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Why Do I Pay a Medical Deductible After My Car Accident?

May 4, 2010 by Steven M. Gursten

Insurance attorney explains primary versus coordinated medical No-Fault benefits for car accident victims in Michigan

As an attorney who handles Michigan No-Fault insurance lawsuits, I speak with hundreds of auto accident victims a year, many who are confused about their insurance policies and benefits. A lot of my clients ask why they have to pay a medical deductible after a car accident, or a medical deductible that is more than $300.

The Michigan No-Fault law can be complicated and difficult to understand. This is what I tell my clients in efforts to help them:

Most people have “coordinated” or “excess” medical benefits on their auto insurance policies. This means that in the event the insured person is injured in a car or a truck accident, his or her health insurance is supposed to pay first, then the auto insurer is responsible for the balance under the Michigan No-Fault law.

Coordinated coverage is less expensive than primary coverage, as your auto insurance company expects it will not have to pay first in the event of a motor vehicle crash.

However, it often turns out that the auto insurer does end up paying first. One such example is if the health insurance policy contains an auto accident exclusion, which is an exclusion in the policy that states the insurer will not pay for treatment related to auto accidents if there is Michigan No-Fault insurance coverage that applies.

An even more common situation is when people lose their health coverage due to a work layoff or termination and forget to tell their auto insurer that they no longer have health insurance. When this happens, the auto insurer will usually charge a higher medical deductible than it would have had the health insurer been paying first. Most insurers charge anywhere from $0 to $300 for a medical lifetime deductible if the policy is set up correctly. If they end up in a primary position, they will increase this amount to $500 or $600 (as an example).

But there are exceptions.

GMAC Financial Services charges a $2,500 deductible if the insured person was supposed to have primary coverage and did not. Additionally, Medicare and Medicaid are not supposed to be used for auto accidents, as they are payers of last resort. If an insurance agent asks you if you have other health insurance, remember that Medicare and/or Medicaid do not count. Therefore, you need to have any medical benefits from your auto insurance as primary on your auto insurance policy. Another term for this is primary medical PIP (personal injury protection).

Finally, keep in mind that there can be substantial penalties if someone is using Medicare or Medicaid instead of No-Fault insurance to treat for personal injuries caused by an auto accident. Many medical doctors do not understand this issue, and will simply send bills to Medicare or Medicaid instead of submitting them to a No-Fault insurer as they are supposed to. Please make sure to contact a knowledgeable No-Fault insurance attorney immediately if this happens.

On Thursday, I will continue on this topic, discussing situations when Michigan drivers should choose primary medical PIP benefits.

– This blog post was written by Jeffrey A. Bussell. Jeff is an attorney in Michigan Auto Law’s pre-litigation division, where he works closely with auto accident victims in the early stages of their lawsuits, helping them recover important insurance benefits making certain they receive whatever medical treatment is necessary for a full recovery.

Related information:

When is it Too Late to File a Car Accident Claim in Michigan?

Important Michigan Car Insurance Coverage Issues

Out of State Car Accidents and the Michigan No-Fault Law

Michigan Auto Accident Guide: Top 10 Things to Know

Michigan Auto Law is the largest law firm exclusively handling car accident, truck accident, motorcycle accident and bus cases throughout the state. Call (800) 777-0028 if you’ve been injured in an auto accident, and would like to speak to a lawyer.

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