With the new no-fault auto reform, drivers will need to understand the difference between how their health insurance vs. auto insurance covers medical expenses in case of an injury during an accident. In this article we’ll explain those differences and also take an in-depth look at changes to PIP coverage.
Changes to Personal Injury Protection
If injured in an auto accident, Personal Injury Protection (PIP) provides coverage for all reasonable and necessary medical expenses for the injured person’s lifetime up to the maximum coverage amount selected on their policy. PIP will also pay for wage loss and replacement services for up to three years after the date of the accident. The reform allows drivers the ability to choose their level of protection relating to medical coverage for catastrophic claims.
The levels available are:
- Unlimited PIP Coverage
- $500,000 limit
- $250,000 limit
- $50,000 limit – Medicaid required.
- PIP Exclusion/Opt out – Medicare A&B or a qualified health coverage is required for all household members.
All insureds must complete a signed PIP selection form.
Limiting or Reducing PIP Coverage
If choosing to waive or limit PIP coverage, remember you’ll have a stronger reliance on individual or employer-sponsored health insurance which is subject to deductibles, co-pays, out-of-pocket maximums, etc., on an annual basis. You would also be waiving or limiting several coverages that a health insurance plan does not cover such as:
- Payment for services the injured person cannot accomplish, such as housekeeping and yard work.
- In home attendant care, including long-term care.
- Door-to-door medical appointment transportation.
- Lost wages replacement for up to three years.
- Home and vehicle modifications such as wheelchair lifts and/or ramps.
- Long term cognitive and speech therapy, which health plans typically limit.
Also keep in mind, individuals with high deductible would be responsible for paying the deductible out of pocket before their health insurance would begin to cover services. Also, in catastrophic claims where the person is injured and unable to return to work, they would eventually lose their employer-sponsored health insurance and be responsible for any future expenses out of pocket.
What is “Qualified Health Coverage”?
In order to opt out of Personal Injury Protection (PIP) all together insureds must have qualified health coverage. Qualified health coverage has no limit or exclusion for injuries resulting from an auto accident and has an annual deductible of $6,000 or less per individual. Medicare Parts A & B also meet the definition of qualified health coverage. Those choosing a lower PIP option can coordinate benefits with their employer -sponsored health plan.
To verify if your health insurance meets the criteria of qualified health coverage contact your medical provider’s coordination department or your Human Resources department.
Four teenage boys returning home from a high school sporting event, were driving too fast and lost control of their vehicle, sending the vehicle off road and into a ditch. One passenger was severely injured and required life flight, extended hospital stay, several surgeries and a lifetime of care. Total claim expenses exceeded $1,900,000 with continued claim costs still being paid to date. Over $900,000 worth of expenses would NOT have been covered under health insurance; leaving a significant gap in coverage.
Read more to understand how an auto policy would pay out depending on your PIP choice.