July 1, 2020 No-Fault Reform
In order to best understand the new No-Fault medical election requirement to re-new your automobile insurance, it is best to understand the old law. For collisions occurring under a policy issued prior to July 1, 2020, a Michigan resident has unlimited medical benefits pursuant to Michigan’s No-Fault Law which was established in 1973. What does this mean? Any reasonable and necessary medical treatment for a person’s care, recovery and rehabilitation related to an automobile collision is the responsibility of the No-Fault carrier. This was a lifetime benefit. If an individual injured their knee in a 2003 automobile collision and needed a knee replacement in 2017, it would remain the responsibility of the No-Fault carrier.
The new No-Fault reform going into effect after July 1, 2020 requires an individual to make an election regarding their medical No-Fault limits in their renewed automobile policy. There are several options which are outlined below with the pros and cons.
1. Unlimited (lifetime) medical benefit (coverage was provided by Old No-Fault Law)
Pros: Same as before July 1, 2020 whereby a person injured in an automobile accident can receive any and all reasonable medical treatment for their care, recovery and rehabilitation without any limitations as to costs. An unlimited/lifetime benefit
Cons: It is anticipated that the insurance companies will charge a premium for this unlimited coverage which all Michigan residents enjoyed from 1973 through June of 2020.
FAQ: Why do I need unlimited/lifetime medical coverage if I have health insurance through my employer?
Insurance is purchased to cover people for all situations including the most catastrophic. Why do people purchase homeowner’s insurance? In case their home is destroyed by a fire or other disaster. Imagine an individual who is catastrophically injured in an automobile collision. Will your health insurance pay for medical bills, attendant care and other reasonable and necessary medical services for your lifetime?
The other dooms day scenario is the wage earner is the individual that is catastrophically injured and cannot work for the next 30 years. If the primary wage earner is catastrophically injured and cannot work, then it stands to reason that their employer will not provide medical insurance for the next 30 years.
2. $500,000 medical benefit
Pros: It will likely be cheaper than the unlimited lifetime
medical benefit.
Cons: A catastrophically injured person requiring numerous surgeries can very easily eat up the $500,000 in medical treatment.
(a) Who pays for medical treatment beyond the $500,000 amount?
(b) if an injured person requires $1 million in medical care, it could reduce a third- party recovery against a negligent driver as the excess medical can be a lien on any third-party recovery.
FAQ: Is this a middle ground regarding the new medical coverage amounts?
No. All Michigan residents enjoyed lifetime unlimited medical benefits under the old law.
3. $250,000 medical benefit
Pros: It should be cheaper than the two coverages listed above.
Cons: The minuscule savings in the present will be greatly outweighed by the significant medical care for an injured person.
A catastrophically injured person requiring numerous surgeries can very easily eat up the $250,000 in medical treatment. See example above.
FAQ: What if this is the only No-Fault coverage that I can afford?
Insurance is only there to protect you in the most dire of times and this coverage can be exhausted very quickly and will not be worth it for anyone who is significantly injured.
4. $50,000 medical benefit (Medicaid)
Pros: Cheap.
Cons: Any government benefit has a right to a lien on other recoveries such as a third-party recovery against a negligent driver.
Where do you receive treatment if the place you want to go to for medical treatment does not accept Medicaid?
FAQ: Won’t my Medicaid pay for my treatment?
Not all surgeons and medical specialists accept Medicaid.
5. Opt out of medical benefit (Medicare).
Pros: No cost at all.
Cons: Any government benefit has a right to lien on other recoveries such as a third-party recovery against a negligent driver.
Many physicians will not accept Medicare. For example, an individual needing spinal fusion surgery may have serious difficulty locating a neurosurgeon or orthopedic surgeon willing to accept Medicare payment for the procedure.
FAQ: Who pays for attendant care (nurse-like services)?
You must qualify for Medicare either by age or disability.
If I am over 65, why do I need anything more than Medicare coverage?
The catastrophically injured individual over 65, will have difficulty obtaining proper medical care. This can shorten the life span of an individual or loved one.
Reforms to the No-Fault law also limit the amount of family provided attendant care (nurse- like services) that an individual can have.
Insurance companies have been clamoring for years for No-Fault reforms such as fee schedules for MRI examinations.
There are other strange outcomes to the new No-Fault law such as an out of state resident may no longer make a claim for No-Fault benefits if they are injured in an automobile collision in the State of Michigan. The only way an out of state resident can receive No- Fault benefits is if they register and own a vehicle in Michigan and receive No-Fault benefits through that particular Michigan insured vehicle.
The law did not change for motorcycles. Most insurance companies do not allow motorcycles to have their own No-Fault coverage. Motorcycles still collect their No-Fault benefits from the other vehicle involved in the incident. This means that if a motorcycle is struck by an individual that has the opt out Medicare option then there may not be No- Fault coverage and it would go toward the Assigned Claims facility and become a burden of the state.
Soapbox
Make no mistake, the reforms to the No-Fault law do not benefit any resident in the State of Michigan. It is very disappointing that Mike Duggan was supporting the No-Fault reforms and backed the new legislation with threats. He claims Detroit residents could not get No- Fault coverage. This was partially true. The automobile insurance companies were red- lining Wayne County residents (discrimination?) and charging higher rates based upon residential zip codes.
If the No-Fault law in Michigan was so disruptive, then why didn’t more insurance companies pull out of the State of Michigan or stop writing policies in Michigan? The insurance companies were not losing money, they were just not making as much money in Michigan. Now, Michigan residents will receive less coverage, worse medical care and overall be penalized by the new No-Fault law.
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