Michigan is one of just 12 states in the United States that requires most drivers to purchase personal injury protection or PIP insurance. It is a no-fault state. By law, each driver must purchase at least $50,000 in bodily injury coverage and $100,000 in total bodily injury per accident. These requirements can make insurance more expensive for those in Michigan, but there are some situations where a driver can opt out of PIP.
If you are in an accident in Michigan, and your insurance company refuses to give you a fair settlement, contact Matz Injury Law at 1-866-22Not33. Our compassionate car accident lawyers can help you fight for your rights based on your insurance policy. We can also help you file a claim against an at-fault driver when the damages to compensate you for your injuries exceed your PIP policy limits. Call us to schedule a free consultation.
In Michigan, personal injury protection, or PIP, is no-fault car insurance coverage. It helps cover some of the most common expenses that arise after a car accident, including:
This insurance coverage allows the driver to look to their insurance company for payment instead of asking the at-fault driver for compensation first. If the driver’s PIP coverage is not enough to cover all of the expenses related to the accident, then the car accident victim can file a claim against the at-fault driver, as well.
Unless you meet a few very limited exceptions, all drivers must have PIP in Michigan. There are six different levels of insurance plans or coverage options available for PIP, and as coverage increases, so will premiums in most situations.
Each of these upper limits is the most the insurance company will pay per accident, per person.
Most drivers in Michigan do not have the option to opt out of PIP benefits. However, there are some limited circumstances in which drivers who also receive Medicare benefits can opt out of PIP coverage.
The insured person must meet the following criteria to opt out of PIP:
Essentially, that means that Medicare enrollees can opt out if they do not have anyone else in their household that needs PIP coverage.
In addition, a lower-premium option might be available to some drivers who have health insurance that will cover auto accident injuries. This coverage is still for $250,000 but often has a lower premium because another (non-Medicare) healthcare insurance is available to the driver and other household members.
Those on Medicaid do not have the option to completely opt out of PIP. Instead, they can choose a lower amount of PIP coverage. They can elect to only have $50,000 in PIP. However, they also have the same restriction as those on Medicare — if anyone else in their household is not on Medicaid and needs PIP, they might be unable to choose this lower coverage amount.
If you choose to opt out, you often save substantial money because you do not need to pay insurance premiums. However, remember that Medicare does not provide the same types of benefits as PIP, so you might not have as many options for compensation if you are involved in an accident.
It is important to understand the difference between Medicare and PIP before you opt out of coverage. For instance, Medicare will pay for medical costs but does not cover things like lost wages or household services (in most situations).
Insurance laws related to PIP and Medicare changed in July 2020. Michigan enacted no-fault laws in Michigan in 1973, but in 2020, the legislature made changes that allowed drivers to have additional options to reduce their PIP coverage.
Before 2020, every driver was required to have unlimited PIP coverage, which was very expensive for Michigan drivers. With the new law, drivers now have more options that are less expensive but provide specific limits on how much an insurance company will cover after an accident.
Because of how no-fault insurance functioned before 2020, those with Medicare looked to their PIP coverage before Medicare became involved in paying for healthcare. Medicare was considered a secondary payer. However, in practice, it did not always work out that way because Medicare would often end up paying for some medical expenses that PIP coverage should have addressed. Then, Medicare would seek reimbursement from the PIP insurance provider.
After 2020, the Michigan Insurance Commissioner clarified that under the new law, Medicare will cover accident-related injuries for crash victims who have opted out of PIP coverage. It will also kick in when a car accident victim reaches their limit in PIP coverage.
That means that Medicare is only a secondary payer if the first level of insurance is available through PIP coverage. If you opt out of PIP, Medicare should pay for crash-related injuries and medical treatment.
Before deciding whether to opt out of PIP, individuals and families need to understand the differences between these two types of coverage. The main difference is that Medicare covers just medical care, while PIP coverage provides reimbursement for other types of losses. However, there are also some medical expenses that Medicare will not cover.
PIP coverage often includes the following benefits that Medicare will NOT provide:
Medicare coverage will provide some limited therapies, durable medical equipment, specialty assistive devices, attendant care, and skilled nursing facility expenses. Limitations are often extensive for each service, but some benefits may be available.
You get the benefits of lowered costs (in premiums, deductibles, and co-payments) if you opt out of PIP coverage. However, those cost savings could disappear if you end up in an accident. PIP coverage provides several valuable benefits that Medicare simply will not cover.
At Matz Injury Law, our legal team generally advises clients to obtain unlimited PIP coverage. Medicare often requires you to undergo extremely conservative treatment before approving more costly surgeries. In some situations, this delay in treatment can cause significant long-term problems. We have seen car accident victims struggle to get approval from Medicare for even relatively minor procedures and testing, like injections or an MRI. PIP must pay all reasonable and necessary expenses related to the car accident, so the approval process is often more streamlined and efficient.
Medicare will also usually assert a lien against any claim you have against an at-fault driver. If there is PIP coverage, then medical expenses are paid for by the PIP insurance company. If there is no PIP, medicare may assert a lien on any compensation the car accident victim receives from the at-fault driver.
The only time opting out of PIP coverage works in favor of a Michigan car accident victim is when they caused the accident. In that type of situation, Medicare will not assert a lien.
If you have PIP coverage, you first turn to your own insurance company for reimbursement related to medical bills, lost wages, and other damages. If you have opted out of PIP coverage, you always have the option to sue the at-fault driver.
As part of your suit against the at-fault driver, you can request compensation for anything Medicare paid for (and they likely asserted as part of their lien) and any medical bills you had to pay yourself. You can also request non-economic damages, like pain and suffering, from the at-fault driver as well.
If you have already opted out of PIP and cannot afford the treatments for your injuries, you might have the option to sue the at-fault driver. At Matz Injury Law, we can often help car accident victims get compensation for their injuries. Calls our Michigan law firm at 1-866-22Not33 to set up a free consultation.