Michigan’s auto insurance reforms allow drivers with Medicare to opt out of their Personal Injury Protection (PIP) medical coverage, known as Option 6. This can lower your car insurance premium, but it is critical to understand the serious limitations and risks involved before choosing this option.
What Option 6 means for your coverage
By selecting Option 6, you are essentially telling your auto insurance company that Medicare Parts A and B will be your primary and sole medical coverage for any injuries sustained in a car accident. Your auto policy will pay nothing toward your medical care, regardless of who was at fault.
Requirements to qualify for Option 6
This is not a straightforward choice. To be eligible for Option 6, strict conditions apply to you and everyone in your household:
- Named Insured: You, as the named insured on the policy, must be enrolled in both Medicare Parts A and B.
- Household Members: Your spouse and any resident relatives must also have “qualified health coverage”. This can include:
- Another auto policy with PIP medical coverage
- Their own Medicare coverage
- A private health insurance plan that covers auto accident injuries
What Medicare covers after a car accident
While Medicare does cover medically necessary treatment for car accident injuries, it is not a complete replacement for robust PIP coverage. The level of coverage will be determined by which part of Medicare applies:
- Medicare Part A (Hospital): Covers inpatient hospital stays, skilled nursing facility care, and hospice care related to your injuries.
- Medicare Part B (Medical): Covers medically necessary services like doctor visits, emergency room treatment, diagnostic tests (like X-rays or MRIs), ambulance transportation, and durable medical equipment.
Gaps and financial risks of choosing Option 6
Relying solely on Medicare for an auto accident can leave you with significant out-of-pocket costs and no coverage for vital long-term care services.
- Out-of-Pocket Expenses: You will be responsible for Medicare’s standard deductibles, copayments, and other cost-sharing expenses. Unlike unlimited PIP coverage, there is no one else to pay these for you.
- Missing Services: Medicare does not cover many essential services that are often required for serious car accident injuries, such as:
- Long-term or in-home attendant care (help with daily tasks)
- Residential treatment facilities
- Home and vehicle modifications for accessibility
- Long-term rehabilitation or physical therapy that exceeds Medicare limits
- Dental Coverage
- Medicare’s Right to Reimbursement: If you receive a personal injury settlement from the at-fault driver’s insurance, Medicare has a right to be reimbursed for any payments it made on your behalf. Your settlement money will be used to pay back Medicare before you receive the funds.
What your auto policy still covers
Even with Option 6, your auto policy still provides important benefits:
- Bodily Injury Liability: Protects you from lawsuits if you cause an accident and are found liable for causing serious injury or death.
- Property Protection (PPI): Covers damage your car does to other people’s property, like a building or fence.
- Lost Wages and Replacement Services: Provides compensation for lost income and help with household chores if you cannot perform them after an accident, though this coverage is typically capped at a maximum of three years.