PIP … Deductible or Not

TECH
TALK
PIP … Deductible or Not …
April 2014
By Irene Morrill, CPCU, CIC, ARM, CRM, CRIS, LIA CPIW
Vice President of Technical Affairs
PIP Deductible … Any Advantages?
Someone emailed stating: “I’m looking to find an article explaining the disadvantages of opting for an $8,000 PIP
deductible.”
I’m not a fan of the PIP deductible. In competitive auto rating is there really a worthwhile/substantial premium
reduction? I think not. The premium discount is the ONLY advantage of taking a PIP deductible as far as I’m
concerned.
What are the Advantages of PIP WITHOUT a Deductible?
I “hear” that some online auto markets ask the applicant if he/she has “health insurance;” and, if the answer is in
the affirmative, a PIP deductible is quoted. I think these online auto markets misunderstand Massachusetts Personal Injury Protection coverage, don’t you?
What Benefits does PIP Provide?
The first benefit is entitled “medical” … but it is more than health insurance.
Medical Expenses
We will pay all reasonable expenses incurred as a result of the accident for necessary medical, surgical,
X-ray and dental services. This includes prosthetic devices. It also includes ambulance, hospital, professional nursing and funeral services.
I was not aware that health insurance plans included dental. Our dental coverage is provided separately from our
health insurance coverage and is a different provider.
Some health plans limit “ambulance” coverage and pay little or nothing towards the “medevac” helicopter, yet PIP
can respond.
And, I know that my health insurance coverage does NOT pay to bury me. What about yours?
So … we haven’t even left the FIRST benefit … and the PIP deductible isn’t worth it.
Massachusetts Association of Insurance Agents
91 Cedar Street - Milford, MA 01757
TECH Hotline 800.870.7091 * 800.972.9312 * 508.634.2900 * 508.634.2929 (FAX)
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April 2014
Lost Wages
If an injured person is out of work because of the accident, we will pay lost wages up to 75% of his or her
average weekly gross wage or equivalent for the year ending on the day immediately before the
accident. We will not pay for the loss of any other type of income. If the injured person was unemployed
at the time of the accident, we will pay up to 75% of the amount he or she actually lost in earning power
as a result of the accident.
My health insurance coverage doesn’t pay my lost wages if I can’t work. Does yours? I have a disability coverage
benefit, but not all consumers do. Also, if one looks at their disability policy, I bet it doesn’t pay 75% of their lost
wages. Workers‘ compensation doesn’t even pay that much!
And the Last PIP Benefit Is:
Replacement Services
We will reimburse the injured person for reasonable payments made to anyone outside his or her
household for necessary services that he or she would have performed without pay for the benefit of the
household, had he or she not been injured.
My health insurance doesn’t pay to have someone come and clean my house or cook my food or go grocery
shopping or perform any of the tasks that I am unable to perform due to the auto accident in which that I was
injured.
Beware of Health Insurance Company Restrictions on PIP Deductibles
Health insurance companies generally want to know if an injury is work or auto related. They know that work
related claims are subject to W/C coverage, and many clients carry medical payments on their auto policy. A MA
health insurance company knows that PIP is available and mandated on all MA auto policies – commercial or
personal.
A health carrier that writes business in Massachusetts might very well know that PIP allows the health insurance
carrier to send back/make the auto carrier pay the first $2,000 of auto accident related medical.
PIP Coverage States:
Some people have a policy of health, sickness, or disability insurance or a contract or agreement with a
group, organization partnership or corporation to provide, pay for, or reimburse the cost of medical
expenses (“health plan”). If so, we will pay up to $2,000 of medical expenses for any injured person. We
will also pay medical expenses in excess of $2,000 for such injured person which will not be paid by a
health plan. Medical expenses must be submitted to the health plan to determine what the health plan
will pay before we pay benefits in excess of $2,000 under this Part. We will not pay for medical expenses
in excess of $2,000 that the health plan would have paid had the injured person sought treatment in
accordance with the requirements of the health plan. In any case, our total payment for medical
expenses, lost wages and replacement services will not exceed $8,000.
The health insurance plan can be written to preclude the first $2,000 of auto related medical bills even if the
insured opted for a PIP deductible. I bet that the return premium for the PIP deductible was NOT $2,000! The
insured MUST check with their health insurance carrier!
April 2014
Other Advantages of FULL PIP Coverage
In today’s world, many organizations limit the number of employee sick days. Suppose you are in an auto related
accident and are “banged up” a bit but not life threatening. You generally don’t take sick days. So, for the three
days you are too sore to go to work, you stay home and just let your employer pay them as work sick days. You
submitted an auto claim for the emergency room and/or doctor visit but not for the lost work days. Later that
year you get pneumonia. You need to take a couple weeks off from work but you have already used up three of
your yearly sick days. What now? You make a claim under your PIP coverage for those three days you DIDN’T take
earlier that year (assuming you have PIP limit left from that incident, of course!).
Or, some people work for one of those employers who “rewards” healthy employees by paying them for
unused sick days at the end of the year. Again, there is an accident where this individual was banged up … a few
medical bills, but nothing life threatening. The individual stays home a few days to recuperate. At the end of the
year … this employee won’t get reimbursed for those three days. But … he or she can … through the unused PIP
coverage from that incident.
PIP coverage states:
Some people have a wage continuation program at work. If so, we will pay them only the difference
between the total we would ordinarily pay under this Part and the amount of the program payments.
We will, however, reimburse the program if it allows benefits to be converted into cash or additional
retirement credit. Sometimes program benefits are reduced or used up because of payments to the
person injured in an accident. In that case, we will pay for lost wages resulting from any other illness or
injury that person has within one year of our last payment. The exact amount of our payments under
this paragraph will be determined by Massachusetts law.
The language in blue tells us that work sick days used for the auto accident injuries can be recouped later that year
from PIP when another injury or illness within the year is not compensated by normal work salary/sick time.
The language in red tells us that salaried sick days used in an auto related accident can be reimbursed by PIP later
in the year when one normally received compensation for unused sick days by the employer.
But … neither will happen if the client took the PIP deductible. What do these two PIP benefits have to do with
having health insurance??? I think the possible use of these benefits far outweighs the paltry return premium
received for removing PIP for you and your household members.
PIP Coverage Might Even Pay Your Health or Disability Premium!
I have not seen a company do this … but PIP states the following:
Within two years after an accident, we may, at our option, pay the cost of renewing or continuing in force
a policy of health, sickness or disability insurance for anyone covered under this Part who is unwilling or
unable to pay such cost. Our payment will not exceed the cost of renewing or continuing such policy
for a period of two years after the accident. Also, our payment will not operate to reduce the benefits
otherwise payable under this Part.
And … tell me again … how having health insurance will pay premium for CONTINUING the health and/or
disability insurance?
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April 2014
I cannot give you ANY GOOD reason for having a PIP deductible. To suggest a PIP deductible to a client without
enumerating the value of the coverage invites an E&O claim.
*****
Good luck! If I can be of service to you, please call me, Irene Morrill, Vice President of Technical Affairs at
800.870.7091 or email me at [email protected].
This article has been developed expressly for the members of MAIA. Reprint by other than members
without the express permission of the author is not permitted.

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