Who Pays Your Medical Bills in a Michigan Auto Accident?


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Given Michigan’s complex No-Fault auto law, sometimes it can be difficult to understand who pays your medical bills when you're injured in an auto accident. This article explains the difference between primary and excess medical coverage for Michigan auto insurance, what is covered, and how Michigan drivers can ensure they have coverage for any medical bills due to injury from a car or truck accident.

Most people have what’s called “coordinated” or “excess” medical benefits on their auto insurance policies. This means that in the event the person is injured in a car or a truck accident, his or her health insurance is supposed to pay first, then the auto insurer is responsible for the balance under the Michigan No-Fault law.

There is also an option to have primary medical benefits on your insurance policy. Another term for this is primary medical PIP (personal injury protection benefits). This means that in the event of an auto accident injury, the injured person receives medical benefits from their auto insurance company.

Coordinated coverage is less expensive than primary coverage, as your auto insurance company expects it will not have to pay first in the event of a motor vehicle crash.

However, in some cases, the auto insurer does end up paying first. One such example is if the health insurance policy contains an auto accident exclusion, which is an exclusion in the policy that states the insurance company will not pay for treatment related to auto accidents if there is Michigan No-Fault insurance coverage that applies.

An even more common situation is when people lose their health coverage due to a work layoff or termination and forget to tell their auto insurer that they no longer have health insurance. When this happens, the auto insurer will usually charge a higher medical deductible than it would have had the health insurer been paying first. Most insurers charge anywhere from $0 to $300 for a medical lifetime deductible if the policy is set up correctly. If the insurance company ends up in a primary position, they will increase this amount to $500 or $600 (as an example).

A few unique situations when the above does not apply include GMAC,Medicare and Medicaid coverage. GMAC Financial Services charges a $2,500 deductible if the insured person was supposed to have primary coverage and did not. Additionally, Medicare and Medicaid are not supposed to be used for auto accidents, as they are payers of last resort. If an insurance agent asks you if you have other health insurance, remember that Medicare and/or Medicaid do not count. Therefore, you need to have any medical benefits from your auto insurance as primary on your auto insurance policy.

Finally, keep in mind that there can be substantial penalties if someone is using Medicare or Medicaid instead of No-Fault insurance to treat for personal injuries caused by an auto accident. Many medical doctors do not understand this issue, and will simply send bills to Medicare or Medicaid instead of submitting them to a No-Fault insurer as they are supposed to. Please make sure to contact a knowledgeable No-Fault insurance attorney immediately if this happens.

Situations when Michigan drivers should choose primary medical PIP benefits.

There are several situations where it’s beneficial for people to use medical benefits from their auto insurance by electing to have primary medical PIP coverage. Even though it may be a little more expensive, the positives far outweigh the slightly higher costs.

Here are a few examples of when people are better off with primary medical PIP insurance benefits:

1. Auto Accident Exclusions.

If you have any type of auto accident exclusion in your health insurance policy, you should elect primary medical on your auto No-Fault insurance. To find out whether you have an auto accident exclusion, you should contact your health insurer and request a copy of the “summary plan description” or the plan itself. Review this with your insurance agent as well. Here’s some info on how to read your auto insurance policy.

2. Beware of ERISA plans.

If your health insurance is a self-funded ERISA plan, you should elect primary medical on your auto No-Fault insurance. These plans can claim a federal lien against your auto accident negligence case (your case for pain and suffering after a car accident). Keep in mind, this area of law is continually changing and is being strongly contested between personal injury lawyers and consumer justice organizations on the one hand, and lawyers representing the ERISA plans on the other. The best way to avoid the problem is to elect primary medical on your auto No-Fault insurance.

To find out whether your health plan is a self-funded ERISA plan, you should contact your health insurer and request a copy of the “summary plan description” or the actual plan. This will help verify and determine your responsibilities with regard to reimbursement and substitution.

3. If you have an HMO.

HMOs can be very restrictive and can often result in delayed medical treatment. By electing primary medical PIP, you do not have to treat within the HMO and can substantially expedite your treatment and improve your choice of providers.

4. Important Warning about Medicare and Medicaid if you are injured in a car accident and have Michigan No-Fault insurance:

If you have Medicare, Medicaid, Veterans Administration Benefits or any county health plan, you should have primary medical PIP on your auto No-Fault insurance. This helps to avoid the “super liens” that providers of government benefits may otherwise have against your automobile negligence case (the case for your personal injuries and pain and suffering that you would bring against the person who has caused your accident).

5. Blue Cross Blue Shield.

Be aware that there is the possibility of a “double dip” if you have traditional Blue Cross and full coverage on your No-Fault insurance policy. For this reason alone, anyone with Blue Cross Blue Shield should have primary No-Fault auto insurance as well. If you have health insurance (other than Medicare or Medicaid) and you want to save money on your auto insurance, you have the option in Michigan to buy coordinated/excess medical PIP coverage. This coordinated policy puts your health insurance in a primary position to your car insurance for auto accident-related medical expenses. Most insurers today already default to coordinated/excess medical, but some agents never ask if you already have health insurance.

ABOUT THE AUTHOR: Jeffrey Bussell
Jeff is an attorney in Michigan Auto Law’s pre-litigation division, where he works closely with auto accident victims in the early stages of their lawsuits, helping them recover important insurance benefits making certain they receive whatever medical treatment is necessary for a full recovery.

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.