Starting July 1, 2020, Michigan drivers get a first-ever choice in the amount of medical benefits that they buy with auto insurance. The current no-fault system requires all drivers to buy potentially unlimited, lifetime medical benefits. Michigan has been the only state with such a requirement.
People who pick lower levels of no-fault coverage will need to rely more on their health insurance after a bad accident.
Overall, the revamped no-fault law is expected to lower Michigan's highest-in-the-nation auto insurance rates, especially in urban areas, and also lower the cost of treating auto accident victims.
Because of no-fault's unlimited benefits, some health insurance plans in Michigan have traditionally not covered auto accidents. There is no estimate yet on the number of employers that might start covering auto accidents under health insurance in time for the new no-fault system.
Even though many employers are set to renew their health insurance plans Jan. 1, they could still make midyear adjustments to add auto accident coverage as the July 1 no-fault date draws closer.
As for individual and family Health Insurance coverage, Open Enrollment starts today, November 1st. We doubt that these plans will have the option of mid year adjustments, making it even more important that MI residents choose their 2020 plan with the help of a professional agent. Making an informed decision is the best way to start the New Year!
Here’s what the new law would mean for Michigan drivers:
Five options for personal injury protection (PIP) coverage
Right now, drivers are required to purchase unlimited personal injury protection (PIP) coverage, which guarantees insurance companies will cover all of the medical costs associated with car accident injuries. That also means auto insurance companies pay regardless of who’s responsible for the accident.
Under the new plan, drivers can choose between five tiers of PIP coverage beginning July 1 2020:
Unlimited PIP coverage (the same coverage as now)
Insurance companies will cover up to $500,000
Insurance companies will cover up to $250,000
Insurance companies will cover up to $50,000 — the lowest-price option available to people on Medicaid, who cannot opt out entirely.
Opt-out of PIP coverage entirely, if you have separate health insurance that covers collision injuries.
If a driver doesn’t have unlimited PIP coverage under the new system and gets in a car accident that’s not their fault, and medical costs exceed the amount of coverage they have purchased, they can sue the at-fault driver for charges beyond their coverage.