Michigan has long had the reputation of being a horrible state to purchase car insurance in. Horrible meaning “expensive”. And, that reputation has been well-earned as we have unique auto insurance laws that impact us all.
We’re going to limit our conversation here to essentially the “medical” portion of our auto coverage in Michigan (vs. liability). We’ll be doing that because, as you know, we’re here to help people with their transition to the Medicare “medical” system; thus the tie-in.
So, we have this system called “no-fault” in Michigan. What this means is that your coverage is a type of car insurance that helps pay for your and your passengers’ medical bills if you’re injured in a car accident, regardless of who caused the accident.
Long story short, when you are on Medicare and are injured in a car accident, Medicare is not your Primary Insurance. Your primary carrier is your auto insurance company. Thus, the higher rates that you pay for this increased exposure to the auto carrier.
No-fault insurance is also called personal injury protection, or PIP insurance.
As it stands today, our PIP coverage in Michigan is unlimited. As in, unlimited. As in, that’s why it costs so much. That part of things is almost that simple. Get more in terms of coverage? You’ll pay more. Think about the legal definition of “insurance”. You exchange a premium (dollars) to get something back (coverage) should the event occur.
So, what you get in return for those premium dollars in the State of Michigan is unlimited medical care (including attendant care).
In our opinion, what people object to is their ability to CHOOSE getting this additional coverage.
We are posting this information as of February 2020. Come July 1, 2020 our coverage offerings will expand.
After July 1, 2020 when your auto policy renews, you will now have a choice of six options for your PIP coverage.
One option will be to retain your current coverage. You may retain unlimited medical coverage. You will continue to pay the higher premiums.
Another option will be that you may opt-out completely of PIP coverage if you are enrolled in both Medicare Parts A and B.
That means that should you be injured in a car accident; your medical bills will be handled through Medicare. If you are enrolled into a Medicare Advantage plan, that means that your medical bills will be handled through that insurance carriers plan.
Note and see chart:
If you are enrolled into a Medicare Advantage plan, are injured in an accident and then change plans the following year, the new carrier would begin to cover your care. This being said, we are being told that different carriers are interpreting the new law differently so be prepared for some unclear answers, for sure. We hope to have firmer information in the coming months.
If you elect to waive the unlimited medical, you will receive a premium reduction for the loss of that coverage. You will also lose all attendant care benefits.
Attendant care means services to assist an injured person with tasks they would normally do for themselves (e.g., eating, bathing, dressing, grooming, and medication administration). It may also involve supervision or other types of support. Source: https://www.michigan.gov/autoinsurance/0,9555,7-405-96685—,00.html
There are also other PIP options that you will have. You may choose $250,000 for example which is Option 4 – See the form here.
If you chose Option 4, for example, your medical limit would become $250,000 and you would also have the ability to purchase a rider for excess attendant care coverage. We’ve not seen the rates for any of the riders at this point but you would see a reduction of premium for your PIP coverage being reduced from unlimited to $250,000.
Notes the following information cited from the Michigan Department of Insurance & Financial Services website:
The “Benefits” of the Change.
The premium reductions are as follows: All PIP limits apply to PIP medical. The full PIP premium must be reduced by the amount required in MCL 500.2111f(2). Companies can only charge the portion of MCCA premium that is from a deficiency, if applicable.
So, look at your current auto insurance bill, see the PIP premium related and note that the anticipated premium reductions will be on that portion of your bill. Review this part with your auto insurance agent to see what your ultimate premium AND coverage reduction will result in for you.
In our opinion, it means think hard and long about choosing to eliminate your PIP coverage because you are enrolled into Medicare. Balance what you will give up vs what you will gain.
Do any of us like paying extra premiums? Of course not. But, we do all want unlimited PIP coverage should we be involved in a car accident.
Do you know anyone that has been in an accident and now receives care from our current auto insurance laws? We do. Several of those people will be receiving attendant care for life. That would cost a family $5-10k a month, forever, if they did not have unlimited PIP.
If you have long term care coverage, review your documents to know your coverage. Remember that PIP’s attendant care is lifelong vs a coverage period of a 3-year benefit for example. Discuss this with your financial planner.
And, this is a great time to bring the long term care conversation to your financial planner. Unfortunately, this is something lacking in the conversation area we find.
Maintain your unlimited PIP coverage and don’t rely on Medicare to cover you in a car accident.
In terms of the best coverage you could have, unlimited is it.
And, obviously, this is just our professional opinion and all cases are unique. Again, please take this opportunity to talk to all of the advisors in your world as this is big news in Michigan.