Employers May Need to Provide Employees with Documentation of Qualified Health Coverage under Michigan No-Fault Auto Insurance Reform

On July 28, 2020, the Michigan Department of Insurance and Financial Services (“DIFS”) issued Bulletin 2020-33-INS, which details the obligations of no-fault auto insurance carriers, either directly or through their agents, to collect documentation of qualified health coverage (“QHC”) under Michigan’s no-fault auto insurance reform.  Michigan’s no-fault law no longer requires Michigan drivers to carry unlimited medical coverage (frequently referred to as “PIP” coverage).  Under certain circumstances, individuals with QHC may be able to opt-out of PIP coverage under their no-fault policy, which generally will lead to a lower premium.

Under the new DIFS guidance, carriers of fully insured group health plans must provide documentation to plan participants about whether their coverage under the group health plan is QHC.  Private employers sponsoring self-funded group health plans are not required to comply with the bulletin’s obligations because of ERISA preemption.  However, if the self-funded group health plan is QHC, these employers may want to provide similar documentation to plan participants to allow them to opt-out of PIP coverage.  It is unclear to what extent governmental or church employers that sponsor self-funded group health plans (but don’t benefit from ERISA preemption) must provide plan participants with information regarding the plan’s QHC status.

Qualified Health Coverage

QHC cannot exclude or limit coverage for injuries related to motor vehicle accidents, and must have an annual deductible of $6,000 or less per individual (this $6,000 amount may be annually adjusted).

DIFS Bulletin 2020-33-INS clarifies that to be QHC “any annual deductible” must be $6,000 or less, which includes in-network and out-of-network deductibles, as well as deductibles that are offset in any manner, such as by funds contributed to health reimbursement arrangements (“HRAs”).  The DIFS Bulletin also states that “[i]f any individual deductible is $6,000 or less, that coverage is QHC.”  This appears to resolve the uncertainty about whether the family coverage tier must contain embedded deductibles of $6,000 or less to be QHC.  In other words, if a plan’s in-network deductible for individual coverage is $6,000 or less, it appears the entire plan is QHC even if the out-of-network or family tier deductible is more than $6,000.  DIFS confirmed this interpretation of the bulletin in an informal conversation with us.

Documentation Requirements

An individual may opt-out of PIP coverage if the individual has QHC.  Additionally, an individual may opt-out of PIP coverage for the individual’s spouse and all relatives that reside in the same household if they also have QHC (or coverage under another no-fault auto policy with at least $250,000 of PIP coverage).  No-fault auto insurance carriers or their agents are required to collect documentation of QHC at the initial issuance of an individual’s no-fault auto insurance policy and at every renewal when the individual is relying on QHC to opt-out of PIP coverage for the individual and the individual’s spouse and resident relatives.  As a result, employer group health plans should be prepared to provide employees with documentation about whether the plan is QHC to allow plan participants to opt-out of PIP coverage if the group health plan is QHC.

Under the guidance in the bulletin, the documentation must state the names and dates of birth of all persons covered under the plan, and a statement as to whether the plan is QHC, or a statement that the plan does not exclude coverage for motor vehicle accidents and has an annual deductible of $6,000 or less per individual.

Loss of Qualified Health Coverage During No-Fault Policy Term

If an individual loses QHC during the term of his or her no-fault auto insurance policy, the individual must contact his or her auto insurer within 30 days to add at least $250,000 of PIP coverage to the individual’s no-fault auto insurance policy (if the individual will not become covered under other QHC within 30 days).  The Michigan Assigned Claims Plan will provide benefits to the individual if a motor vehicle accident occurs during this 30-day period, but before the individual acquires other QHC or PIP coverage.  However, medical expenses that result from motor vehicle accidents occurring after the 30-day period will not be covered.

Conclusion

Carriers of fully insured group health plans and private employers of self-funded group health plans, whether required to by law or not, should be prepared to provide plan participants with documentation about whether the plan is QHC because plan participants with QHC may be able to opt-out of PIP coverage.

If you have any questions, please contact one of the Miller Johnson employee benefits attorneys.