What is Coordination of Benefits: Coordinated vs. Uncoordinated Explained
What is coordination of benefits?
Coordination of benefits is when a person coordinates his or her health insurance with his or her No-Fault auto insurance so that, in return for a reduced auto insurance premium, the person’s health insurance is the primary payer for car accident-related medical expenses.
Below you will learn about the important difference between coordinated and uncoordinated No-Fault benefits and how Michigan No-Fault PIP benefits works for victims who have been injured in a car accident and who receive benefits from other sources such as health or disability insurance plans.
The difference between coordinated and uncoordinated No Fault PIP benefits
There are two types of coordination of benefits, coordinated and uncoordinated, that describe how a person’s No-Fault PIP benefits are provided.
Here’s the difference between coordinated and uncoordinated benefits:
Coordinated benefits: If a person opts for coordinated No-Fault PIP Benefits, then those benefits will be coordinated with similar benefits he or she receives from other sources, such as a health or disability insurance plan. In practice, that means the person has agreed to have his or her private health or disability insurance company take top priority in terms of paying benefits, such as the products, services, and accommodations that are reasonably necessary to an auto accident victim’s care, recovery and rehabilitation.
The No-Fault insurer’s duty to provide No-Fault PIP Benefits kicks in once the health or disability insurer’s policy limits have been reached.
Uncoordinated benefits: Uncoordinated benefits are also known as “full benefits.” The effect of choosing uncoordinated benefits is that an accident victim’s No-Fault insurance company pays all accident-related benefits, even if the expenses for those benefits are also paid by the accident victim’s health insurance provider.
Coordinated benefits provisions are legally binding and, thus, control an accident victim’s source of benefits, unless an accident victim’s health and/or disability insurance is provided through his or her employer’s self-funded ERISA health insurance plan.
If the employer’s self-funded ERISA health insurance plan contains a coordination of benefits provision that designates the No-Fault insurer as first priority, then the No-Fault policy’s coordinated benefits clause may be void.
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