This week we attended a meeting in Lansing about the auto insurance reform bill recently passed into Michigan law.
Though there are still many questions about the new legislation, we came away from the meeting with four new insights we wanted to share with you. We believe they will make this complex issue clearer and give you some much needed knowledge about insurance decisions you’ll need to make.
1. PIP Limits Apply Per Accident to Anyone Covered Under Your Policy
The new legislation will allow you to choose less than unlimited Personal Injury Protection (PIP) coverage. If you are injured in an auto accident – regardless of who is at fault – your own no-fault PIP coverage is what provides medical insurance benefits.
It is important to note that, if you’re involved in an accident, your limit applies to all people covered under your policy who were involved in that accident.
For example, if you choose a $250,000 PIP limit and are involved in an accident where multiple family members are injured, that amount is applied to any covered people involved in the accident as a whole, not $250,000 for each person.
The key takeaway: An amount less than the unlimited PIP coverage that’s currently mandated may not be enough, in the case of a severe accident.
2. The Medical Provider Fee Schedule Goes Into Effect in 2021
The bill calls for a medical provider fee schedule, which will normalize the rates charged by doctors, hospitals, clinics, rehabilitation facilities, etc. for medical care associated with auto accidents. However, this fee schedule won’t go into effect until July 1, 2021.
The key takeaway: If you were to choose less PIP coverage in 2020, it would likely be exhausted more quickly than it would in the coming years, when medical care costs start to decrease.
3. PIP Coverage Covers Things Other Medical or Health Insurance Doesn’t
If you were injured in an accident, PIP coverage would cover a lot of things besides your immediate medical care. For example, it would provide lost wages from time away from work, and it would pay for modifications to your vehicle or home, if those were needed to accommodate a debilitating injury.
However, other medical or health insurance plans would not cover these kinds of things.
The key takeway: PIP coverage is broader than other types of insurance that might apply in the case of an accident. Choosing a lower PIP limit or opting out completely would result in more limited coverage.
4. PIP Limits Affect Michigan Catastrophic Claims Association (MCCA) Fees
Every Michigan driver pays a fee to help fund the MCCA, which is a nonprofit that helps cover catastrophic auto-related medical claims.
Under the new legislation, if you choose any PIP limit lower than the unlimited benefit, your MCCA fee will decrease. You will only be paying for past claims (the MCCA’s deficit) and not future claims.
For example, the 2019-2020 MCCA fee is $220, but only $43 of that is associated with past claims. These numbers are reevaluated each year.
The key takeaway: Choosing lower than unlimited PIP benefits will save you on MCCA fees and auto medical premiums, but will result in less coverage.
Making the Complex Simple
For more information on this topic, please see our original post: “What You Need to Know About Michigan Auto Insurance Reform.”
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