PIP Coverage in Michigan: How Much Do I Need?

It has become common knowledge that the Michigan no-fault law has changed, as we near the year mark of the new laws taking effect. These laws made it so Michigan drivers could have a choice in their level of PIP coverage, up to six different options. Even though this change took effect almost a year ago, it is common to find yourself feeling confused when reviewing your options, especially if you have not had to renew your policy yet.

Before these changes took effect, it was easy, because all Michigan policies had unlimited PIP coverage, meaning if you had been injured in a crash, the insurance would be responsible for paying all medical bills, and there was no limitation on the coverage. This allowed for lifetime medical benefits for treatment related to your care and recovery. Beginning July of 2020, insurance companies were then allowed to offer different tiers of PIP coverage, with the intent of lowering the cost of car insurance in the state.

We’ve outlined the options for you, so you can make an informed choice:

Unlimited PIP Coverage, $500,000 Coverage, and $250,000 Coverage.

Unlimited PIP coverage is what everyone with car insurance in Michigan had previous to the new laws. Policyholders, and any relatives who reside with them, are covered for unlimited allowable expenses for any care, recovery, and rehabilitation costs related to an auto accident under this type of coverage. It will cover services such as attendant care, case management, and rehabilitation, which oftentimes are not covered under someone’s health insurance. Additionally, PIP carriers cannot assert a lien on any negligence settlement, like health insurance companies can.

$500,000 coverage and $250,000 coverage are similar, but as their options suggest, not unlimited.

Medicaid – $50,000

If a policyholder qualifies, this allows them to purchase only $50,000 of PIP coverage. In order for the policyholder to qualify, they must be enrolled in Medicaid, and any resident relatives or spouse must also have Medicaid, PIP coverage through a different policy, or any other qualified health coverage. Eligibility requirements for this type of PIP coverage are stringent, and remember, Medicaid does not cover any treatment related to a crash.

Medicare Opt-Out

If the policyholder is covered under Medicare Part A and Part B, and any resident relatives or spouse have qualified health coverage or coverage under a separate auto insurance policy, they may opt-out of PIP coverage entirely. This means they would have to rely on Medicare to pay any auto accident expenses. It is important to note that Medicare may not cover accident treatment automatically and does not cover all of the services you may require during your treatment and recovery. This option, similar to the Medicaid option, can be risky. Additionally, if you file a lawsuit, Medicare will place a lien on any recovery.

$250,000 PIP Opt-Out

This option is for drivers who have qualified health coverage (non-Medicare) that covers motor vehicle accidents, and is also available if your resident relatives/spouse have qualified health coverage as well. Qualified health coverage is where your accident/health coverage does not exclude or limit coverages for injuries related to an accident, and has a deductible of $6,000 or less. Basically, you have to have health insurance that will cover any treatment, recovery, and rehabilitation costs related to a motor vehicle accident, with no exclusions/limitations. However, this option will not be available to most people, because most health insurance plans do have exclusions/limitations on what they pay for injuries related to a motor vehicle accident. You cannot opt-out of PIP coverage without health insurance that will cover those injuries. It is also important to note, just like Medicare and Medicaid, if you do select this option, the health insurance company can (and will) place a lien on anything you may recover in a lawsuit.

So what kind of coverage should I choose?

It is important to consider the risks vs. the benefits of selecting a less expensive auto insurance policy. More often than not, the risk outweighs the benefits, and the least expensive policy could severely affect your ability to recover medical expenses after an auto accident. Of course, the best policy to select would be the unlimited coverage option, so the PIP carrier auto insurance will pay for the expenses related to your care. In general, you should at least select the $250,000 coverage option (note: not to be confused with the $250,000 opt-out coverage), so that way, you can at least have some of your medical expenses related to your care covered. The other options may be cheaper, but they are riskier, and could result in a larger headache for you during a time where stress is already running high.

If you’ve been injured in an auto accident and need help, give us a call, we can help. 1-855-LAW-MICH.