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Auto Insurance For Seniors in Michigan: What You Need To Know

July 14, 2020 by Steven M. Gursten

Auto Insurance For Seniors in Michigan: What You Need To Know

Michigan’s new auto No-Fault insurance law could leave older drivers without access to needed medical care after a car accident. If they choose the Medicare/opt-out option for auto insurance for seniors, they will lose medical coverage for vital services. Auto No-Fault insurance will not pay for medical bills.

New changes to Michigan’s No-Fault law took effect on July 2, 2020, leaving many older drivers asking anxious questions about auto insurance for seniors in Michigan.

Specifically, older drivers want to know about the Medicare/opt-out option which allows drivers on Medicare to opt-out of No-Fault PIP medical benefits coverage altogether. The interest in this Medicare/opt-out option is understandable, driven as it is by politicians’ promises of savings.

But those promises of savings on auto insurance for seniors in Michigan come with some very ominous dangers. The reality is that older drivers who choose the Medicare/opt-out option will jeopardize their own and their families’ ability to get necessary medical care and treatment after a car accident.

Why? Older drivers choosing the Medicare/opt-out option will have forfeited their rights to No-Fault insurance medical coverage. The coverage they will have instead through Medicare or private health insurance will not pay for some of the most important and critically necessary medical services available through No-Fault.

Yes, with the new No-Fault law there will be savings on auto insurance for seniors in Michigan who choose the Medicare/opt-out options (see below), but these savings will come at a real cost if an older driver is involved in a serious car crash.

Finally, depending on how the federal Medicare Secondary Payer Rule is interpreted and applied to Michigan’s Medicare/opt-out (as well as to the other No-Fault PIP medical benefits coverage levels available after July 1 2020), drivers who choose the Medicare/opt-out could end up actually paying for much or all of their own car accident-related medical bills.

To learn more, check out the video below of Michigan Auto Law attorney Brandon Hewitt’s interview on WZZM-13 TV in Grand Rapids:

Attorney Brandon Hewitt of Michigan Auto Law talks with WZZM about car insurance for retirees, older drivers and drivers on Medicare, especially the Medicare/Opt-Out under the new No-Fault law.

Recommendations for auto insurance for seniors in Michigan

When it comes to auto insurance for seniors in Michigan, our auto attorneys make these recommendations for coverage under the new auto No-Fault law that took effect July 2, 2020.

We believe that all drivers – whether they’re first-timers who just got their driver’s license or elderly drivers who’ve been driving for decades – should choose the No-Fault PIP option with unlimited medical benefits (and no Managed Care Option).

What are the options for older drivers in Michigan?

The auto insurance options for seniors in Michigan for medical coverage after a car accident are the same that all drivers have under Michigan’s No-Fault law.

Specifically, in policies issued or renewed after July 1, 2020, driver will choose one of the following No-Fault PIP medical benefits coverage levels which determine how much medical care will be covered after a car accident: $50,000 for drivers on Medicaid; $250,000; $500,000; unlimited; and an opt-out for drivers on Medicare.

How does Michigan auto insurance for seniors apply to the Medicare/opt-out?

If a driver has Medicare, he or she can opt out of No-Fault PIP benefits by “elect[ing] to not maintain coverage for personal protection insurance benefits” to cover medical bills after a car accident. (MCL 500.3107d(1))

In doing so, the driver is choosing to give up his or her rights to No-Fault medical coverage of car accident-related medical bills and presumably will rely on Medicare (or another payment source) for medical coverage.

Importantly, a driver can choose the Medicare/opt-out only if the following conditions exist:

  • The driver has Medicare Parts A and B (MCL 500.3107d(1) and (7)(b)(ii) and (7)(c))
  • The driver’s spouse or family member living with the driver has “qualified health coverage” (in the form of coverage for car accident-related medical care through a private plan or Medicare) or have his or her own No-Fault policy. (MCL 500.3107d(1))

Importantly, to qualify as “qualified health coverage,” a person’s “health or accident coverage” must be such that it “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))

What does Michigan auto insurance for seniors cover?

In regards to auto insurance for seniors in Michigan it is important for older drivers to understand the difference between what No-Fault medical coverage and Medicare will cover for people who have been injured in a car accident.

Subject to the No-Fault PIP medical benefits coverage levels in the policy through which a car accident victim is claiming medical coverage, PIP benefits will cover all car accident-related medical care that is “reasonably necessary” to a victim’s care, recovery or rehabilitation. (MCL 500.3107(1)(a))

By contrast, the following medical services that are vital to a victim’s recovery are either not covered or subject to very restrictive coverage limitations by Medicare:

  • In-home attendant care
  • In-home, family-provided attendant care
  • Post-acute care/sub-acute rehabilitation
  • Long-term comprehensive rehabilitation
  • Residential treatment programs
  • Case management services
  • Transportation to and from medical appointments
  • Vehicle modifications
  • Home modifications
  • Physical therapy
  • Occupational therapy
  • Durable medical equipment
  • Electric wheelchairs
  • Specialty assistive devices
  • Pain management
  • Executive functioning therapy for post-traumatic brain injuries

How will Medicare liens affect Michigan auto insurance for seniors?

When it comes to auto insurance for seniors there is the very real possibility that a driver will have to reimburse Medicare if Medicare pays for car accident-related medical bills.

Unfortunately, for most elderly drivers, this reimbursement will come out of the driver’s car accident injury settlement or jury verdict against the at-fault driver who caused car crash for pain and suffering compensation.

Medicare would presumably secure this reimbursement by filing a Medicare lien against any settlement or judgment the car accident victim might obtain (as they do now).

Medicare has the legal right to do this under the federal Medicare Secondary Payer rule which says that Medicare cannot be made the primary payer on car accident-related medical bills when payment “can reasonably be expected to be made . . . under an automobile . . . insurance policy . . . or under no fault insurance.” (42 U.S. Code § 1395y(b)(2)(A)(ii); 42 CFR Part 411.50(c)(1))

In practical terms, what that means is that whatever money Medicare pays for a car accident victim’s medical bills, the victim pays Medicare back with any money he or she collects through a lawsuit. In other words, the victim ends up paying for his or her own medical bills.

I know Michigan’s Insurance Commissioner in Bulletin 2020-05-INS has assured us that “Medicare will pay for Medicare-covered services to enrollees who opt out of PIP medical benefits, are injured in an automobile accident, and have no other available coverage.”

But as an auto accident attorney who has dealt with many Medicare liens over the last two decades, I also know that Medicare takes its Congressionally-enacted “Medicare Secondary Payer” powers very seriously and that Medicare has always aggressively sought reimbursement for “conditional payments” made when No-Fault coverage should have been paying.

Are there savings from Michigan auto insurance for seniors?

If a driver chooses the Medicare/opt-out, he or she will no longer have to pay for No-Fault medical coverage or the full Michigan Catastrophic Claims Association assessment. (MCL 500.2111f(3); 500.3104(7)(d))

So, the short answer is yes, there are savings from Michigan’s auto insurance for seniors.

However, any older driver who chooses Medicare/opt-out for savings should keep these warnings in mind:

  • In return for giving up all No-Fault medical coverage and catastrophic injury coverage to protect themselves or their families if they’re injured in a car accident, drivers would only see savings on the 35% of their bill that applies to No-Fault personal protection insurance.
  • Reductions in No-Fault medical premiums may be offset by increasing in premiums for bodily injury liability insurance.
  • Reductions in No-Fault medical premiums may be offset by overall increases in premiums based on a company’s use of “territories” and credit-based information in its rate-setting process.
  • Any savings now due to reductions in No-Fault medical premiums are offset later by Medicare liens that take money out of a car accident victim’s settlement for pain and suffering compensation and/or “excess” medical bills.

What about wage loss under Michigan auto insurance for seniors?

If you are over 60 years of age and retired or otherwise not working and, thus, not eligible for No-Fault wage loss benefits if you’re injured in a car accident, then you can “waive coverage for work loss benefits. (MCL 500.3107(2)(a))

In return for your waiver of No-Fault wage loss coverage, your company “shall offer” you “a reduced premium rate.”

Injured and need a lawyer? Call Michigan Auto Law

If you have been injured in a car accident, you can call toll free anytime 24/7 at (800) 777-0028 for a free consultation with one of our experienced auto accident attorneys. You can also get help from an experienced attorney by emailing [email protected] or you can use the chat feature on our website.

Auto Insurance For Seniors in Michigan: What You Need To Know

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