Veterans with just VA benefits can't opt out of no-fault coverage

Michigan recently learned from VA officials that such drivers cannot completely opt out of no-fault because VA benefits do not always cover injuries from auto accidents that aren't treated at VA facilities.

"What we have been told by the federal VA is that the health care that you get under your VA (benefits) ... that's not going to qualify to allow you to opt out of medical under your policy,” Fox said.

State officials had been waiting months for the VA to offer guidance.

Under Michigan's new auto insurance system that took effect in July, only drivers with Medicare or another form of health insurance such as Blue Cross Blue Shield plans that do cover auto accidents are allowed to drop no-fault medical coverage from their auto policies. The law classifies those types of comprehensive health plans as "qualified health coverage."

Before July, all Michigan drivers were required to buy potentially unlimited, lifetime no-fault medical benefits. That requirement was a major reason why auto insurance rates in Michigan, especially in Detroit, often ranked among the nation's highest.

While some drivers are saving money under the new auto system, those who choose to opt out of PIP generally see the biggest savings. The other PIP coverage options are:

Unlimited medical $500,000 limit $250,000 limit $50,000, available for Medicaid beneficiaries only

State officials say they are still awaiting a response from the U.S. Department of Defense on whether those enrolled in Tricare, a program that provides health care to some active duty and retired military service members and their families, can opt out of PIP coverage.

"We are still working with Tricare," Fox said. "We are a little more optimistic there, but we will put out information as soon as we have something that is confirmed and reliable."

The new auto insurance system also raised the minimum purchase requirements for bodily injury liability coverage to $50,000 per person injured or killed/$100,000 per accident if several people are injured or killed. The previous minimum was $20,000 per person/$40,000 per accident.

Drivers can call their auto insurer to immediately request a new policy with all the new coverage options, or wait until their current policy's renewal period.

Disabled vet can't opt out

Fox fielded a question during the town hall about whether a disabled veteran on VA benefits can opt out of no-fault. She replied that the veteran cannot, and must choose a PIP option with some medical coverage.

"If what you have is just your VA benefit, the federal VA has informed us that that will not qualify" for a $0 PIP option, she said. "Since VA health benefit does not guarantee that you will receive (coverage) in the event of an accident if you are not at a VA hospital, that cannot serve as qualified health coverage for the purposes of opting out."

An 18-month "amnesty" period allowing uninsured drivers to buy auto insurance without any financial penalty started last July. Insurance companies ordinarily charge higher rates to drivers with gaps in their insurance coverage.

Contact JC Reindl at 313-222-6631 or jcreindl@freepress.com. Follow him on Twitter @jcreindl. Read more on business and sign up for our business newsletter.

This article originally appeared on Detroit Free Press: Veterans with just VA benefits can't opt out of no-fault coverage

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