The New Relationship between Medicare and Michigan Auto Insurance

Michigan has recently updated its laws on auto insurance’s medical coverage, effective July 1, 2020. The various changes provide new options for Medicare enrollees regarding options for Personal Injury Protection (PIP) benefits.

Michigan has unique laws compared with the rest of the nation, due to unlimited healthcare coverage for automobile accidents, which is why costs have been more expensive than in other states. Many Michigan seniors are still unclear about these changes, so here’s a brief look at the new laws.

PIP Coverage Changes

Auto insurance policies in Michigan have traditionally provided unlimited personal injury protection coverage. While Medicare has always provided medical benefits in the event of an auto accident, the policyholder’s auto insurer paid first for the bulk of any accident claims, including “unlimited” medical coverage.

You now have four options for auto/medical coverage:

  • Maintain unlimited medical coverage as it has always been available.
  • Discard unlimited coverage in favor of a $500,000 maximum benefit option.
  • Discard unlimited coverage in favor of a $250,000 maximum benefit option.
  • Completely remove Health Coverage on your Auto Policy.

Choosing lower limits can help reduce costs significantly. For example, the $500,000 option gives you a 20 percent reduction of the PIP portion of your auto insurance, while the $250,000 option provides 35 percent savings. By opting out of PIP coverage, you can see a 100 percent reduction in PIP costs if you are enrolled in Medicare or a qualified health plan with an MCCA fee of zero.

Medicare Qualifications for New PIP Plans

In order to qualify for PIP benefits, seniors must be enrolled in Medicare Parts A and B. Your spouse or other household family members must also qualify by having Medicare or health insurance providing benefits during an automobile accident.

For enrollees who opt out of this protection, Medicare will pay for all approved services in the event of an accident if you have no other insurance plans. In these cases, the enrollee will be responsible for regular Medicare coinsurances, copayments, and deductibles. There are also differences in coverages that Medicare will not pay, including transportation for doctor visits, case management services, and long-term custodial care, which are included in your auto insurance PIP coverage.

Be sure to read the fine print for all the options offered with medical and auto insurance plans. Before enrolling in a plan, talk with your auto insurance advisor.

MI auto and medical insurance reform is underway to help provide drivers with more personal injury protection options to get lower pricing. Contact the experts at CIA Insurance & Risk Management today to gain a clearer understanding of these changes in Michigan.

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