Qualified Health Coverage and No-Fault Auto Insurance

Michigan Auto Law
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The big selling point for Michigan’s new auto No-Fault insurance law was that drivers would be able to save money on their car insurance by choosing the level of medical coverage they wanted to have available to them and their family if tragedy struck and they were injured in a car accident.

But what the politicians failed to tell people was that the coverage levels for No-Fault PIP medical benefits with the most savings potential would not be available to drivers if they or certain family members did not have a qualified plan to cover healthcare costs after a car accident.

For instance:

  • The $50,000 coverage level for drivers on Medicaid, which is supposed to result in average savings of 45%, is available only if the driver’s spouse or relative who lives in the same home has a qualified plan, is “enrolled in Medicaid” or has his or her own No-Fault auto insurance policy.
  • The ability to opt-out of No-Fault PIP medical benefits coverage completely for a driver on Medicare, which eliminates his or her premium for No-Fault medical coverage, depends on whether his or her spouse or family member that lives in the same house has the proper health insurance or has their own No-Fault auto insurance policy.
  • The new No-Fault law allows drivers to choose the $250,000 coverage level for No-Fault PIP medical benefits and coordinate his or her health insurance with No-Fault coverage, which results in a 100% reduction in his or her premium for No-Fault medical coverage. But this coverage option is only available if (1) the driver has private health insurance that meets the law’s requirements and (2) the driver’s spouse or family members have a qualified plan through a private insurer or Medicare.

The expectation with the new requirement regarding qualified health coverage is that, in addition to making it difficult to secure certain coverage levels, it will complicate both access to and the cost of private health insurance.

The new No-Fault law requires that the health insurance necessary for certain No-Fault coverage levels must not exclude or limit coverage for auto accident-related medical care. That means that “qualified” plans must effectively offer the same coverage that is available under No-Fault. This is going to cause one or both of the following things to happen:

  • Health insurers will exclude auto coverage altogether to avoid having to meet the higher coverage demands.
  • Health insurers are going to increase their prices considerably in order to be able to afford to provide the same medical care and treatment coverage that is available through No-Fault PIP medical benefits coverage.

If you’re wondering if you have the right health insurance plan to select the No-Fault coverage level you want, then you should check with your insurer. Michigan’s Insurance Commissioner has required them to put together documentation to indicate whether their coverage is “qualified for purposes of no-fault insurance.”

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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