Who Pays Medical Bills After a Michigan Car Accident? Understanding PIP Coverage

Michigan is a no-fault state. This means the injured person’s individual car insurance pays the medical bills not covered by health insurance following a crash. It also means the car insurance carrier must pay regardless of who was at fault for the crash.

Who pays your medical bills?
Under Michigan law (MCL 500.3114), there is a specific order for who pays:

1. Your Own Policy: If you have auto insurance, it pays first.
2. Resident Relative: If you are uninsured, a spouse or relative you live with pays.
3. Michigan Assigned Claims Plan: If no insurance exists in your home, the State assigns a carrier (capped at $250,000).
   

This order is the same regardless of whether the injured person was inside or outside a motor vehicle at the time of the crash. In other words, the order is the same for drivers, pedestrians, bicyclists, and passengers.

Which Car Insurance Company Is Responsible For Paying My No-Fault Claim?

1. Your Own Auto Insurance Is First in Priority

Under MCL 500.3114, your own auto insurance is first in the order of priority. This means if you are injured in a car wreck, your own auto insurance always pays the medical bills that health insurance does not cover. This is true even if your car or truck is not involved in the crash.

Example:
Anthony owns a Buick and has State Farm Insurance. One day, while crossing the street, he gets hit by a drunk driver. Anthony sustains terrible injuries, including a broken hip and brain injury. State Farm Insurance must pay his own medical bills up to the medical coverage limit, even though his Buick was not involved in the accident.

2. Resident Relative

If the injured person is not a named insured or does not have auto insurance of their own, they next look to the auto insurance of a resident relative.

Who counts as a resident relative?
In a no-fault auto insurance claim, a resident relative is typically defined as a person related to the named insured by blood, marriage, or adoption who lives in the same household as the named insured. This includes spouses, children, and other family members residing with the policyholder.

Example:
Anthony owns a motor vehicle and is hit by a car while walking across the street. His motor vehicle is not insured. However, Anthony lives with his sister, April, and she has an Allstate insurance policy. Allstate is responsible for paying Anthony’s medical expenses, up to the medical coverage limit.

3. Michigan Assigned Claims Plan (MACP)

The Michigan Assigned Claims Plan (MACP) is a program established by the State of Michigan to provide access to no-fault benefits when no applicable car insurance is available.

It is the plan of “last resort.” Under the MACP, benefits include:

• Lost wages
• Doctor and hospital bills (Medical expenses capped at $250,000)
• Prescription reimbursement
• Replacement services (household chores)

The Plan is administered by the Michigan Automobile Insurance Placement Facility.

Example:
Anthony lives with his sister, April. They have one car in the household, but it is not insured. Anthony is injured crossing the street when another car strikes him. Anthony must first turn to the MACP to pay his medical bills. This is true even if the driver caused his injuries.

When Does Health Insurance Pay Medical Bills?

This is a common point of confusion. Medical insurance becomes primary for the payment of auto accident-related medical bills only when a person’s auto insurance is "Coordinated" with health insurance.

Under MCL 500.3109a, insurers must offer the option to coordinate auto insurance benefits with other health insurance to lower premiums.

• If Coordinated: The health insurer becomes the primary payer for medical expenses. The auto insurer pays for deductibles and co-pays.
• If Uncoordinated: The auto insurance is primary for payment of all medical expenses.

Medicare and Medicaid Rules

If an injured person is on Medicare or Medicaid (such as Blue Cross Complete, Molina, or McLaren), auto insurance is always primary for the payment of medical bills.

• The Law: Federal and state laws state that government plans are secondary to no-fault medical policies.
• VA Plans: This rule also applies to individuals on VA plans like Tricare.

Self-Insured ERISA Plans

Many health insurance plans are actually self-insured plans under ERISA (Employee Retirement Income Security Act).

In Federal Kemper Ins Co v Health Ins Admin, Inc, the Michigan Supreme Court held that a health insurance carrier is primarily liable for medical bills when the insured elects to coordinate no-fault benefits.

However, there is an exception: If the ERISA plan language clearly states that the plan is secondary, then the auto insurance becomes primary. These situations are very complicated, and it is best to contact an experienced Michigan car accident lawyer to determine who pays.

Does the Negligent Party Ever Pay Medical Bills?

Yes. The negligent party (at-fault driver) is responsible for paying medical bills when the no-fault policy covering the injured person is exhausted.

Example:
Many people now purchase a $250,000 PIP limit. If the injuries from a crash are catastrophic and hospital bills exceed $250,000, the liability insurance for the at-fault driver must step up and pay the excess medical bills.

What If I am a "PIP Opt-Out"?

Under Michigan law, individuals with Qualified Health Coverage (health insurance that does not exclude auto injuries and has a deductible of $6,000 or less) can choose to opt out of PIP medical coverage entirely.

In this situation:

1. Who Pays: Your health insurance (e.g., Blue Cross) must pay auto accident-related medical bills.
2. The Catch (Liens): Unlike PIP, health plans like Medicare or Blue Cross can assert a lien on your tort recovery. This means they can seek reimbursement from your pain and suffering settlement for the money they paid out.

Contact Our Michigan Insurance Claim Lawyers

Figuring out who pays can be a nightmare. Insurance companies often point fingers at each other to delay payment. We stop that game.

Call the Lee Steinberg Law Firm at 1-800-LEE-FREE (1-800-533-3733) today. We will review your policy for free and make sure your bills get paid.