Medicaid is expected to cover auto accident injuries in Michigan under the No-Fault law. The reason: once a car accident victim’s medical bills reach his or her No-Fault PIP medical benefits coverage limit and No-Fault coverage ends, the law presumes Medicaid will be a source for continued medical care.
The No-Fault PIP medical benefits coverage levels that drivers must choose from when purchasing their Michigan auto insurance policy include: (1) $50,000 for drivers on Medicaid; (2) $250,000; (3) $500,000; and (4) unlimited. (MCL 500.3107c(1)(a))
Like Medicare, Medicaid has a complicated relationship with Michigan’s auto No-Fault insurance law in terms of who covers what, what triggers coverage and whether car accident victims would have to pay to reimburse for the money spent on their medical bills.
It’s important that car accident victims know what their legal rights are and how Medicaid cover auto accident injuries under the Michigan No-Fault law.
Has Medicaid covered auto accident injuries in Michigan historically?
Historically, Medicaid was not supposed to cover auto accident injuries in Michigan. Like Medicare, Medicaid is a “secondary payer” under federal law, meaning that it would not pay for a car accident victim’s medical care and treatment if a third-party such as No-Fault auto insurance has the “legal liability” to pay. (42 U.S.C. 1396a(a)(25)(A); 42 CFR § 433.138(a))
However, in the rare, unintended circumstance that Medicaid did end up covering auto accident injuries – even though No-Fault insurance coverage was available – Medicaid would always seek reimbursement from the car accident victim. (42 U.S.C. 1396a(a)(25)(B); 42 CFR § 433.139)
Typically, reimbursement involved Medicaid’s assertion of a lien on a car accident victim’s third-party tort recovery for pain and suffering compensation.
And, as I will discuss more below, presently and in the future, Medicaid may assert liens on all “excess” medical and economic damages that a car accident victim claims in a third-party tort claim for pain and suffering compensation. (MCL 500.3135(3)(c))
Does Medicaid cover auto accident injuries under the No-Fault law?
It is expected that – under Michigan’s No-Fault law – Medicaid will cover auto accident injuries and a victim’s accident-related medical bills once the dollar-limit of the victim’s PIP medical benefits coverage level has been reached:
- $50,000 coverage level – This coverage level is limited to only those drivers who are “enrolled in Medicaid.” It is expected that once the driver’s car-accident-related medical bills exceed $50,000 and, thus, No-Fault coverage ceases, then Medicaid will pay for accident-related medical care thereafter.
- $250,000 and $500,000 coverage levels – These coverage levels are available to all drivers. It is expected that once the driver’s car-accident-related medical bills exceed $250,000 or $500,000 (depending on whichever coverage level has been selected in the policy through which benefits are sought (MCL 500.3107c(5)) and, thus, No-Fault coverage ceases, then Medicaid will pay for accident-related medical care thereafter.
It is important to note that the “unlimited” No-Fault PIP medical benefits coverage level is available to all drivers. But it is expected that Medicaid will not cover auto accident injuries of an injured victim if this coverage level is chosen because (1) Medicaid is a secondary payer and (2) the “unlimited” coverage would bestow on No-Fault the third-party “legal liability” to pay.
If Medicaid covers auto accident injuries, is it still a secondary payer under the No-Fault law?
Yes. The federal law has not changed. But what that means in practice we have yet to see.
After 26 years as an attorney specializing in helping people injured in auto accidents, I know how aggressive Medicaid has always been in using the “secondary payer” rule to recoup what it has paid out in medical expenses that should have been paid by No-Fault.
That means Medicaid – despite the continued validity of the federal “secondary payer” law – will likely not suddenly change its old ways under the No-Fault law that makes Medicaid a regular payer of auto-accident-related medical bills and expenses once people exhaust their own pre-selected No-Fault PIP coverage levels.
In other words, for myself and for other experienced Michigan car accident lawyers, it would not be a surprise if at some point Medicaid re-asserts the “secondary payer” rule as a way to prevent the state of Michigan and individual drivers from overriding federal law to make Medicaid a more readily-accessible payer under the new No-Fault law – much the way that Medicare used the “secondary payer” rule to block drivers from coordinating No-Fault with Medicare to make it the “primary” payer on all car accident-related medical expenses. For instance, lawyers can anticipate that relying on the “secondary payer” rule, Medicaid may argue that once PIP is exhausted it ceases its own “legal liability” to cover auto accident injuries by paying for an injured driver’s medical bills because the driver made the choice to limit that liability by selecting a less expensive coverage option for PIP.
Michigan lawmakers who were looking to give the auto insurance industry a boondoggle by limiting their PIP exposure and therefore increasing their profit margins by forcing the burden of paying for medical care onto taxpayers through shifting payment from No-Fault to Medicaid may not like this.
But none of those lawmakers or insurance industry lobbyists asked Medicaid either.
Does Medicaid provide coordinated coverage for car accidents?
No. Drivers cannot coordinate their No-Fault PIP medical benefits coverage with Medicaid because it is prohibited by the federal “Medicaid Secondary Payer” law, which provides that Medicaid can cover auto accident injuries but cannot be made the “primary payer” to pay for accident-related medical bills when No-Fault has the “legal liability” to pay.
How does Medicaid affect car accident settlements in Michigan?
If Medicaid covers auto accident injuries paying for accident-related medical bills that No-Fault insurance had the “legal liability” to pay, then they will seek reimbursement through a lien on the pain and suffering portion of any car accident settlement that the victim obtains in his or her case.
Additionally, it’s possible that Medicaid will cover auto accident injuries but may seek reimbursement through a lien on a victim’s third-party tort recovery for “excess” medical benefits.
What are Medicaid liens for pain and suffering and excess medical benefits?
A Medicaid lien on a car accident victim’s recovery of pain and suffering compensation and/or “excess” medical benefits (i.e., accident-related medical expenses that exceed the No-Fault PIP medical benefits coverage level selected in the policy through which a victim is claiming benefits) is usually how Medicaid ensures that it will be reimbursed for any payments made on the injury victim’s behalf for car accident-related medical expenses.
From a car accident victim’s perspective, these so-called “Medicaid super liens” are horrible. This means Medicaid will cover auto accident injuries but they force victims to use most or all of their compensation from a trial verdict or a settlement to pay them back. As a result, the car accident victim is left with a vastly reduced settlement recovery, or with nothing at all for all the pain and all the injuries he or she has suffered.
In contrast, when a car accident victim is covered by an auto insurance policy with “unlimited” No-Fault PIP medical benefits coverage, reimbursement through liens on the victim’s third-party recovery will not occur because the No-Fault law prohibits an auto insurance company from seeking reimbursement for monies it paid out in No-Fault benefits. (MCL 500.3116(1) and (4))
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