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Know the Law – Uncoordinated vs. Coordinated no-fault

Posted at 9:00 AM, Jul 22, 2017
and last updated 2017-07-22 09:00:42-04

When selecting your Michigan no-fault insurance, you can choose a policy that has either uncoordinated or coordinated coverage. The insurance company must offer you the choice. So what’s the difference between the two types of coverages?

If you select uncoordinated no-fault benefits, your no-fault insurer pays first if you’re injured in a car crash. This includes your medical expenses and wage loss benefits, regardless of whether you have separate health insurance and/or disability insurance. In other words, your no-fault benefits are primary.

If you choose coordinated benefits, your health insurer and/or disability insurer will pay first if you’re in an auto accident. Your no-fault insurance will only pay those medical expenses and wage loss benefits that are not covered by your health insurance and/or disability insurance. In other words, your no-fault benefits are secondary.

When it comes to selecting either uncoordinated or coordinated coverage, it is highly recommended that Michigan consumers choose uncoordinated benefits. Here’s why.

  • Ensures freedom of choice for medical care. If you have coordinated coverage and you’re insured by an HMO (or similar managed plan), you must exhaust all medical treatment available under the health plan before your no-fault insurer is required to pay medical expenses incurred as a result of seeking treatment outside your plan. This can end up in a loss of choice for persons who believe their injuries are better treated by non-plan medical providers. But with uncoordinated coverage, you can be treated anywhere you want, as long as the services are Areasonably necessary@ and the charges are Areasonable@ in amount.
  • Protects a liability settlement from health insurance liens and reimbursement claims. If you get a liability settlement for your injuries, you may have to pay all (or a portion of) that settlement to your health insurance plan, if it has an enforceable lien. Note that liens may be enforced although the settlement represents only noneconomic damage and your health insurance plan paid only medical benefits. But with uncoordinated coverage, your no-fault insurance pays your medical benefits and wage loss first, and this is important because, under current law, a no-fault insurer cannot claim reimbursement from a liability settlement that represents only noneconomic loss. Therefore, any liability settlement you may recover is protected from being depleted by a health insurance plan that has reimbursement rights.
  • Fewer hassles in processing your claim. If you have coordinated coverage, you must first exhaust all benefits payable by any health plan, etc. In other words, you must first submit a claim to these other insurers, get payment, obtain an explanation of benefits and then submit balance to no-fault insurer for payment, forcing you to process claims with various insurers to get full payment. But with uncoordinated coverage, you only have to deal with your no-fault insurer, which must pay your claim as the primary insurer.
  • Protects insured from depleting health insurance coverages w/ lifetime limitations. If you have coordinated coverage, your health insurance pays first. If your health insurance has lifetime coverage limits and you’re seriously injured in an auto accident, you may substantially deplete your health insurance and be left with inadequate protection should you have future substantial expenses due to illness, etc. But with uncoordinated coverage, you never have to worry about diminishing your health insurance coverage because of an auto accident injury because no-fault is the primary payer.