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The Rathbun Agency Blog

All You Ever Wanted to Know About Insurance

What is Qualified Health Coverage?

As a result of recent no-fault legislation, beginning July 1, 2020, there will be the option of selecting from several different options in regards to the medical coverage carried on your auto insurance policy. The Personal Injury Protection (PIP) allowable expense limit options will include:

  • Unlimited (no limit)
  • $500,000
  • $250,000
  • $50,000
  • Opting-Out

These limits will apply per individual, per claim and apply only to allowable expense coverage. Coverage for work loss, replacement services and survivor’s benefits will not be impacted by the selected PIP allowable expense limit.

In order to select the $50,000 limit, at least one named insured must be enrolled in Medicaid, and all other insureds must either:

  • Be enrolled in Medicaid,
  • Have qualified health coverage (QHC),
  • Or carry PIP allowable expense coverage from another auto policy

But who is eligible to opt out? Policyholders will be eligible to opt out of carrying PIP allowable expense coverage if they carry:

  • Health or accident coverage that does not exclude or limit coverage for auto accident injuries AND has an annual deductible of $6,000 or less per individual, OR
  • Coverage under Medicare Parts A and B of the Federal Medicare Program

For those policyholders who select the unlimited, $500,000 or $250,000 PIP allowable expense limits, it does not matter whether they carry QHC.

Those who are enrolled in Medicare Parts A and B can elect not to maintain PIP allowable expense coverage with a Medicare Opt-Out. But, for any resident family members who are NOT enrolled in Medicare, they must must have qualified health coverage in order for the policyholder to qualify for the Medicare Opt-Out.

But what if a health plan provides coverage for auto accident injuries on a secondary basis? This is very common with self-insured ERISA plans, federal employee plans and military plans. We are not yet certain how these plans will be affected, but anticipate the following effects:

  • ERISA self-funded group – These groups have the option to pay primary, secondary or exclude auto accident-related claims. These groups that pay primary or exclude auto-accident related claims should not be impacted. Groups that pay secondary after auto insurance would be responsible for auto accident-related claims once the PIP limit is met by the auto insurer. These groups may see an increase in auto accident-related claims, depending on the PIP limit their members choose.
  • Non-ERISA self-funded group – These groups have the option to pay primary or exclude auto accident-related claims. These groups should have no impact as a result of the recent legislation.

Members of self-funded groups should still consider purchasing PIP allowable expense as it pays for items that health insurance doesn’t, such as attendant care, lost wages and vehicle or housing modifications.

If you do not choose to keep unlimited medical, you will be require to complete the following form every renewal and if you do not complete it, your coverage will automatically default back to unlimited medical.

If you have additional questions about how your medical coverage will affect your auto insurance policy, please reach out to our office.