Drivers may need qualified health coverage (QHC) in order to save money on their auto insurance premiums under the Michigan No-Fault insurance law. To select one of the new, lower No-Fault coverage levels a driver must have health insurance that meets the new laws requirements.
The big selling point for Michigan’ new auto No-Fault law was that it would save drivers money. The new law would for the first time since the No-Fault law was enacted in 1973 allow drivers to choose different levels of No-Fault PIP medical coverage (to pay for medical care and medical treatment after a car accident). Drivers could attempt to save money by opting for lower PIP coverage levels.
But what the politicians who passed this new auto law neglected to tell people (aside from that these promised savings will be limited and for most of us very disappointing) was that these lower PIP medical coverage levels would be unavailable if the driver or certain family members did not have the right type of health insurance coverage. This “right type of health insurance” is what the No-Fault law refers to as qualified health coverage.
In other words, if a driver – or a family member – does not have health insurance that qualifies, then a driver will be locked out of any savings that the politicians promised would be available to drivers under our new auto law.
What is qualified health coverage (QHC)?
Qualified health coverage is the insurance that the new Michigan No-Fault insurance law requires drivers to have to be able to select certain PIP medical benefit levels. To ensure your health plan meets the requirements of the new law it must not exclude or limit coverage for car accident-related medical care.
The new Michigan No-Fault insurance law defines qualified health coverage in two ways:
- It is “health or accident coverage” that “does not exclude or limit coverage for injuries related to motor vehicle accidents” and its “annual deductible for coverage” must be “$6,000 or less per individual.” (MCL 500.3107d(7)(b)(i))
- Or it is Medicare coverage. (MCL 500.3107d(7)(b)(ii))
Do I need qualified health coverage?
Yes. In order to select certain lower and presumably cheaper levels of No-Fault PIP medical benefits, you or a family member will need to have health insurance that meets the requirements of qualified health coverage under the new Michigan No-Fault law.
These are the relevant coverage levels and requirements:
- The $50,000 coverage level for drivers “enrolled in Medicaid” requires that the driver’s spouse or relative who lives in the same home have QHC, be “enrolled in Medicaid” or have his or her own No-Fault auto insurance policy. (MCL 500.3107c(1)(a)) That means that if a driver’s spouse or family does not have Medicaid or No-Fault or insurance, through a private plan or through Medicare, that meets requirements of qualified health coverage under the new Michigan No-Fault insurance law, then the driver cannot select the $50,000 level.
- The total opt-out of No-Fault PIP medical benefits for a driver who has Medicare requires that his or her spouse or family member that lives with the driver either have qualified health coverage that is required under the new Michigan No-Fault insurance law (i.e., insurance for accident-related medical care through a private plan or through Medicare) or have his or her own No-Fault auto insurance policy. (MCL 500.3107d(1))
Additionally, QHC plays a role in a new arrangement for the coordination of health and No-Fault coverage:
- A driver who chooses the $250,000 coverage level for No-Fault PIP medical benefits under MCL 500.3107c(1)(b) can coordinate his or her No-Fault insurance with his or her health insurance in return for a 100% reduction on his or her PIP medical premium, but only if (1) the driver has private health insurance that meets the laws requirements and (2) the driver’s spouse or family members have QHC through a private health plan or through Medicare. (MCL 500.3109a(2)(a))
Why is QHC so important under the new Michigan No-Fault insurance law?
Qualified health coverage is important because without it drivers will not be able to take advantage of the insurance options under the new Michigan No-Fault insurance law that politicians have promised will save them money.
- The $50,000 coverage level is expected to provide “average” (not individual) savings of 45%. (MCL 500.2111f(2)(a))
- The opt-out for drivers on Medicare is expected to “result in no premium charge for coverage” for No-Fault PIP medical benefits. (MCL 500.2111f(3))
- When health insurance is coordinated with the $250,000 coverage level (assuming all of the required persons have the necessary qualified coverage), the “premium for [No-Fault PIP medical] benefits payable under section 3107(1)(a) under the policy must be reduced by 100%.” (MCL 500.3109a(2)(a))
Qualified health coverage vs Michigan No-Fault insurance
Here’s where promises of lower health insurance premiums smack into the new reality of increased health insurance costs.
The claim behind the new auto law was that it would save drivers money on their auto insurance. It would do this by shifting the responsibility for paying for car accident-related medical care to drivers’ health insurance companies.
Health insurance is perceived as less costly than No-Fault. A big reason for this is that many health care plans either do not cover medical services for car accident-related injuries, or drastically limit these medical services. The catch, however, is that many of these medical services that are not covered or that are drastically limited with health insurance are still considered vital to a car accident injury victim’s care and recovery.
These same medical services and medical treatments that are excluded or limited by health insurance were being paid by No-Fault as long as they were “reasonably necessary” to a car accident victim’s care, recovery or rehabilitation – which is the legal threshold requirement for a medical service to be paid by your auto No-Fault insurance.
But now the new qualified health coverage requirement effectively undoes much of this.
Because the only health insurance coverages that will meet the No-Fault law’s requirements are plans that do “not exclude or limit coverage for injuries related to motor vehicle accidents,” health insurance will now have to provide the same coverage to auto accident victims that No-Fault has been providing for more than 40 years.
Therefore, we can bet that our health insurance costs will go up – and that employers who provide health insurance will likely be passing these increased costs onto the rest of us. These increased costs will likely eat away at any savings that drivers will see on their auto insurance premiums under the new auto law.
How do I know if I have the right health coverage?
To confirm that your health insurance coverage meets the requirments under the No-Fault law, ask for documentation from your health insurer. They are required to prepare and provide this documentation.
In Insurance Bulletin 2020-01-INS, entitled “Qualified Health Coverage Notices” and issued on January 14, 2020, Michigan’s Insurance Commissioner stated that, because “individuals who have (QHC)” are allowed “to make certain choices regarding their no-fault coverage,” “[h]ealth insurers and health plans should develop a document that indicates whether a person’s coverage is qualified for purposes of no-fault insurance . . .”
Find out more about the car insurance you need
For our advice on how to best protect yourself and your family under Michigan’s new No-Fault law, please check out our blog post, “How Much Car Insurance Do I Need in Michigan?,” and order a copy of your FREE e-book, “How much car insurance do I need?”