Qualified health coverage under the Michigan auto insurance law 

October 13, 2025

Michigan residents have an uncommon requirement under the state’s auto insurance law to pay for coverage that includes medical services related to a car accident. The coverage is called personal injury protection (PIP). Car owners can avoid the PIP requirement (and pay lower auto insurance premiums) by showing they are enrolled in “qualified health coverage” (QHC). Enrollment in Medicare Parts A & B and Medicaid automatically qualifies as PIP. Employer-sponsored group health plans must meet certain requirements to be considered PIP.

The law (Mich. Comp. Laws § 500.3107d) allows a car owner to opt out of purchasing PIP medical coverage if he or she and all family members residing in the same home have QHC. To qualify as QHC, employer plans cannot exclude or limit coverage of injuries related to motor vehicle accidents, and any individual deductible (in-network or out-of-network) must be $6,000 or less (indexed for inflation).

The Michigan Department of Financial and Insurance Services (DIFS) confirmed this rule in Bulletin 2023-17-INS: as long as at least one individual deductible is at or below the deductible threshold, the coverage is QHC. For the period of July 1, 2025–June 30, 2026, the deductible threshold is $6,579, per Bulletin 2025-06-INS. As explained in Footnote 1 of Bulletin 2023-17-INS and the FAQs for Insurance Agents, an employer plan that pays secondary for medical claims related to motor vehicle accidents would not necessarily prohibit that plan from meeting the definition of QHC.

• Example 1. An employer offers a plan that does not exclude or limit coverage of injuries related to motor vehicle accidents and includes a $4,000 self-only deductible and an $8,000 family deductible for in-network (INN) services. The out-of-network (OON) deductible is $8,000/$16,000. The covered individual’s INN and OON deductibles are equal to the self-only deductible (often called an “embedded deductible”). Because the individual INN and OON deductibles do not exceed the deductible threshold, this coverage meets the QHC requirements for deductible limits.
• Example 2. Same facts as Example 1 except the plan does not have an embedded deductible. Because the individual INN deductible is $4,000, which is below the deductible threshold, this coverage meets QHC requirements.

The law also allows a car owner to select a $250,000 PIP medical limit, with an exclusion from PIP medical coverage for the applicant and any family members with QHC. A $50,000 PIP medical limit is available when the applicant is enrolled in Medicaid and family members have QHC. The law directs an insurance applicant or insured to provide documentation of QHC — provided by the insurer or the employer — to the auto insurer when requesting a renewal. DIFS has provided a sample documentation letter for this purpose.

Deciding whether to obtain a QHC exception to the PIP requirement is an individual decision. Despite the higher auto insurance premium, some Michigan drivers may want a higher level of PIP coverage for various reasons, like wage-loss benefits and attendant care not covered under the employer plan. In addition, unlike employer-based coverage (which typically ends upon employment termination, subject to COBRA), PIP coverage is not tied to employment status. DIFS provides a sample selection of PIP medical coverage — individuals form with the risks and benefits of each PIP coverage option.

Employers that coordinate their health plan’s benefits with auto insurance medical coverage — even plans that pay secondary — may face greater exposure to Michigan claims than before the law took effect on July 1, 2020. Coordinating benefits may not help if the employer health plan otherwise meets the QHC definition. If the health plan is QHC, the employee and any covered family members may be in a position to opt out of or substantially reduce PIP medical coverage offered by the auto insurer. This could leave the health plan as the sole source of medical coverage for injuries related to a car accident.

Health insurers and self-funded group health plan sponsors should be ready to provide documentation to Michigan drivers (and any family members) indicating whether the health plan is QHC and, if so, confirming their coverage under the health plan. The timing of these requests will vary throughout the year because auto insurance renewals are not necessarily tied to a calendar year or health plan year. Self-funded plan sponsors with significant Michigan populations should monitor health plan costs for state residents and make adjustments, as needed.

• Mich. Comp. Laws § 500.3107d (Michigan Legislature)
• Bulletin 2025-06-INS, 2025-2026 maximum QHC deductible (Michigan DIFS, Feb. 18, 2025)
• Bulletin 2023-17-INS, QHC documentation from employers and insurers (Michigan DIFS, June 22, 2023)
• Sample Qualified Health Coverage Documentation (Michigan DIFS, Aug. 2, 2023)
• Michigan’s new auto insurance law — Choosing PIP medical coverage (Michigan DIFS)
• Sample selection of PIP medical coverage — individuals form (Michigan DIFS)
• Auto insurance purchaser FAQs (Michigan DIFS)
• Information for Insurance Agents FAQs (Michigan DIFS)

• Michigan’s automobile insurance reforms may cost group health plans (Nov. 13, 2019)