Michigan Auto Reform changes PIP requirements

Michigan reforms auto insurance PIP coverage. Effective July 1, 2020, you can choose your insurance protection (PIP) options. Governor Gretchen Whitmer signs the law changing PIP options effective July 1, 2020, more details on other changes can be found at the Michigan DIFS site. After this date, the only people who will be eligible for benefits through the MCCA after an accident will be the people who chose the “unlimited” option on their auto policies. 

Michigan 6 New PIP options

  1. Unlimited PIP coverage (MCCA pays after the first $580,000) 
  2. $500,000 PIP coverage option 
  3. $250,000 PIP coverage option 
  4. $250,000 PIP coverage option with Medical exclusions. This choice is for drivers who have qualified health coverage (not Medicaid or Medicare) that covers auto accident injuries. Drivers can exclude household relatives (that also have qualified plans) to lower the PIP premium.
  5. $50,000 – Medicaid eligible consumer’s option 
  6. Opt-out of PIP coverage – Available if the named insured has Medicare (Parts A and B). All other household relatives must have coverage provided by an auto insurance policy or qualified health insurance that will cover auto accident injuries

Insurance companies are required to reduce PIP premium rates and guarantee a reduction for eight years.

Michigan Required PIP Premium Reductions

  1. Unlimited PIP coverage option: 10% reduction
  2. $500,000 PIP coverage option: 20% reduction 
  3. $250,000 PIP coverage option: 35% reduction 
  4. $50,000 PIP coverage option: 45% reduction
  5. Opt-out of PIP coverage option: Individuals with Medicare or qualified health insurance will receive a 100% reduction on certain portions of PIP.  The MCCA reduces the fee to $0 for the 2020 year.

Michigan options if you have no medical insurance after an accident

Without the unlimited PIP Choice, Michigan accident victims in Michigan will have the same choices as other states. Drivers will need to use one of the following options to pay medical bills.

  1.  Sue, the at-fault driver for “excess” medical expenses under their policy.
  2. Place a claim with your health insurance policy, assuming they do not have auto accident exclusions.
  3. Apply for  medical care from  government plan Medicaid or Medicare;
  4. File a claim under an “underinsured motorist” or “underinsured motorist” with your insurance carrier. 
  5. Pay the bill, or you may have to file for bankruptcy. 

What are Michigan PIP Benefits

Michigan PIP coverage includes the following:

  • All reasonable and necessary medical and rehab expenses
  • 85% of lost wages up to the monthly maximum (currently $5,718/month) not to exceed three years
  • Household replacement services, up to a maximum of $20/day, not to exceed three years
  • If accident results in death, surviving dependents benefits for loss of income up to the monthly maximum not to exceed three years.

Finally, for more information on what the new Michigan Catastrophic Claims Association fee is at MCCA New Fee.