Health insurance is full of landmines for unsuspecting car crash victims, who are subject to ‘auto exclusions,’ coverage limitations, managed care, HMOs and medical pre-approval requirements and ERISA liens.

No-Fault car insurance or health insurance: Which one is the better choice for paying for a car crash victim’s medical care and treatment?

The insurance industry, many Republicans in Lansing, and Detroit Mayor Mike Duggan are all pushing for drastic changes to Michigan’s auto No-Fault law. They all say that many of the benefits that car accident victims receive from auto No-Fault insurance are now provided through health insurance, so we can impose caps on No-Fault, such as the $25,000 cap that Duggan is proposing with D-Insurance.

But they’re wrong.

Based on my 23 years as a car accident attorney, auto No-Fault insurance is by far the best choice. Auto No-Fault medical benefits provides for all reasonably necessary medical care and treatment for auto accident victims. These benefits cover care and treatment as wide-ranging as doctor visits, surgeries, medication, attendant care, home and vehicle-modifications and medical mileage.

But what about health insurance? Not so much.

Unlike with the auto No-Fault law in Michigan, car accident victims seeking post-crash medical coverage from a health insurer often will face the following steep challenges:

• Auto-accident exclusions that deny coverage for medical treatment for injuries caused by a car accident.
• Limitations on or non-coverage of medical products, services and accommodations readily covered by No-Fault.
• Managed care plans (or HMOs) that deny victims their “right” to choose their own doctor and that require the insurer’s “pre-authorization” for medical services and prescriptions.

But the worst of them all is self-funded ERISA plans.

These ERISA plans are increasingly common, and they are very dangerous. Under a self-funded ERISA plan, a health insurer can legally claw back the money it spent in medical care from a car crash victim’s pain and suffering settlement. People who are completely innocent and catastrophically injured can receive nothing from the insurance company of the driver who hit them and injured them, because the health insurer wants to be paid back for everything it paid for accident-related medical care.

So why am I writing about this now, given that our auto No-Fault law usually covers motor vehicle accident victims’ medical bills (except in the limited circumstances where the victim has coordinated his No-Fault and health coverage)?

Because if some politicians have their way, car crash victims of the future may be forced to increasingly rely on health insurance, rather than No-Fault, for some or all of their car accident-related medical coverage.

It’s time these people start contemplating what post-car crash medical care and treatment will actually look like if health insurance, rather than No-Fault insurance, is providing the coverage.

Because the answer is that it will be a disaster.

Why would car accident victims have to start relying on health insurance, rather than No-Fault?

For years, politicians have been proposing so-called No-Fault “reform” bills that would replace No-Fault’s guarantee of unlimited medical benefits with either a “cap” (i.e., a dollar limit) on No-Fault medical benefits or a PIP Choice plan — such as the recently introduced House Bill 4488 — that would allow consumers to select one of several “cap” levels.

If either of those proposals become a reality, then a car crash victim will have to turn to her health insurer for coverage once her medical bills have exceeded the applicable “cap” amount.

Contrary to the “it’s not a big deal” spin from the pro-No-Fault-reform politicians and insurance industry lobbyists, it’s a huge deal.

Not only will the cost of health insurance go through the roof when and if insurers suddenly become liable for unlimited, lifetime catastrophic coverage for automobile accident victims (which they are currently not liable for), but car accident victims will receive a significantly inferior level of medical care.

Can a health insurance policy’s ‘auto accident exclusion’ leave a car crash victim without medical coverage?

Sadly, the answer is “Yes.”

If a health insurance company has an “auto accident exclusion” in its policy (they’re very common in Michigan because of No-Fault’s guaranteed of unlimited medical benefits), then that means the health insurer excludes coverage (i.e., won’t pay for medical treatment) for injuries related to a car crash.

Will health insurance provide the same unlimited coverage that No-Fault does?

Most likely not.

Although it will depend on the specific terms of each health insurance plan, it’s likely that most health insurers would not cover the same wide breadth of products, services and accommodations for car crash victims that No-Fault does — especially on the same unlimited basis.

Those medical-related items may include:

• Residential care;
• Attendant care by an agency;
• In-home attendant care by a family member;
• Prescriptions;
• Hospitalization;
• Doctors/lab;
• Rehabilitation services;
• Case management;
• Transportation [possibly including medical mileage];
• Home purchases/modifications;
• Prosthesis;
• Equipment;
• Vehicle purchases/modifications. (Source: Michigan Catastrophic Claims Association, March 13, 2017, press release)

For more on other reasons No-Fault is better than health insurance for motor vehicle accident victims — namely, managed care plans (such as HMOs) and ERISA liens — please visit this part 2.