A few weeks back I received a rather threatening letter from my auto insurance company in regards to medical coverage (or potential lack of). Here is the heart of the letter (which I cannot find anywhere online), word for word:
You are receiving this notice because you currently have Coordination of Medical Expenses on your Personal Injury Protection (PIP) coverage for your above-referenced Auto Policy.
Selecting Coordination of Medical Expenses means that the health plan you have for yourself and all family members will pay on a primary basis for automobile-related accidents.
We request that you confirm this health plan information by reviewing the Health Coverage Verification form attached to ensure that you have the correct coverage. Failure to provide accurate information regarding your health plan coverage may result in a penalty deductible of no more than $500 per accident in the event of a claim.
$500 penalty deductible? That doesn’t sound good. Sadly, it got worse…
Please follow the instructions exactly as listed on the enclosed form and only return this form if indicated.
If you do not return this form within 14 days, adjustments may be made to your PIP coverage and premium.
OK, that sounds really bad.
Side note, for those not aware, Personal Injury Protection (or PIP, for short) is also referred to as “no-fault insurance”. In certain states, PIP provides insurance that can cover medical costs, loss of earnings, additional living expenses, and funeral costs for occupants of the insured automobile and pedestrians, other than those insured under other policies.
PIP is actually mandatory in many states:
- Maryland (unless a waiver is signed at initial purchase)
- New Jersey
- New York
- North Dakota
- Texas (unless a waiver is signed at initial purchase)
- Washington (unless a waiver is signed at initial purchase)
$1,000,000 in coverage is costing me $60 per year – which seems like a small price to pay for that much coverage.
Back to the story…
I then looked at the enclosed form, which started with three options for me to choose from:
- You are NOT currently covered under a health insurance/health plan:
- Your health plan is provided by Medicaid or Medicare (including Supplemental Plans):
- You have a health plan that does NOT pay on a primary basis for automobile-related accidents:
And then, if I did not check any of those, it requested that I fill in my health insurer, plan name, policy number, and even employer information – and return within the 14 days (or face premium increases).
I don’t recollect ever receiving a similar letter in the past, so I was left a bit confused and wondering how serious they were about increasing my premium, so I gave them a call.
- Me: What up with this letter, yo?
- LM: Oh, um, we sent that out to everyone.
- Me: I’ve never received anything like this before.
- LM: Yeah, this is the first year we’ve sent it out.
- Me: Hmm… that’s odd. So I need to send this in or you’ll increase my premium?
- LM: Yep.
Not knowing whether my health insurer primarily covered medical expenses in the event of an auto accident, I called them up.
- Me: Do you guys primarily cover me in the event of an auto accident.
- HI: Yes, of course.
- Me: OK, thanks.
I go on to find out that most health insurers do primarily cover you in the event of an auto accident, with some notable exceptions: Medicaid and Medicare. And if you have no health insurance coverage at all, of course.
I still find it odd that I had never received this formal request previously. Regardless, I filled out the form and sent it in.
I am willing to bet that many of you received similar forms for your auto insurers.
Lessons learned – if your state requires PIP:
- Find out if your insurer primarily covers your medical costs in the event of an auto accident.
- If your health insurer does primarily cover medical costs, you should coordinate with your auto insurer so they do not, by default, increase your premiums. That would be bad.
PIP Premium Discussion:
- Do you have PIP on your auto insurance policy?
- Have you received a similar letter from your insurer? What state are you in, and who is your insurer?
I haven’t gotten this letter yet but I’ll keep a lookout for it come time for renewal.
My old company did self insurance. They specifically were not the primary insurance in the case of an auto accident. They claimed that they would have to charge more than our auto insurance would charge us. While I don’t necessarily agree, they did NOT do a good enough job to let people know about this deficiency. It took me a few years before I found this out and had my insurance changed. I had seen a few people get in accidents and need major coverage get stuck in limbo. In most cases, our insurance covered them even though they weren’t supposed to, but the decision could have gone either way.
Yeah one thing to call and ask them that question, try getting that in writing that they will cover you primary!