Michigan No Fault Reform: The Devil is in the Details
In May of 2019, Gov. Gretchen Whitmer signed sweeping changes to our No Fault Law. Most headlines still focus on the promised premium savings tied to new options for Personal Injury Protection, a revamped fee schedule for Medical Claims, Fraud Prevention Measures, and adjustments to rating factors. What receives far less coverage is who ultimately pays for your accident-related injuries—and how those bills can boomerang back on you under the new rules.
1. Choosing your lifetime medical caps
You can now set a per-person/per-occurrence medical cap of Unlimited, $500,000, $250,000, or $50,000 (Medicaid only)—or, in very limited circumstances, opt out of PIP medical entirely. Many drivers lean toward the lower limits (or an opt-out) after hearing about premium savings. But buyer beware:
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Medicare remains a secondary payer in auto accidents.
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If you exhaust—or skip—your PIP coverage, Medicare will pay conditionally and then demand reimbursement.
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That repayment right is a conditional-payment lien that attaches to any future Settlement for Bodily Injury and can follow assets in your Estate if it isn’t satisfied.
Real-world proof (post-July 2020 cases)
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Estate of Delmond Richards v. Grange Insurance Company of Michigan (Oakland Cty No. 2021-188404-NF): After lower PIP limits were used up, Medicare paid $109,000+ in hospital bills. The court’s dismissal order required Grange to satisfy Medicare’s lien before the case could close.
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Spectrum Health Hospitals v. State Farm (Kent Cty No. 22-005638-NF): The patient’s Medicare Advantage plan covered part of a $1.4 million bill. Settlement paperwork included full repayment of that lien.
So far, every documented Michigan settlement filed after July 2020 that involved Medicare as the primary payer has ended with Medicare (or a Medicare Advantage plan) being repaid first—no exceptions.
2. Coverage gaps for passengers and drivers in your vehicle
Under the revised law, your PIP medical now follows only the Named Insureds and Resident Relatives. Everyone else must look to their own auto policy—or, if they have none, potentially to the Assigned Claims Plan—a process that can be slow and contentious. Scenarios that raise both a moral dilemma and increased Liability exposure include:
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Children away at school
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Split-household arrangements
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Out-of-town visitors
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Elderly parents riding with a caretaker
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Friends or co-workers borrowing a vehicle on your policy
If any of these apply, talk with a licensed insurance agent about endorsements or alternate strategies to protect both those individuals and your own financial well-being.
3. Practical guidance moving forward
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Balance premium savings against potential liens. Lower caps reduce the bill today but may leave you writing a much larger check later to clear a Medicare lien.
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Keep Medicare paperwork current. If you or any household member is on Medicare Parts A & B, ask your attorney or adjuster to request a conditional-payment letter early in any claim.
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Document lien satisfaction. Whether settling a claim or closing an Estate, insist that repayment language appears in the release, probate petition, or court order.
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Review household coverage annually. New drivers, health-plan changes, or additional resident relatives can shift your best PIP option.
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Lean on professional advice. Unlimited PIP isn’t always the right answer, but a knee-jerk opt-out can be equally dangerous. Find an agent who understands Michigan No Fault Reform, conditional-payment liens, and the nuances of Personal Injury Protection caps.
Closing thoughts
Agents who simply tell every client to “stay unlimited” may be protecting their own commissions more than your budget—yet opting out just because you can may expose you to a Medicare lien that survives the settlement table and even your passing. Each household’s risk profile is different. Seek guidance from someone you trust—someone who knows the law, understands Fraud Prevention Measures, and can give practical, tailored advice.
Have questions? Let’s keep “dorking out” on insurance together—reach out any time.