There is no VA benefits opt out for drivers under Michigan’s new auto No-Fault insurance law. Also, because VA benefits do not cover all medical costs related to a car accident, other No-Fault coverages are “unavailable” under the auto law to drivers whose main or only source of health care is VA benefits.
There is still a lot of understandable confusion after Michigan’s new auto No-Fault law took effect on July 1st of this year. No area of the new law has created more confusion than with “opt-outs,” or the ability of people who have their own sources of health care coverage to save money on auto insurance by “opting out” or dropping presumably duplicative medical coverage from their own auto No-Fault insurance policies. As a car accident and auto No-Fault lawyer, I’ve written a lot about this issue on this blog, and today we’re going to explore VA benefits and why people who have VA benefits cannot opt out under Michigan’s new auto law.
Incidentally, it is understandable that so many veterans and people who have access to VA benefits are confused about this. The politicians who pushed to change Michigan’s auto No-Fault law promised us that people who had their own sources of health care coverage could save a lot of money by dropping medical coverage from their auto insurance policies.
But as is always the case with politicians’ promises about auto insurance and promises of savings, the reality is often very disappointing. Let’s add VA benefits opt out to the list of disappointments with the new auto law.
The reality is that these politicians did not fully understand and take into consideration the concerns of drivers who depend on their VA benefits for their health care. The new auto law in Michigan was not written in a way to provide these savings or even the ability to opt out of No-Fault medical if people have VA benefits.
No VA benefits opt out under new Michigan No-Fault law
The new No-Fault law did not create a VA benefits opt out for drivers who receive their health care through the U.S. Department of Veterans Affairs (VA). Although the new No-Fault law specifically allows drivers with Medicare to opt-out of No-Fault medical coverage, it did not create a similar, specific opt-out for drivers covered by VA benefits.
VA benefits do not cover car accident-related medical care
In Bulletin 2020-47-INS, Michigan’s Insurance Commissioner stated that enrollment in VA benefits does not qualify as the “qualified health coverage” that is required by the new No-Fault law because VA benefits “excludes or limits coverage for injuries related to motor vehicle accidents.”
The Bulletin explained that only under very limited circumstances would VA benefits reimburse a veteran for “emergency care in a non-VA facility, even when veterans who are injured in a motor vehicle accident need emergency care in such a facility.”
No-Fault, VA benefits and qualified health coverage
Because VA benefits do not qualify as “qualified health coverage” for purpose of the No-Fault law, drivers who depend on VA benefits for their health care may be ineligible or they may render their family members ineligible for the No-Fault coverage levels that politicians touted as being capable of providing savings for drivers:
- $50,000 coverage level for drivers on Medicaid: Touted as providing an “average” savings of 45% for all drivers who chose this coverage level, it will be unavailable if the driver’s spouse or family member who lives in the home depends exclusively on VA benefits for health care. (MCL 500.3107c(1)(a); 500.2111f(2)(a))
- Medicare opt-out: Touted as eliminating the premium for No-Fault medical coverage for drivers on Medicare by allowing such a driver to forfeit or “opt-out” of all No-Fault coverage for medical bills after a car accident, this option would be unavailable to a driver whose spouse or family member who lived in the home had only VA benefits as a source of health care. (MCL 500.3107d(1); 500.2111f(3))
- $250,000 coverage level with qualified health coverage exclusion: This little-talked-about coverage option involves a driver who has “qualified health coverage” choosing a No-Fault PIP medical benefits coverage level of $250,000, but agreeing to be excluded from all No-Fault medical coverage in return for a 100% reduction in the No-Fault portion of his or her auto insurance premium. (MCL 500.3109a(2)) Additionally, the driver’s spouse and/or family member who lives in the home must have “qualified health coverage.” Consequently, this option is unavailable if the only source of health care available to a driver and/or his or her spouse or family is VA benefits.
TRICARE is ‘Qualified Health Coverage’ under No-Fault
In Bulletin 2020-47-INS, Michigan’s Insurance Commissioner stated that TRICARE, which is health care coverage provided to military families and their dependents through the U.S. Defense Health Agency, “is insurance and qualifies as QHC” for purposes of No-Fault auto insurance.
QHC stands for “qualified health coverage” which describes the type of health insurance coverage that Michigan drivers must have in order to qualify for certain levels of No-Fault auto insurance.
The Commissioner concluded that TRICARE qualified as QHC because it “does not exclude coverage for motor vehicle accidents and all TRICARE policies have a deductible of less than $6,000 per individual.”
The Bulletin concluded that TRICARE does not “exclude” coverage for car accident-related medical care. But the Bulletin did not state that TRICARE does not “limit” coverage for motor vehicle accidents. Under Michigan’s No-Fault law, “health or accident coverage” qualifies as “qualified health coverage” only if the “coverage does not exclude or limit coverage for injuries related to motor vehicle accidents” and “[a]ny annual deductible for the coverage is $6,000.00 or less per individual.” (MCL 500.3107d(7)(b)(i))
Similarly, because the health care available through the federal government did not meet the qualifications for QHC, no VA benefits opt out available for purposes of No-Fault auto insurance.
As a result of the Bulletin, drivers who have TRICARE may select certain No-Fault coverage levels that are unavailable to drivers who depend on VA benefits for their health care:
- $50,000 coverage level for drivers on Medicaid
- Medicare opt-out
- $250,000 coverage level with qualified health coverage exclusion
CHAMPVA is ‘Qualified Health Coverage’ under No-Fault
In Bulletin 2020-47-INS, Michigan’s Insurance Commissioner stated that CHAMPVA, which provides health care benefits to military families and their dependents, “is insurance and qualifies as QHC” for purposes of No-Fault auto insurance “because CHAMPVA does not exclude or limit coverage for motor vehicle accidents and all CHAMPVA policies have a deductible of less than $6,000 per individual.”
As a result of the Bulletin, drivers who have CHAMPVA may select certain No-Fault coverage levels that are unavailable to drivers who depend on VA benefits for their health care:
- $50,000 coverage level for drivers on Medicaid
- Medicare opt-out
- $250,000 coverage level with qualified health coverage exclusion
Need help? Call Michigan Auto Law
If you are a veteran who was injured in a car accident and need help, you can call toll free (248) 353-7575 for a free consultation. You can also get help from an experienced Michigan car accident attorney by visiting our contact page or you can use the chat feature on our Michigan Auto Law website.
