On June 11, 2019, Governor Gretchen Whitmer signed Public Act 21 of 2019, the most significant overhaul of Michigan’s no-fault auto insurance system since its creation in 1973. The reforms, which took effect in stages beginning July 1, 2020, fundamentally changed how Michigan drivers purchase insurance, how medical providers are compensated, and how accident victims access benefits after a crash.
For anyone injured in a Michigan car accident, understanding these changes is essential. The level of Personal Injury Protection (PIP) coverage you selected—or failed to select—directly determines how your medical expenses are covered and what benefits are available to you after an accident.
The Key Changes Under Michigan’s No-Fault Reform
PIP Coverage Is No Longer Unlimited by Default
Before the reform, all Michigan auto insurance policies included unlimited lifetime PIP medical benefits. This was a defining feature of Michigan’s no-fault system—and a primary driver of the state’s notoriously high insurance premiums.
Under the new law, Michigan drivers can choose from several PIP coverage levels:
- Unlimited PIP: Continues to provide lifetime medical coverage with no cap. This is the most comprehensive option and the default if you do not actively select a different level.
- $500,000 PIP: Covers up to $500,000 in accident-related medical expenses.
- $250,000 PIP: Covers up to $250,000 in accident-related medical expenses.
- $50,000 PIP: Available only to individuals enrolled in Medicaid. Covers up to $50,000 in accident-related medical expenses, with Medicaid serving as secondary coverage.
- PIP opt-out: Available only to individuals with qualified health insurance coverage. Allows the policyholder to opt out of PIP medical coverage entirely, relying on their health insurance for accident-related medical expenses.
This choice has enormous consequences. If you selected a $250,000 PIP limit and your accident-related medical bills exceed that amount, you may face significant out-of-pocket costs. Traumatic brain injuries, spinal cord injuries, and other catastrophic injuries can easily generate medical expenses in the millions of dollars over a lifetime.
Medical Provider Fee Schedule
One of the most impactful provisions of the reform is the medical provider fee schedule, which caps the amount that hospitals, doctors, and other healthcare providers can charge for treating auto accident injuries:
- Effective July 1, 2021: Medical providers were limited to charging 200% of the Medicare rate for most services.
- Effective July 1, 2022: The cap was further reduced to 190% of Medicare.
- Effective January 1, 2025: Hospitals are limited to 195% of Medicare; outpatient providers to 160% of Medicare.
The fee schedule was designed to reduce medical costs and, in turn, insurance premiums. However, it has had the unintended consequence of making it harder for some accident victims to find medical providers willing to treat them. Providers who previously treated auto accident patients at higher rates have, in some cases, stopped accepting no-fault patients or reduced the services they offer.
This is particularly concerning for patients who need long-term rehabilitation, attendant care, or specialized treatment. The fee reductions have hit catastrophic injury patients hardest, as their care is most expensive and most affected by the caps.
Attendant Care Changes
Before the reform, family members who provided nursing-type care to an injured loved one could be compensated at rates comparable to professional caregivers. The reform imposed significant limits:
- Family-provided attendant care is now capped at 56 hours per week.
- Compensation rates for family attendant care are limited to $15 per hour (adjusted annually for inflation).
- For accidents before June 11, 2019: Pre-reform attendant care arrangements were initially subject to the fee schedule reductions, though ongoing litigation has challenged some of these retroactive changes.
These limits have placed a substantial burden on families caring for loved ones with catastrophic injuries, forcing some to choose between providing care and maintaining employment.
Impact on Existing Claims (Pre-Reform Accidents)
One of the most contentious aspects of the reform was its retroactive application to accidents that occurred before the law took effect. Specifically:
- The medical provider fee schedule applies to treatment rendered after July 1, 2021, even for accidents that occurred decades earlier under the old unlimited PIP system.
- Attendant care limits apply to care provided after the reform’s effective dates, regardless of when the accident occurred.
This retroactive application has been challenged in court. In Andary v. USAA, the Michigan Supreme Court addressed constitutional challenges to the retroactive fee schedule reductions. The ongoing litigation has created uncertainty for pre-reform accident victims who depended on unlimited PIP benefits for their long-term care.
How the Reform Affects Your Car Accident Claim Today
If you are injured in a car accident in Michigan today, the reform affects your claim in several practical ways:
Your PIP Coverage Level Matters More Than Ever
The PIP level you selected on your auto insurance policy determines the ceiling on your medical benefits. If you chose $250,000 and your injuries are severe, you may exhaust your benefits and face uncovered medical expenses. This makes it critical to:
- Review your current PIP coverage level and understand what it means.
- Consider whether your health insurance provides adequate backup coverage for auto accident injuries.
- Understand that if you opted out of PIP, your health insurer may have subrogation rights or policy exclusions that limit your coverage.
Finding Medical Providers May Be Harder
The fee schedule has caused some providers to limit or stop treating no-fault patients. An experienced car accident attorney can connect you with medical providers who still accept no-fault insurance and provide the treatment you need.
Tort Claims Are More Important
With PIP benefits potentially limited, the tort (liability) claim against the at-fault driver has become more important for recovering the full cost of your injuries. If your medical expenses exceed your PIP limit, excess medical costs can be pursued as economic damages in a tort lawsuit—but only if your injuries meet the serious impairment threshold under MCL 500.3135.
Understanding Your PIP Coverage Options
When purchasing or renewing your Michigan auto insurance, carefully consider the PIP coverage level that best protects you and your family:
- Unlimited PIP provides the greatest protection but comes with higher premiums. It is the safest choice for anyone who could face catastrophic injury costs.
- $500,000 PIP is a middle-ground option that provides substantial coverage at a reduced premium.
- $250,000 PIP offers lower premiums but may be inadequate for serious injuries. Consider this option only if you have robust health insurance to serve as secondary coverage.
- $50,000 PIP or opt-out should only be selected if you have qualifying coverage (Medicaid or qualified health insurance) and fully understand the risks.
Frequently Asked Questions
Can I change my PIP coverage level after an accident?
No. Your PIP coverage level at the time of the accident is the level that applies to your claim. You cannot increase your coverage retroactively after a crash. This is why it is critical to select adequate coverage before an accident occurs. Review your policy regularly, especially at renewal time.
What happens if my medical bills exceed my PIP limit?
If your no-fault PIP benefits are exhausted, you may be responsible for medical costs above your limit. Options include: (1) your health insurance may cover additional expenses, though co-pays and deductibles apply; (2) Medicaid may cover costs if you qualify; (3) excess medical expenses can be pursued in a tort lawsuit against the at-fault driver as economic damages.
Did the reform actually lower insurance premiums?
The reform required insurers to reduce premiums for policyholders who chose lower PIP coverage levels. Drivers who selected $250,000 PIP were to receive at least a 35% reduction, and those who opted for $50,000 PIP were to receive at least a 45% reduction compared to unlimited PIP rates. Whether these reductions have been fully realized in practice has been a subject of debate, and the Michigan Department of Insurance and Financial Services has taken enforcement action against insurers that failed to comply.
Are wage loss benefits affected by the reform?
The basic structure of wage loss benefits was not changed by the reform. Injured individuals can still receive up to 85% of their gross income for up to three years if they are unable to work due to accident-related injuries. The three-year cap and 85% limit existed before the reform and remain in effect.
Can I still get unlimited PIP coverage in Michigan?
Yes. Unlimited PIP remains an option for all Michigan drivers. If you want the maximum protection available, you can select unlimited PIP when purchasing or renewing your auto insurance policy. While the premiums are higher, unlimited PIP ensures you will not face a coverage cap if you suffer catastrophic injuries in an accident.
How does the reform affect my ability to sue the at-fault driver?
The reform did not change the requirements for filing a tort (liability) lawsuit. You must still demonstrate a “serious impairment of body function” or “permanent serious disfigurement” under MCL 500.3135 to pursue a claim for pain and suffering. However, with lower PIP limits now possible, tort claims have become more critical for recovering the full scope of damages in serious injury cases.
Navigating Michigan’s No-Fault System After the Reform
Michigan’s no-fault insurance reform created a more complex landscape for accident victims. Whether you are filing a PIP claim, searching for medical providers, or pursuing a tort lawsuit, you need an attorney who understands every aspect of the reformed system. The Joseph Dedvukaj Firm, P.C. has helped thousands of Michigan residents navigate no-fault claims and has recovered over $300 million in compensation. Call 1-866-HIRE-JOE or visit 1866hirejoe.com for a free, no-obligation consultation.