Now that we’re into July of 2023, there have been a lot of questions, concerns, and comments aimed at the Michigan PIP (Personal Injury Protection) Medical Expense limits. For the untrained eye, looking at a declarations sheet is written in a foreign language with most people focusing on the dollar signs following some acronym on the page.
Have you ever wondered what these acronyms stand for, why you’re paying for it, and why the prices of these items just increased?
One the of most important acronyms to understand your personal injury protection coverage is: MCCA – The Michigan Catastrophic Claims Association. This is a non-profit corporation that is responsible for paying health care costs for people that suffer catastrophic injuries from a vehicle accident. Michigan no-fault law was enacted in 1973. Since then, most of us have paid a standard dollar amount on our auto insurance with the understanding that if we were in a catastrophic accident, our medical bills would be covered by our auto insurance regardless of the title of our providers. Within the past several years, our auto laws have been amended a few different times. The most significant change took effect on July 1st, 2020.
What benefits have changed?
The State of Michigan signed an auto insurance reform legislation on May 30th, 2019 to help lower medical costs by having insureds rely on their own health insurance. This reform took effect on July 1st, 2020. Many residents prior to the new reform were not able to afford insurance and were driving uninsured due to the high costs for PIP on their auto policies. Michigan saw where costs needed to be cut to make insurance affordable again and came up with the new auto laws.
Prior to this new law, individuals who were injured in a vehicle accident had unlimited medical benefits. Michigan had one of the highest coverage options in the country, but the comprehensive medical coverage came with a large cost as well. The new auto reform gave residents of Michigan a choice on their auto medical coverage. Individuals are now able to lower their premiums by lowering their PIP benefits. They are no longer forced to carry unlimited coverage. Coverage options are listed below:
Option 1: Unlimited Medical Coverage – There is no limit to what your policy will pay.
Option 2: $500,000 – Your policy will pay up to this amount.
Option 3: $250,000 – Your policy will pay up to this amount.
Option 4: $250,000 with exclusions – You are able to exclude one or more household member as long as they have Qualified Health Coverage* that is not Medicaid.
Option 5: $50,000 – Only available for Medicaid recipients.
Option 6: No Coverage – Only available with Medicare A and B.
*Qualified Health Coverage is coverage by either Medicare parts A and B; or a health an accident health insurance plan that a) does not exclude injuries resulting from a motor vehicle accident, and b) has an annual deductible of $6,000 or less.
Cutting benefits and premiums do not only effect the policyholder, however. Medical providers are now going to be forced to provide care to those injured in auto accidents at a much lower compensation.
MORE CHANGES ON JULY 2ND, 2021
There are 2 significant changes that happened on this date. These changes severely impact the ease of, quality of, cost of, and amount of care the catastrophically-injured victims can receive. Medical providers that provide non-Medicare compensable services will also be affected. Changes are as follows:
- 45% payment reduction to medical providers.
- 56-hour-per-week cap on in-home family provided attendant care.
The payment reimbursement rate to medical providers is now capped at 55%. Many medical providers are not wanting to/are not able to treat victims of auto-accident injuries due to the 45% pay cut. This reduction in payment has already resulted in many clinics and care facilities to fully shut down business. Not only does it hurt those in business, but it reduces the number of places where accident victims can be treated.
The second change regarding the in-home family provided care prompted a lawsuit from several car accident victims that were catastrophically injured prior to the law change.
THE ANDARY LAWSUIT
To help lower the costs of PIP with the new auto reform taking effect in July of 2021, Michigan set new limitations to in-home family provided attendant care*. Where lifetime medical benefits were previously 100% covered for those who needed round-the-clock care, there is now a cap on in-home family provided attendant care. If victims need more than 56 hours of services per week, they have to rely on commercial providers for the remainder of their care. This has not proved effortless as it is harder to find providers who will care for auto-accident victims due to the pay decrease.
The injustice that prompted the lawsuit was the retroactive application of the payment limitations prior to the effective date of the new law. Even though the victims involved in the lawsuit had an insurance policy that provided unlimited medical reimbursement, the state “back-dated” the law, unconstitutionally taking away those benefits stated in their insurance contract at the time of loss. As a result of the lawsuit, the state of Michigan now has to back-pay costs for medical services incurred by the victims that wrongfully lost their benefits.
*Family provided attendant care means any caregiver who knew the victim before their injuries occurred.
THE MCCA DEFICIT
The MCCA’s financial position is now lower than precedented. Losses that occurred before June 11th, 2019 resulted in about $3.7 billion in medical claims that the state of Michigan has to now pay back. Another contributor to MCCA’s financial deficit are the lower-than-expected investment returns.
WHAT WILL YOU PAY?
According to the MCCA for 2023-2024 drivers will pay an annual assessment of $48 per vehicle beginning July 1st, 2023 to address this deficit.
- Here’s a tip – Let it drip!
- What is an Insurance Score?
- Signed, Sealed – Do you Deliver?
- How Much Do You Really Know?
- New Beginnings
Citations:
https://protectnofault.org/lawsuit-updates
https://autonofaultlaw.com/lawsuit-challenging-michigan-no-fault-insurance-reform/