Most people know that Michigan’s long-held no-fault auto insurance law is changing on July 2, 2020. At the heart of this change is the PIP (Personal Injury Protection) level that Michigan drivers will now be able to choose.
It covers the costs of medical and recovery care, rehabilitation, wage loss, replacement services, and the cost of a caregiver when injuries prevent the insured from performing daily functions. It also provides for some funeral expenses and survivor benefits if injuries result in death. Currently, there is no end date or cap on costs covered. Coverage for the injured motorist applies for life.
The option to continue with unlimited PIP is still available in Michigan, the only state to offer this. Alongside this change, insurance carriers must lower their statewide average PIP medical premiums for eight years. Medical providers will also be required to operate under a fee schedule that limits how much they can charge auto insurers. Non-driving factors like sex, marital status, homeownership, credit score, education level, occupation, and zip code will no longer impact auto insurance rates. (Michigan Government Brochure 679974-7)
Another factor affecting premium costs under the new auto insurance law is the amount of the MCCA (Michigan Catastrophic Claims Association) assessment per vehicle. The MCCA is an association of auto insurers that reimburses insurance carriers once they have paid out an excess amount (presently $580,000) related to medically necessary costs. This assessment per vehicle will now be at least $120 lower.
Finally, if you’ve heard nothing else, you’re probably aware that this new law was put into effect to create significant savings off our inarguably high auto insurance premiums. The truth—which isn’t fully known at the moment—is considerably more complicated. Check out the table for a before and after comparison of Michigan’s auto insurance coverage and choices.
After reading this far, you might think the changes on the horizon don’t seem all that complex. As often happens, though, this is when you realize there’s a bit more to consider. Before you choose which PIP level is right for you, you need to know if you have qualified health coverage through your medical provider.
Qualified Health coverage must not exclude or limit auto accident injuries and must have an individual deductible of no more than $6,000. Coverage under both Medicare Parts A and B also constitutes qualified health coverage. Coverage under Medicaid, however, is not considered qualified health coverage. (Michigan Government DIFS Bulletin 2020-03-INS)
If you’re like a lot of people, you never even thought about this. You might have just assumed your medical coverage would kick in if you were injured in a car accident. However, some employer-sponsored health insurance excludes medical costs resulting from an auto accident. Because this is important information that you may not readily know, your employer is required to share a document that tells you if your group health plan meets this definition. (Michigan Government DIFS Bulletin 2020-01-INS)
You should also know that PIP coverage is broader than your qualified health insurance. While your qualified health benefit plan covers medical expenses and some rehabilitation costs, it doesn’t cover loss of wages, replacement services, home, and vehicle modifications, etc. like PIP does.
With the PIP level choice now resting with the motorist, you need to become educated enough to weigh the premium savings against the reduced coverage level. Although carrier rates have not yet been approved by the state—leaving much still unknown—your Oswald Personal Client Management and Employee Benefits teams are ready to answer any questions you may have to help guide your choice.
Note: This communication is for informational purposes only. Although every reasonable effort is made to present current and accurate information, Oswald makes no guarantees of any kind and cannot be held liable for any outdated or incorrect information. View our communications policy.