The Michigan no-fault reform brings significant changes for both employees and employers. With drivers now able to select lower PIP (personal injury protection) limits, the Michigan no-fault reform impact includes a greater reliance on employer-sponsored health coverage. This shift has important implications for health plan costs and coverage gaps.
1. What is the Michigan No-Fault Reform Impact?
In May 2019, Governor Whitmer signed a historic update to Michigan’s no-fault auto insurance law, the first since 1973. The reform aims to make auto insurance more affordable while offering more coverage options. It overhauls how auto accident-related medical claims are paid.
Previously, Michigan drivers received unlimited PIP coverage, which paid for all medical costs, services, and accommodations related to injuries. Now, drivers can choose lower PIP limits, increasing reliance on employer-sponsored health plans.
2. Employer Considerations for the Michigan No-Fault Reform Impact
Employers must understand how the Michigan no-fault reform impacts their health plans. Employees choosing lower PIP limits will rely more on employer-sponsored health coverage, increasing cost exposure.
Encourage employees to purchase the highest PIP coverage they can afford. Lower PIP limits or exclusions leave gaps that health insurance doesn’t cover, such as:
- In-home attendant care
- Transportation to medical appointments
- Wage replacement
- Home and vehicle modifications
- Long-term cognitive and speech therapy
Health plans often limit the number of covered services per year. High-deductible plans require employees to pay out-of-pocket before coverage begins. In catastrophic cases, employees unable to work may lose employer-sponsored health insurance.
Employee Considerations
The no-fault reform allows drivers to select their level of medical coverage for catastrophic claims. Key changes include:
- Reduced PIP rates
- Increased state minimum bodily injury limits
- Prohibited rating based on gender, marital status, education, occupation, credit score, or zip code
PIP options now include:
- Unlimited PIP Coverage
- $500,000 Limit
- $250,000 Limit
- $50,000 Limit (only for Medicaid recipients)
- PIP Exclusion/Opt-Out (requires qualified health coverage or Medicare A&B for all household members)
Kapnick Insurance Group advises selecting the broadest options to protect yourself and your assets. Recommended minimum coverages include:
- Unlimited PIP Coverage
- Bodily Injury Limits: $500,000 per accident/$500,000 per occurrence
- Uninsured Motorists Limits: $500,000 per accident/$500,000 per occurrence
- Underinsured Motorists Limits: $500,000 per accident/$500,000 per occurrence
- Property Damage Coverage: $500,000
- Personal Umbrella Policy: Minimum limit of $1,000,000
Looking to Learn More?
Visit our Michigan No-Fault Auto Insurance Reform page for more in-depth coverage, information, and resources.
