Part 2: New Changes to the No-Fault System and New Policies Coming in July
With the shutdown of the state and Michigan still reeling from the coronavirus, some may have forgotten about some of the many changes that are coming under the no-fault reform that was passed last year. A few weeks ago we discussed some of the changes taking place here (Part 1) where we discussed the new limits for personal injury and bodily injury. One of the options that is likely to be available within the Personal Injury Protection Benefits is a “coordinated coverage” option, which in short means health insurance pays before auto insurance. So is this a good idea?
First, under the old no-fault act, and for those under the new act that are electing unlimited benefits (which we generally recommend), coordinated coverage will not really change. What is allows is for the insurance company to charge a lower premium if the insured agrees to use their health insurance first for medical, and only those items excess or not included to the health insurance will be paid by the auto insurance. This could, for example, include a co-pay or deductible for a $120 office visit. The first $20 office visit might be a co-pay and therefore picked up by Auto insurance, and the $100 might be picked up by health insurance. People do have to be careful, however, in electing this provision, because if you treat outside of your health plan, it is possible that NEITHER the health insurance nor the auto insurance will pay for the bill. Additionally, if your health insurance lapses or is cancelled when an auto accident occurs, you may have a deductible which can range from a few hundred to potentially thousands of dollars if you elected a coordinated plan. For these reasons, many Plaintiffs’ attorneys recommended people not elect coordinated benefits. And for unlimited PIP auto policies, this hasn’t changed.
However, under the new no-fault act, if someone purchases less than unlimited coverage, a coordinated coverage option may allow those auto insurance limits to last longer. For example, if someone purchases an uncoordinated PIP policy of $50,000, they will have a maximum coverage of $50,000 worth of their medical bills. However, if they purchase $50,000 of PIP coverage and the policy is coordinated, health insurance may pay the first $100 or even $1000 of the medical bills, and only the co-pays or deductibles would be paid by the Auto-Insurance, meaning you could theoretically greatly increase the maximum amount of coverage you could obtain through a coordinated policy. Again, the best coverage is unlimited coverage, but if you have eligible health insurance and you are going to purchase less than an unlimited PIP benefits auto insurance policy, it would make a great deal of sense to let your insurance company know that you have the available health insurance so that you can get both a lower premium and allow your auto insurance dollars to last longer.
John T. Schroder
Attorney at Law
Law Offices of Joumana Kayrouz