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Why the MCCA part of your auto insurance is going up by $48 starting July 1

Car accident
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Michigan's 2019 auto no-fault law allows people to carry less than lifetime, unlimited coverage for catastrophic injuries. But even those who have lower coverage limits are going to kick in something to replenish the state's catastrophic care fund.

Insurance policies for the fiscal year beginning July 1 will add a new MCCA "deficit recoupment fee" of $48. Even if you don't have unlimited lifetime medical coverage on your policy, which is what the MCCA covers, you will have to pay this extra fee.

Here's what you need to know to understand why.

What is the MCCA?

The Michigan Catastrophic Claims Association is a non-profit corporation that is charged by state law with paying health care costs for people who suffer the most catastrophic injuries in a car crash. Currently, that amount is anything over $600,000. Most people who suffer paraplegia, quadriplegia or traumatic brain injuries will require funds from the MCCA. The organization estimates that every day, nearly three people with unlimited medical coverage suffer these catastrophic injuries.

The MCCA is managed by insurance industry officials. This group makes actuarial calculations each year about how much future expenses are likely to be in the future for catastrophically injured people. The MCCA fee is adjusted each year, based on factors like rising health care costs and how much the fund has made in stock market investments.

Why did Michigan, alone among all states in the nation, establish the MCCA?

Prior to 1973, Michiganders who were catastrophically injured in car crashes had to sue the other driver involved, if the other party was partly or entirely at fault. The lawsuits were costly, to both the drivers involved and the court system, and often required people to wait years before getting money to live on and treat their injuries.

To fix these problems, the Michigan Legislature passed a no-fault system that also provided lifetime care for crash victims who needed it. The MCCA was established shortly afterwards to manage the lifetime care fund. The no-fault law was signed by Republican Governor Bill Milliken, who, decades later, called it one of his proudest achievements.

"It is a great honor to know that no-fault benefits have assisted so many citizens in Michigan on their road to recovery after a devastating accident. It is my opinion that this has truly been good public policy for Michigan residents. Seriously injured persons are provided optimal medical care that enables them to achieve maximum recovery, including the possibility of returning to work and becoming taxpayers again. Under this legislation, injured parties and families have the lifetime medical coverage needed, so they can avoid the threat of bankruptcy due to medical costs and/or the shifting of these costs to the state's Medicaid program."

The MCCA fee goes up and down based on different factors like rising health care costs, but this $48 increase is for a unique reason.

Over the years, the MCCA has assessed a catastrophic care fee ranging from a low of $5.60 annually (in 2000) to a high of $220 (in 2019).

In November 2021, the MCCA said it had a little more than a $5 billion surplus in the fund, and that it would send $400 checks per registered car to all Michigan car owners. This surplus represented two things:

1) The MCCA's assumption, despite a pending lawsuit, that changes to the no-fault law in 2019 would permanently reduce the fund's responsibility to pay for lifetime care for catastrophically injured crash victims.

Click here for a rundown of the changes that 2019 law brought your car insurance

2) Robust stock market returns from investments made with MCCA funds.

But by the time the checks went out in the spring, the MCCA's stock market returns had already gone south.

And in August 2022, the Michigan Court of Appeals ruled that the 2019 no-fault law did not apply to people injured in crashes before the law took effect. That made the MCCA once more responsible for necessary medical expenses for people whose catastrophic accidents happened pre-2019.

The MCCA blamed that court decision for the deficit.

In October that year, the MCCA announced it would address the deficit with a deficit recoupment fee of $48. This fee would be charged even to drivers who no longer carried lifetime medical coverage on their policies, because they, too, had received the $400 checks out of the supposed surplus.

No-fault critics were outraged, accusing the MCCA of reckless and irresponsible management of Michigan drivers' MCCA fees.

MCCA says the deficit will be amortized over 15 years, which means the recoupment fee will be an annual part of insurance rates for the next 15 years.

What's next

The Michigan Supreme Court is expected to decide by the end of July whether the 2019 law applies to medical coverage for those catastrophically injured prior to 2019.

If the answer is yes, it applies to them, then there will likely be a boomerang, and second, loss of access to benefits for those victims.

If the answer is no, the law does not apply pre-2019, those victims will continue to be entitled to lifetime necessary medical care at reasonable rates.

This would set up a two tier coverage system: victims who paid for lifetime coverage before 2019 are likely to have access to a full range of care options; people who paid for lifetime medical coverage after 2019 will not.

Survivors of catastrophic car crashes continue to lobby the state Legislature to fix the 2019 no-fault law, so everyone has access to the same care, regardless of when they were injured. The Insurance Alliance of Michigan says making such changes to the state's no-fault law would result in higher insurance rates for drivers.

Tracy Samilton covers energy and transportation, including the auto industry and the business response to climate change for Michigan Public. She began her career at Michigan Public as an intern, where she was promptly “bitten by the radio bug,” and never recovered.
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