Michigan's New Auto Insurance Law
  • Information for Insurance Agents

    Michigan's historic bipartisan auto insurance reform law, which Governor Gretchen Whitmer signed into law in 2019, provides lower rates for Michigan drivers, protects insurance coverage options, and strengthens consumer protections. The law applies to auto insurance policies issued or renewed after July 1, 2020.

    This FAQ will be updated to provide the latest information to Michigan auto insurance agents.

    Disclaimer: The information contained within this website pertains to Public Acts 21 and 22 of 2019. It is advisory in nature, and is not meant to be a substitute for legal advice.

     


FAQ
When do I need to collect a signed Personal Injury Protection (PIP) medical coverage selection form?

For new business after July 1, 2020, any applicant or named insured seeking a policy should be offered the PIP medical coverage selection form. In order to make an effective PIP medical selection, the customer must return and the producer must collect a signed and completed PIP medical coverage selection form. If the customer does not return a completed form at application, the carrier should issue the policy with unlimited PIP medical.

For renewals for customers who have selected unlimited, $500,000, or $250,000 in PIP medical coverage (Options 1, 2, or 3), if a customer does not return a completed PIP medical coverage selection form but pays their renewal premium, the law allows for a “rebuttable presumption” that the insured wants to maintain the current limit, and the carrier can renew the policy with the same PIP medical selection.

For renewals for customers who have selected $250,000 with exclusions, $50,000 in PIP medical coverage, or the PIP medical opt out (Options 4, 5, or 6), a completed and signed PIP medical coverage selection form and proof of enrollment in Medicaid, Medicare, or Qualified Health Coverage must be collected at every renewal.

For renewals for customers who would like to change their PIP medical coverage option, the customer must return and the producer must collect a signed and completed PIP medical coverage selection form with the new PIP medical limit.

It is important to note that some insurance carriers may have additional requirements or procedures regarding when a completed and signed PIP medical coverage selection form should be returned. Contact the carriers you represent for more information on any company-specific requirements.

When do I need to collect a signed Bodily Injury (BI) selection form?

A signed BI selection form must be collected for new business or the first renewal effective after July 1, 2020 if a customer would like to select BI limits of less than the statutory default amount of $250,000 per person and $500,000 per accident. If the insured does not provide a signed and completed BI selection form, the insurer must issue the policy with $250,000/$500,000 limits.

For subsequent renewals, a signed BI selection form must be collected only for a change in coverage to below the statutory default amount of $250,000 per person and $500,000 per accident. If the insured does not request the BI selection form or request a change in coverage, the insurer must renew the policy with the existing BI limits.

It is important to note that some insurance carriers may have additional requirements or procedures regarding when a completed and signed BI selection form should be collected. Contact the carriers you represent for more information on any company-specific requirements.

When do I need to collect a Qualified Health Coverage (QHC) letter or Medicare/Medicaid documentation?

Auto insurers, directly or through their producers, should collect a QHC letter and, if applicable, Medicare or Medicaid documentation not only when a customer first applies for coverage, but also at every renewal when a customer is relying on QHC, Medicare, or Medicaid to make a PIP medical coverage selection under PIP medical selection Options 4, 5, or 6. A QHC letter cannot be required to provide a customer a quote for any of the PIP medical selection options. Please see Bulletin 2020-33-INS for more information.

Enrollment in U.S. Department of Veterans Affairs benefits does not qualify as QHC. Please see Bulletin 2020-47-INS for more information.

 

I have been getting many requests from clients who want to opt out of Personal Injury Protection (PIP) medical, even though they are not on Medicare. I tell them they are not eligible unless they are on Medicare, but is there something else I should do?

Producers are expected to inform their customers about all of the PIP medical options available to them under the new law.

Customers who would like remove PIP medical coverage from their policy but do not have Medicare Parts A and B might be eligible to exclude PIP medical under the limited coverage option of $250,000, with some or all persons excluded from PIP medical (Option 4). A named insured who wishes to exclude PIP medical coverage must have Qualified Health Coverage (QHC) that is not Medicare. Any resident relative or spouse who wishes to exclude PIP medical coverage must have QHC. Anyone who is excluded will have no PIP medical coverage. Anyone who is not excluded will have $250,000 in PIP medical coverage.

I have many clients asking to change their policies now that the law is in effect. Am I required to change their policy if they ask for it, or can I have them wait until renewal?

Upon the customer’s request, an auto insurer, either directly or through a producer, must offer all of their customers one of the following: 1) mid-term endorsements, or 2) the option to cancel and reissue their policy under the new law. Please see Bulletin 2020-31-INS for more information.

Public Acts 21 and 22 present consumers with a variety of new choices. What are my obligations in advising clients under the new law?

Producers must be prepared to explain these choices clearly and thoroughly and must allow consumers to make selections that are right for them, their families, and their budget.

Producers are prohibited from attempting to channel an eligible person away from an insurer or insurance coverage with the purpose or effect of avoiding a producer’s obligation to submit an application or an insurer’s obligation to accept an eligible person.

Producers are reminded of their obligations under MCL 500.2116, including, among other things, the obligation to provide eligible persons with quotations for all forms or types of insurance coverage offered by the insurers the producer represents. Please see Bulletin 2020-29-INS for more information.

How are friends and family members who live outside of the household of the named insured covered on a policy if they are a driver or a passenger?

Coverage will depend on the specific policy language of the insurance contract and the relevant policies involved. Questions of this nature should be addressed with the insurance companies to determine how claims will be handled.

My client wants to opt out or exclude Personal Injury Protection (PIP) medical coverage. What may not be covered by Qualified Health Coverage (QHC) that is included in PIP medical Coverage?

PIP medical coverage provides benefits a health policy might not provide, such as transportation to and from medical appointments, vehicle modifications, case management services, residential treatment programs, and long-term and custodial care. Benefits will vary among health policies. Persons relying on QHC to pay for auto accident injuries should also be aware that, unlike auto insurance, health insurance stops paying when the policy ends or is canceled.

What is the difference between the Personal Injury Protection (PIP) medical exclusion (Option 4) and the PIP medical opt out (Option 6)?

The limited coverage option of $250,000 with exclusions (Option 4) allows some or all persons to exclude PIP medical under their policy. Anyone who is excluded will have no PIP medical coverage. Anyone who is not excluded will have $250,000 in PIP medical coverage. For a named insured who wants to exclude under this option, they must have Qualified Health Coverage that is not Medicare. For any resident relative or spouse who wants to exclude PIP medical under this option, they must have Qualified Health Coverage.

The limited coverage option of $250,000 with exclusions is a separate option from the Medicare opt out (Option 6). The $250,000 option with exclusions allows some or all covered individuals to exclude PIP medical coverage. Under the Medicare opt-out option, none of the covered individuals will have PIP medical coverage. To choose this option, the named insured must have Medicare Parts A and B and any resident relative or spouse must have Qualified Health coverage or PIP medical coverage under another Michigan auto policy.

Some of our clients have received letters from their employers or health insurance providers stating that their health insurance pays for injuries on a secondary basis but is considered Qualified Health Coverage (QHC). Can that be true?

As it relates to QHC, a health plan provision that states the health plan acts as the secondary payor of medical claims related to motor vehicle accidents would not prohibit a health plan from meeting the definition of QHC for the purposes of opting out of PIP medical coverage or excluding PIP medical coverage. Furthermore, which coverage pays primary or secondary is not relevant if a consumer does not have PIP medical coverage with which to coordinate.

Coordination of no-fault benefits with a health plan is a separate consideration. DIFS expects health plans to offer two separate letters to their consumers:

  • A letter indicating whether the consumer’s coverage is QHC.
  • A letter indicating whether the consumer’s coverage would coordinate with no-fault benefits.

Please see Bulletin 2020-01-INS for more information.

A client of mine has health coverage that doesn't limit or exclude auto accident injuries but has more than one deductible, including one or more higher than $6,000. Is it Qualified Health Coverage (QHC)?

Per the clear language of the statute, “any annual deductible” that is $6,000 or less per individual (i.e., an individual deductible) means that the coverage is QHC. This includes any type of individual deductible, whether it is in-network or out-of-network. It also includes deductibles that are offset in any manner (e.g., by funds contributed to health reimbursement accounts). If any individual deductible is $6,000 or less and does not limit or exclude coverage for auto accident injuries, that coverage is QHC. Please see Bulletin 2020-33-INS for more information.

Where does my client go to get a Qualified Health Coverage (QHC) letter? What information must be included in this letter?

Health insurers and health plans should develop a document that indicates whether a person’s coverage is QHC for purposes of auto no-fault insurance. Insureds will have to contact their health insurer or health plan to obtain this documentation.

A QHC letter must contain the following:

  1. The full names and dates of birth of all individuals covered under the policy or plan; and
  2. A statement that includes whether the coverage provided constitutes “Qualified Health Coverage” as defined in MCL 500.3107d(7)(b)(i), or that the coverage:
  • Does not exclude coverage for motor vehicle accidents, and
  • Has an annual deductible of $6,000.00 or less per covered individual.

Please see Bulletin 2020-01-INS for more information.

Is Veterans Affairs (VA) coverage, TRICARE, or CHAMPVA considered Qualified Health Coverage?

The U.S. Department of Veterans Affairs has determined that VA coverage is not Qualified Health Coverage (QHC) under Michigan’s new auto insurance law, so consumers may not use VA coverage to exclude or opt out of PIP medical coverage.

DIFS has confirmed with the U.S. Department of Defense that TRICARE and CHAMPVA coverage constitutes QHC under Michigan’s new auto insurance law. Consumers may use TRICARE or CHAMPVA to exclude or opt out of PIP medical coverage. Auto insurers are reminded that they should collect a QHC letter, if applicable, either directly or through their producers, not only when a customer first applies for coverage, but also at every renewal when a customer is relying on QHC to make a PIP medical coverage selection. Insureds may have to contact TRICARE or CHAMPVA to obtain this documentation.

Please see Bulletin 2020-47-INS for more information.

My client has a Medicare Advantage Plan. Can they choose to opt out of Personal Injury Protection (PIP) medical coverage (Option 6)?

Yes. Medicare Advantage plans cover all Medicare services that are covered under Part A and Part B. An applicant or named insured may choose to opt out of PIP medical coverage (Option 6) if they have coverage under both Medicare Parts A and B, and any spouse and all resident relatives covered by the policy have Qualified Health Coverage (QHC) or are covered under another auto policy with PIP medical coverage.

What coverages are consumers choosing when they make a Personal Injury Protection (PIP) coverage selection?

The new law allows consumers to choose a PIP medical limit on their auto policy. PIP medical coverage pays for allowable expenses for medical care, recovery, and rehabilitation if you have injuries from an auto accident. PIP coverages that are separate from PIP medical coverage such as wage loss, replacement services, and funeral and burial expenses are still included in the auto policy, even if consumers choose the opt out or exclusion option.

My client has an indemnity plan. Does this count as Qualified Health Coverage (QHC)?

No. Accident-only indemnity plans, fixed indemnity plans, and hospital indemnity plans are not considered Qualified Health Coverage (QHC).

Having QHC means either Medicare Parts A & B or a health insurance policy that does not limit or exclude auto accident injuries and has a deductible of $6,000 or less.

What has changed regarding limited property damage liability (Mini-Tort) coverage?

For accidents that occurred before July 2, 2020, the maximum amount of damages available for a mini-tort claim was $1,000.00. Public Acts 21 and 22 of 2019 increased this maximum to $3,000.00 for accidents occurring after July 1, 2020.

To comply with this change, limited property damage liability coverage must pay up to $3,000.00 on a mini-tort claim for any accident occurring after July 1, 2020. This coverage amount will apply regardless of the date a policy was issued or any conflicting policy language.

What is considered appropriate documentation to confirm Medicare or Medicaid enrollment?

For Medicare or Medicaid, documentation may be in the form of a current Medicare or Medicaid card. The guide below provides a sample list of Medicaid cards that can be used to show proof of enrollment.

Medicaid ID Card Guide

Will the Qualified Health Coverage (QHC) maximum deductible be adjusted this year?

No. For the period of July 1, 2021 through June 30, 2022, the maximum deductible for determining whether health or accident coverage is QHC remains $6,000.

Regarding the maximum deductible, a compliant QHC letter must state either of the following:

  • The coverage has an annual deductible of $6,000.00 or less per covered individual OR,
  • The coverage provided constitutes “qualified health coverage” as defined in MCL 500.3107d(7)(b)(i).

Please see Bulletin 2021-05-INS and Bulletin 2020-01-INS for more information.

 

A client of mine was injured in an auto accident and recently received a notification from DIFS stating that their health care provider has filed an appeal to DIFS' Utilization Review program. What does this mean and how should I advise them to proceed?

Any health care provider who disagrees with a Utilization Review decision made by the insurer or the Michigan Catastrophic Claims Association (MCCA) may appeal to DIFS. After a review period, DIFS will issue an order resolving the appeal to both the health care provider and the insurer or the MCCA.

If your client received a notice related to Utilization Review, it means that a health care provider has disagreed with a determination made by the auto insurer and that the provider has submitted an appeal to DIFS for a review.  Neither you nor your client are required to take action. If you have questions, please contact DIFS at 877-999-6442 or DIFS-UR@michigan.gov. If your client has questions, they can contact DIFS at 833-ASK-DIFS (833-275-3437) or autoinsurance@michigan.gov.

Why do I need to collect proof of Medicare documentation at every renewal?

Auto insurers, directly or through their producers, should not conclude that an individual meets the criteria for their Personal Injury Protection (PIP) medical coverage choice without collecting documentation regarding Medicare or, if applicable, Qualified Health Coverage or Medicaid (See Bulletin 2020-33-INS). While many people have Medicare benefits for life, some do not. Reasons somebody may lose Medicare coverage may include failing to pay plan premiums, no longer qualifying due to loss of a qualifying disability, or engaging in Medicare fraud. Selecting $250,000 with exclusions, $50,000 in PIP medical coverage, or the PIP medical opt out (Options 4, 5, and 6) can depend on household members having Medicare Parts A & B. Collecting documentation regarding Medicare at every renewal ensures that an insurer can verify and document eligibility for coverages that require Medicare Parts A & B and ensures your customers have coverage if they are injured in an accident.

Why does my client have to pay MCCA fees on a motorcycle policy?

Motorcycle insurance companies are assessed by the Michigan Catastrophic Claims Association (MCCA) just like auto insurance companies. While motorcycle policies do not include Personal Injury Protection (PIP) benefits, motorcyclists are still entitled to PIP medical benefits if they are injured in an accident involving a motor vehicle. Therefore, motorcycle insurers are required to pay an assessment to the MCCA for all motorcycles they insure, which is typically passed on to the motorcycle policyholder.

What happens if my client wants to exclude Personal Injury Protection (PIP) medical coverage (Option 4) but does not provide proof of Qualified Health Coverage (QHC)?

When applying for new coverage or renewing existing coverage, if an insured has chosen limited PIP medical coverage of $250,000, with some or all persons excluded from PIP medical (Option 4), they must provide a completed PIP selection form and proof of QHC for all excluded household members. If proof of QHC is not provided, the policy must be issued with limits of $250,000 for all persons without proof of QHC and with no PIP medical coverage for those who do provide proof of QHC. The insured will be charged the appropriate premium for those not excluded from PIP medical on the policy.