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Why allowing seniors to opt out of No Fault for Medicare harms seniors

January 29, 2018 by Steven M. Gursten

By allowing seniors to opt out of No Fault for Medicare, SB 787 jeopardizes seniors’ medical and financial health after a car crash

It sounds good, at first. Allowing senior and elderly drivers to opt out of Michigan auto No Fault insurance and use Medicare exclusively for medical treatment and care after a car accident sounds like it would save senior citizens money.

But it is reckless and wrong.

And for those senior citizens who are seriously injured in a bad car accident in Michigan, this bad idea can cause enormous harms if it becomes law.

Yet, that’s what lawmakers like Sen. Rick Jones (R-Grand Ledge) are trying to do with Senate Bill 787 (introduced on January 25, 2018), which allows senior drivers to opt out of unlimited auto No Fault insurance coverage in favor of considerably limited and potentially far more costly coverage provided by Medicare.

For the same reasons I condemned the idea as terrible when lawmakers attempted it in 2013, I do so, again, today with respect to the proposals in Sen. Jones’s SB 787:

Excluding seniors from No Fault insurance would actually work to take away vital legal protections that senior citizens currently have, and it will increase Michigan taxpayers’ Medicare burdens … Seniors who are seriously hurt in automobile accidents will lose everything. Any senior who is seriously injured in an auto accident will quite literally be driven into financial ruin if this proposed legislation becomes law.”

Building on the points I first made in 2013, here’s my list of the reasons why SB 787’s proposal to exclude senior drivers from No Fault coverage after an auto accident is a terrible, reckless, dangerous, and misleading idea:

  • No guaranteed auto insurance savings: The bill fails to guarantee any meaningful, long-term savings on auto insurance prices for senior drivers. We’ve seen this “bait and switch” before – and without guaranteed savings, we can expect any savings to be erased shortly thereafter by rate increases.
  • No Fault cap will leave seniors woefully under-insured in the event of a car crash: The bill’s proposed $50,000 cap on No Fault benefits (especially medical benefits) for senior drivers is “irresponsible and unrealistic,” which is how the Detroit Free Press described a proposed $50,000 No Fault cap in 2011.
  • Medicare may not cover auto accident-related injuries and accompanying medical costs: As an auto accident lawyer, this is the biggest problem for me. Senior citizens who opt out of Michigan auto No Fault have no idea how dangerous this will be for them if they suffer serious personal injury in a car accident. This is because Medicare won’t allow its benefits to be coordinated with No Fault benefits (i.e., make Medicare the primary payer, as the No Fault Law allows drivers to do with health insurance) and because SB 787’s proposal is, in effect, coordinating benefits. Additionally, it’s very likely Medicare won’t provide coverage to senior drivers who opt out of No Fault under SB 787 for necessary medical care and treatment that Medicare does not provide. I should add some insurance lawyers feel Medicare wouldn’t even have to provide any coverage whatsoever if senior citizens choose an opt-out of Michigan auto No Fault because under federal law, Medicare is a secondary payer on medical expenses for auto accident-related injuries. This is incredibly dangerous and reckless. SB 787 is literally playing Russian Roulette with the lives of senior citizens who will be injured in car accidents, on a vague promise of some possible future savings.
  • Medicare will require senior auto accident victims to repay medical expenses from their pain and suffering recoveries: Have you ever heard of a “Medicare super-lien”? Well, your injury attorney has. If SB 787 passes, you can bet you will, too. What it means is this: If Medicare pays for a car accident victim’s medical care and treatment and that victim, ultimately, obtains a settlement or jury verdict for pain and suffering compensation, then the victim must use as much of that money as is necessary to repay Medicare for what it paid out in medical expenses. To put it another way, senior drivers who sue for their injuries after a car accident – and to recover for pain and suffering damages for their injuries – will face a Medicare lien, also known by personal injury lawyers as a “super-lien” on any third-party tort (pain and suffering) recovery. Medicare gets back most of what it pays from these injury settlements. Realistically, a Medicare super-lien without any primary auto No Fault insurance if a senior opts out of No Fault could leave an accident victim with nothing. This would not be the case if medical care is covered by No Fault insurance, as it currently is.  If SB 787 becomes law, Medicare would have full legal subrogation rights to any money damages and compensation that injured senior auto accident victims recover.  
  • Medicare won’t cover many of the vital benefits and protections that No Fault readily covers: From my own personal experience as a Michigan car accident lawyer, this is a huge danger with SB 787 that its sponsors are recklessly and completely ignoring. As I noted in 2013 blog post, “Medical care under Medicare will not protect injured senior drivers like Michigan No Fault insurance does” (which I wrote after lawmakers previously tried to shove senior drivers off of No Fault and onto Medicare), the problem with Medicare is not only that the care it provides is “inferior” and “subpar” compared to the care provided under No Fault, but that “Medicare does not cover what No Fault covers.” Significantly, Medicare doesn’t cover vitally important benefits and protections (which are currently covered by No Fault) such as: skilled nursing facility care; in-home nursing care; attendant care; home health services; long-term custodial care; long-term comprehensive rehabilitation; home- and vehicle-modifications; electric wheelchairs; and prescriptions. Indeed, the Michigan Health and Hospital Association has stated that “Medicare does not cover many of the services currently provided for through Michigan’s no-fault system, including long-term care, attendant care services, replacement services, occupational therapy, executive functioning therapy for post-traumatic brain injuries, etc.”
  • Unrealistically low Medicare fee schedules for medical providers could jeopardize senior car accident victims’ access to high quality medical care: Because the reimbursements set by the federal Medicare law are so low, it may be economically unfeasible for many of the medical providers and specialists who currently care for elderly car accident victims to continue to do so. That means that victims would be forced to seek treatment with less skilled and/or less experienced health professionals or forgo necessary, potentially life-altering, treatment altogether.
  • SB 787 discriminates against elderly drivers: Like the previous bill that I discussed in my 2013 blog post, “Why proposed bill to exempt MI seniors from No Fault insurance is a terrible idea for elderly,” SB 787 “discriminate[s] terribly against seniors by allowing seniors to trade away all of their legal rights that they currently have in Michigan. They lose their current ability to have automobile accident-related medical bills paid for by No Fault in return for the obligation to pay back every penny to Medicare for medical services that Medicare does actually cover. They lose their constitutional right to sue for their injuries and pain and suffering if they are injured by another. They are trading away nearly everything, in exchange for dropping No Fault insurance.”
  • By pushing elderly drivers off No Fault and onto Medicare, lawmakers will be pushing up the Medicare tax burden for all of us: As I previously noted in the blog post referenced immediately above, “[t]axpayers’ Medicare burden will increase drastically as a result of shifting the medical benefits cost for injured senior auto accident victims from the No Fault system (which is funded by Michigan auto insurance companies through the premiums paid by drivers) to the Medicare system (which is funded by taxpayers).”

How does SB 787 propose to get elderly drivers from No Fault to Medicare?

Senate Bill 787 requires drivers who are 65 years of age or older (the eligibility age for Medicare) to select either a $50,000 cap on all No Fault benefits (which applies only to the named insured and his or her spouse) or stick with the current, guarantee of unlimited No Fault medical benefits.

Specifically, SB 787 provides:

  • “[W]hen an individual who is 65 years of age or older applies for or renews an insurance policy that provides [No Fault PIP] benefits under this chapter, the individual shall select 1 of the following levels of maximum personal protection insurance [PIP] benefits: (a) a $50,000.00 limit. (b) no maximum limit.”
  • “[T]he maximum limit selected applies only to benefits payable because of an accidental bodily injury to the insured named in the policy and the insured’s spouse.”

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