Who pays first after a Michigan crash: auto or health insurance?

When you’re in a hospital bed worrying about your physical recovery after a crash, the last thing you want to worry about is how you’re going to pay for it. If you have coverage, at least one insurer should be responsible for picking up the tab. Depending on your coverage plans, either health or auto insurance is picking up the bill.

How do I check which coverage applies?

If you have coordinated personal injury protection (PIP) medical coverage, health insurance likely pays first. You might not have to rely on health insurance first if you have uncoordinated PIP coverage. It could pay for covered crash related medical expenses without health insurance.

The determining factors are often found in the declarations page and coordination endorsement of the auto policy in effect during the crash. You need to know whether your PIP medical coverage is coordinated or uncoordinated, the applicable deductible and your PIP medical limit.

Coordinated coverage allows for PIP medical coverage to remain available as secondary coverage. If you have opted out of PIP medical coverage, you won’t be able to pay for your medical bills this way.

The distinction is explained in Michigan’s coordination statute and the Michigan Department of Insurance and Financial Services (DIFS) guidance on coordinating auto and health coverage.

Qualified health coverage (QHC) meets Michigan’s requirements for certain PIP medical coverage choices. Some people with QHC might qualify for an exclusion under the $250,000 PIP medical option. The separate opt-out requires the applicant or named insured to have Medicare Parts A and B, with their spouse and resident relatives covered by QHC or another auto policy’s PIP medical coverage. DIFS explains the difference between coordination and QHC.

If the unresolved question is which auto insurer handles your PIP claim, the Michigan medical-bill priority rules address that separate issue.

What can change that payment order?

Medicare

For crash related services, PIP medical coverage normally pays before Medicare. If the responsible insurer doesn’t pay right away, Medicare may make a conditional payment that can later be recovered.

Whether Medicare covers the service and whether PIP remains available still matter. Medicare’s payment-order guidance explains this distinction.

Medicaid

Medicaid generally pays after other liable coverage, but that doesn’t guarantee that it will cover everything that remains. Medicaid’s coordination guidance describes its role after other liable resources.

Employer health coverage

Some employers fund health benefits themselves, even when an insurance company administers the claims. For qualifying self-funded plans governed by the federal Employee Retirement Income Security Act (ERISA), plan terms that conflict with the auto policy can change the payment order. The plan’s coordination terms receive full effect under the precedent set by Auto Owners Insurance Co. v. Thorn Apple Valley, Inc.

An employer plan is not automatically secondary just because ERISA applies. In Citizens Insurance Co. of America v. MidMichigan Health ConnectCare Network Plan, the court found the health plan primary where the relevant terms did not actually conflict.

What if health insurance leaves a bill unpaid?

If health insurance refuses to pick up the tab, PIP may pay for specific bills. However, the specific bills it can pay depend on why the health insurance didn’t pay them. The amount applied to a deductible is different from a service not covered by the plan.

PIP medical coverage only covers reasonable charges for necessary care, recovery or rehabilitation under MCL 500.3107(1)(a). Available coverage, the PIP medical limit and any applicable deductible still affect payment. A health denial does not automatically make the entire invoice payable by PIP.

If your PIP medical coverage is coordinated with a health maintenance organization that can provide the necessary treatment, you generally have to use that organization’s network for that treatment. Choosing an outside provider without required authorization could lead both insurers to deny payment for that treatment. That precedent in Tousignant v. Allstate Insurance Co. doesn’t apply to every situation involving an emergency, unavailable services or a plan’s failure to provide care.

A preferred provider organization (PPO) may cover treatment outside its network at a different deductible or payment percentage. In Advance Therapy & Rehab, Inc. v. Auto-Owners Insurance Co., the PPO covered out-of-network treatment and applied the submitted bill to the patient’s deductible. The court rejected the insurer’s argument that the patient had to choose an in-network provider to maximize health payment.

Before arranging for nonemergency treatment, ask the provider and health plan about network, referral and authorization requirements.

Important evidence to preserve and collect

Ask each insurer for the written reason for not paying and the policy or plan provision that justifies it. Keep track of:

• the auto policy, declarations page and coordination or PIP medical election documents in effect at the crash
• the health plan’s coverage documents, including employer-plan amendments for the treatment period
• the itemized bills, explanations of benefits (EOBs) and denial letters
• copies of what you submitted, when you sent it and any responses

For employer health coverage, request the Summary Plan Description and claims procedures if you do not have them. A brief benefits summary or insurance card may not contain all the controlling terms.

What deadlines apply while insurers disagree?

For an initial denial under an ERISA covered health plan, you generally have at least 180 days after receiving the denial to appeal.

The Department of Labor’s health-benefit claims guide explains these records and appeal steps for plans covered by ERISA. These steps don’t automatically preserve the separate notice, lawsuit or recovery periods under MCL 500.3145.

A PIP lawsuit generally must begin within one year after the crash unless the insurer already received written notice of that injury or paid benefits towards it. In that case, the lawsuit has to be filed within one year after the most recent expense or loss was incurred.

Even when the lawsuit is timely, a separate rule generally bars recovery of expenses incurred more than one year before it was filed. A specific PIP payment request can pause those latter lawsuit and recovery periods until the insurer formally denies the claim, provided the claimant pursues it with reasonable diligence. Sending bills only to health insurance does not preserve these PIP rights.

The Michigan no-fault claim deadline guide explains those timing rules and their conditions.

Michigan Legal Center can compare the auto policy, health-plan documents, written denials and bill to identify the disputed coverage provision. Michigan Legal Center attorneys can assess which insurer should respond and what steps are needed to protect the separate claims while payment responsibility is resolved.

If your crash medical bill is caught between auto and health insurers, contact Michigan Legal Center to have the coverage dispute reviewed.