Medicare + Michigan Auto Insurance Reform: What to Know


Michiganders will have a choice to make by July 1, 2020. Currently, under Michigan’s no-fault insurance system, injured motorists receive unlimited Personal Injury Protection (PIP) regardless of who caused the accident. This coverage pays for your care, recovery, rehabilitation, wage loss, and household replacement services. Starting this summer, Michiganders have the option to exchange some (or all!) of their PIP coverage in exchange for lower auto insurance premiums.

Is Medicare = PIP? Of the six menu options, “Option 6: No PIP Medical coverage” may seem like the default for those who have coverage under Medicare Parts A and B. Why pay extra car insurance premiums when Medicare will just take care of my auto accident injuries? Right? ...Not so fast. Medicare will NOT cover everything that your PIP coverage would. If a car accident leaves you permanently disabled, Medicare will NOT cover “attendant care”, defined as assistance with everyday tasks such as eating, bathing, dressing, grooming, and mobility. Medicare will NOT pick up the tab for “long-term skilled services”, such as the long-term rehabilitation that many require in catastrophic collisions.

The Takeaway: No one can predict if or when he or she will be in a tragic car accident of catastrophic proportions. The purpose of any insurance—whether home, health, life, or automobile—is to protect the insured against such uncertainties and the associated risk of economic losses. In an analysis of more than 70,000 PIP claims, EPIC Consulting found that 1 of every 200 claims exceeded $400,000. The average cost of this segment of claims was $1.4 million. Before opting out of unlimited coverage, carefully weigh the risk carried in the event of a catastrophic claim vs. the premium savings. As you consult your licensed insurance agent, ask yourself:

  • “Is the premium savings enough to offset the risk of giving up a lifetime of comprehensive benefits not covered under Medicare?”

  • “Who would take on the burden of care if I opt out or limit my PIP coverage?”

  • “How much am I willing to pay to eliminate this uncertainty?”



Securities and Advisory Services offered through LPL Financial, a Registered Investment Advisor, member FINRA/SIPC. This information is not intended to be a substitute for specific individualized insurance advice. We suggest that you discuss your specific insurance issues with a qualified insurance advisor.

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