It's like one last shot over the bow for everyone with an auto insurance bill next week. While auto insurance reform may have been passed into law in recent days in Lansing, it doesn't actually go into effect until next summer and in the meantime, one part of your insurance bill is going up again on Monday.
On Monday, July 1st, the per vehicle fee to cover the cost of medical care of people catastrophically injured in a car accident will increase by $28 per vehicle to $220 a year. The Michigan Catastrophic Claims Association (MCCA) oversees the fund, which reimburses auto insurance companies for the cost of medical care when it exceeds $580,000.
Under the new auto no-fault law passed by the Legislature and signed into law by Gov. Whitmer in late May, drivers will be able to choose their level of medical coverage beginning next summer. As the new law takes effect it is expected the MCCA fee will decrease, although it’s unclear by how much.
Tricia Kinley is Executive Director of the Insurance Alliance of Michigan. She says, “On July 1, 2020, drivers will finally have options on the level of medical coverage they carry with their car insurance, so they can pick a plan that works for them and their families,” adding, “For decades, drivers have been forced to pay for unlimited, lifetime medical benefits, but that mandate ends next summer – and not a moment too soon.”
Multiple studies have found Michigan drivers pay the highest auto insurance premiums in the country. A mandate to purchase unlimited, lifetime medical benefits and a lack of cost controls that have allowed big hospitals and medical providers to dramatically overcharge for procedures have caused the state’s auto insurance premiums to skyrocket over the last several years, and are a clear culprit in the rising cost of the MCCA fee.
Beginning next summer, drivers will be able to choose between several levels of medical coverage, including:
- Unlimited medical benefits, which is required now
- $500,000 in Personal Injury Protection (PIP)
- $250,000 in PIP coverage
- $50,000 in PIP coverage for those on Medicaid
- Opt-out of PIP coverage entirely if you have separate health insurance that covers collision injuries
When the selection process goes into effect next year, each level of coverage comes with a guaranteed rate reduction on the PIP portion of a driver’s auto insurance premium.
A year later, in the summer of 2021, cost controls will be implemented to rein-in overcharging by big hospitals and medical providers.
In the meantime, however, you get another year of higher costs thanks to that mandatory coverage, as, starting Monday, each car in your line up will be charged an extra $28 on your insurance bill.
Kinley says, “We applaud the Legislature for implementing critical cost controls to stop overcharging by big hospitals and medical providers, however we believe they should be implemented sooner to maximize savings for drivers.”