
• Their spouse and any resident relatives must also have their own qualified health coverage or be covered under a separate No-Fault policy.

For those who are not on Medicare:

• The "Limited PIP Medical Coverage of $250,000 with Exclusions" option allows individuals to opt out of PIP medical coverage while still having a $250,000 benefit level.
• To be eligible, one must have qualified health coverage, and their spouse and resident relatives must also have qualified health coverage or be covered under a separate No-Fault policy for car accident injuries.

Implications of Opting Out

It is important to understand the implications of opting out of No-Fault medical coverage. If an individual opts out and is injured in a car accident:

• No-Fault will not cover any accident-related medical bills.
• They will have to rely on their Medicare or other health insurance coverage for medical expenses resulting from the accident.
• Medicare will pay for medical bills related to the accident, but it is entitled to reimbursement from any claim made against the negligent driver.

Other Considerations

When considering whether to opt out of No-Fault medical coverage, it is advisable to consult with a knowledgeable insurance broker or professional. It is also essential to review the scope of services covered by Medicare or other health insurance plans, as they may offer limited services for serious injuries sustained in motor vehicle accidents.

Additionally, it is worth noting that opting out of No-Fault medical coverage does not affect other aspects of one's insurance policy, such as property damage liability coverage.

Attendant care limits

Attendant care is a No-Fault PIP benefit that ensures car accident victims have the nursing assistance they need to recover from their injuries and rebuild their lives. It covers the cost of a nurse or family member helping victims with the "activities of daily living" they are too injured to do on their own. This includes bathing, dressing, eating, administering medication, and using the toilet.

The new Michigan car insurance law imposes an unprecedented restriction on in-home, family-provided attendant care services. Starting on July 2, 2021, No-Fault auto insurance companies are only required to pay for 56 hours per week of in-home, family-provided attendant care services. This limitation does not apply to services provided in a facility or by a nurse or home health aide from a commercial agency.

Importantly, in Michigan, a car accident victim and/or their provider can ""contract" with the auto insurance company "to pay benefits for attendant care for more than" the 56-hours-per-week limitation on in-home, family-provided assistance. Some auto insurance companies may find this "contract" option appealing as in-home, family-provided services are often significantly less expensive than the commercial rate charged by agencies.

The new Michigan No-Fault law that was enacted on June 11, 2019, provides that after July 1, 2021, auto insurance companies are not obligated to pay for more than 56 hours per week of in-home, family-provided attendant care for Michigan car accident victims. There has been no change to this law.

Insurers are required to offer an additional optional rider for attendant care coverage in excess of the amount provided by the chosen PIP option if you choose a PIP limit of $50,000, $250,000, or $500,000.

Fee schedule

A fee schedule is a required cost control measure between auto insurance companies and healthcare providers to make personal injury protection (PIP) medical coverage more affordable.

The Michigan medical fee schedule is intended to standardize payments to medical care providers (physicians, hospitals, clinics, etc.) for services rendered or supplies provided to people injured in auto accidents. Payments to medical care providers are based on a percentage of the Medicare-based fee schedule. This fee schedule outlines the costs that correspond to medical services and supplies and will help standardize how much can be charged by and paid to medical care providers for these services.

The Michigan No-Fault law includes a managed care option for consumers looking to buy or renew their insurance policies. The No-Fault law now includes a fee schedule and a tiered PIP coverage plan.

The new law requires that auto insurance companies and agents give policyholders forms that describe the benefits and risks of the coverage options.

The Michigan Catastrophic Claims Association (MCCA) is a private non-profit association that provides reinsurance for all auto insurers operating in Michigan. The MCCA is responsible for reimbursing insurers for PIP claims that exceed a certain amount. That amount is currently $580,000. In November 2019, the MCCA announced that if you select the unlimited PIP option, the assessment charged per vehicle will be $100 for the period beginning July 2, 2020, through June 30, 2021. If you select an option providing less than unlimited PIP coverage, there will be no MCCA assessment for the period beginning July 2, 2020, through June 30, 2021.

Increased bodily injury liability coverage

Michigan's auto insurance law has undergone significant changes, including increased bodily injury liability coverage. The new law requires auto insurance companies or licensed agents to provide drivers with forms outlining the benefits and risks of their coverage options.

Bodily injury liability insurance in Michigan provides coverage for at-fault drivers in car accidents that result in injuries or death. It covers pain and suffering compensation, excess medical benefits, lost wages, and other economic damages owed to injured parties, up to the policy limit.

Prior to the changes, the minimum coverage limits were $20,000 for injuries or death per person and $40,000 per accident. The new default coverage limits have been raised to $250,000 per person and $500,000 per accident. Additionally, the minimum property damage coverage in another state has been set at $10,000.

Drivers have the option to purchase lower coverage limits of $50,000 per person and $100,000 per accident. However, they must sign a specific form approved by the Michigan Insurance Commissioner, acknowledging the risks associated with choosing lower coverage.

The increased bodily injury liability coverage provides greater protection for at-fault drivers, ensuring that they can cover the financial consequences of an accident. It is important to carefully consider the coverage limits and seek advice from insurance agents and legal professionals to make an informed decision.

The changes in Michigan's auto insurance law, including the increased bodily injury liability coverage, aim to provide more flexibility and protection for drivers while also addressing the high costs of auto insurance in the state.

Frequently asked questions