By Kristen M. Daum
Lawmakers in the Michigan Capitol are working to exempt senior citizens
from a state requirement that requires all drivers to purchase unlimited
medical coverage through their auto insurers.
Rep. Jeff Farrington, R-Utica, introduced a bill this week to change Michigan’s controversial no-fault law and make personal injury protection — the mandatory medical coverage — optional for Michigan drivers who are 65 years old and on Medicare.
Sen. Rick Jones, R-Grand Ledge, said Friday he’s drafting a similar proposal that could be introduced later this fall.
“It’s extremely unfair to seniors on a fixed income,” Jones said.
A variation of this “senior carve out” was first proposed in the Michigan House six years ago but it saw little traction then and was never voted on by the full House.
With efforts underway this session to reform Michigan’s auto no-fault law, it’s possible this facet of the mandate might get more attention this go-around.
Farrington’s bill, House Bill 4959, was referred to the House Insurance Committee. No hearing has been scheduled yet.
The legislation, like Jones’ effort, was inspired by the plight of Potterville retiree Penny Ruff — who said her auto insurance premiums are going up $750 a year because she’s now on Medicare and bought a new used vehicle this spring. Ruff lives in Jones’ district.
“Recent news stories have shown the need for serious reform of PIP auto insurance coverage, especially for seniors,” Farrington said in a statement Thursday, announcing his legislation. “It seems absurd that we would continue to force seniors to pay for this coverage even though they are already receiving health care coverage through Medicare.”
House Minority Leader Tim Greimel, D-Auburn Hills, is reviewing the bill and has no formal position on it yet, his spokeswoman Katie Carey said.
Michigan’s 1970s-era no-fault law requires drivers to purchase certain basic coverage and guarantees unlimited medical benefits in the event of an accident. It also prohibits drivers from suing each other except in extreme cases.
State and federal officials say a provision in Michigan’s auto no-fault law prohibits seniors on Medicare from coordinating their health benefits with another provider.
Under the federal program, Medicare is a payer of last resort, which means Medicare covers medical bills only when other insurance cannot. So for seniors on Medicare in Michigan — where all insured drivers have unlimited medical coverage in auto-related accidents — that means auto insurance companies always pay the bills for accident-related injuries.
Experts say this drives up seniors’ auto premiums because older drivers present a greater liability for insurers and a greater cost should the drivers get an accident.
The Insurance Institute of Michigan, which supports no-fault reform, previously supported the senior carve out when it was first pitched in late 2007.
“There is a problem with the current system and the treatment of seniors because they do have to pay twice for this medical coverage — paying Medicare and then paying their auto insurer,” spokeswoman Lori Conarton said.
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