What Are the Six New Personal Injury Protection (PIP) Options and Which One Should I Choose?

In the past, motorists have been required to purchase unlimited lifetime Personal Injury Protection (PIP) medical coverage in Michigan. The major advantage to No-Fault was that accident-related medical care for seriously injured victims was covered, regardless of fault. The downside was that Michigan drivers have historically paid the highest auto insurance rates in the country.

In an attempt to lower premiums across the state, legislators passed extensive reforms to the existing No-Fault law. One of the most significant changes involves coverage of Personal Injury Protection (PIP) medical benefits.

After July 1, 2020, Michigan policy holders are able to select the amount of Personal Injury Protection (PIP) coverage. Here is an overview of Michigan PIP benefits.

What is included in Personal Injury Protection (PIP) medical coverage?

Personal Injury Protection (PIP) benefits provide coverage of “reasonably necessary” medical and related expenses if you or someone on your policy is injured. This may include surgeries, hospitalization, doctor visits, prescriptions, rehabilitative therapy, durable medical equipment, home and vehicle modifications and attendant care.

Additionally, PIP benefits pay 85% of lost wages for up to three years.

Reimbursement for lost wages and replacement services remain the same as they were under the previous No-Fault law. The six new coverage options only apply to Personal Injury Protection (PIP) medical benefits.

How much can I save by choosing less Personal Injury Protection (PIP) medical coverage?

Because PIP benefits comprise the largest portion of most premiums, less PIP medical coverage may result in lower rates. However, it is still unclear exactly how much motorists will save by choosing one of the lower PIP coverage options.

In addition, it’s important to understand that your policy will not pay for medical treatment that exceeds the coverage limits of your policy. For example, suppose you have selected $250,000 or even $500,000 in PIP benefits. If you suffer a catastrophic injury requiring extensive medical care, your PIP coverage will run out quickly and you will be responsible for the rest. Therefore, you should consider whether the premium savings are worth the risk of potential financial devastation.

What are the six options for Personal Injury Protection (PIP) medical coverage under the new Michigan No-Fault law?

Option 1 – Unlimited Lifetime PIP Medical Coverage

This option provides the same level of PIP medical coverage that was required in all Michigan No-Fault policies prior to July 1, 2020. It includes unlimited lifetime coverage of all “reasonably necessary” medical and related expenses for the injured person’s care, treatment, recovery and rehabilitation.

Option 2 – Limited PIP Medical Coverage of $500,000

With this option, your insurance company will cover up to $500,000 per person per accident in PIP benefits for medical and related expenses.

Option 3 – Limited PIP Medical Coverage of $250,000

This coverage option will limit PIP coverage to $250,000 per person per accident for medical and related expenses.

Option 4 – Limited PIP Medical Coverage of $250,000 with Exclusions

This option allows policy holders who choose limited coverage of $250,000 to opt out of PIP medical coverage for themselves, a spouse or resident relative. The excluded person(s) must have their own qualified health care coverage – other than Medicare or Medicaid – that covers injuries resulting from motor vehicle accidents. Excluded family members will not be eligible for PIP medical benefits under the No-Fault policy.

Option 5 – Limited PIP Medical Coverage of $50,000 – for Medicaid Recipients

This option, which caps PIP benefits at $50,000 per person per accident, is only available to applicants or named insureds who are enrolled in Medicaid. In addition, the policy holder’s spouse and resident relatives must have their own qualified health care coverage that covers auto accident injuries. This coverage can be provided by Medicaid, private insurance or a separate No-Fault policy that includes PIP medical benefits.

Option 6 – No PIP Medical Coverage

This option is only available to applicants or named insureds who are covered under Medicare Parts A and B. In addition, the policy holder’s spouse and any resident relatives covered by the policy must have their own qualified health care coverage that covers auto accident injuries. This includes private insurance or another auto policy with PIP medical coverage.

What are the pros and cons of choosing less Personal Injury Protection (PIP) medical coverage?

The most obvious advantage of selecting an option with less Personal Injury Protection (PIP) medical coverage is a lower premium rate. However, it’s important to know that your insurance company will not pay medical costs that exceed your policy limits. Therefore, if you select one of the limited PIP medical coverage options, and you don’t have health insurance that covers auto accidents, you could be faced with devastating medical bills in the event of a catastrophic injury.

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