To be or not to be...out of pocket
Whether to select PIP primary or Health Primary? To be or not to be…significantly out of pocket
As an initial housekeeping matter, the information shared here pertains to New Jersey and only New Jersey. To the extent you have any questions about PIP and you do not live in New Jersey, you should seek out competent counsel in the state where the claim exists, as this information may be singularly wrong for your claim.
Now on to the meat:
On all automobile policies in New Jersey that are required to maintain PIP benefits, you have the choice of selecting the automobile be the primary in case of an accident, or your health insurance. There are practical considerations here as well, given that health primary is usually a bit cheaper premium wise. So is selecting less than the standard amount of PIP coverage, which is $250,000.00. You can choose a decreasing amount of coverage, all the way down to $15,000.00 which reduces your premium, but obviously also reduces the coverage for medical treatment available. So there are financial considerations that may come into play.
You also need to be aware that if your health insurance company is Medicaid or a plan that is “Self-Funded ERISA” that your health insurance company may specifically refuse to be health primary (not that you or your agent would know that at the time), and that in order to switch to auto PIP primary after finding that out, you and every named driver on the policy would need to pay $750.00 as a penalty. And this isn’t a some opt in and some can opt out, this is everyone must or no one can.
If you select health primary, auto PIP is considered secondary (and vice versa as well). What I find a lot of injured people have not thought about when making this selection is how functionally health primary works, because they don’t understand how auto primary works. So I aim to change that with this entry, well as much as I can in the space available.
With auto PIP primary, you select a deductible, ranging from $250.00 (the presumptive) all the way up to $2,500.00. You are responsible for paying this AND 20% of the first $5,000.00 in medical bills. Recent case law has determined that this amounts are ON TOP of the limits you have selected. See the case of Birmingham v. Travelers (App. Div. 2023) After that, until you are terminated from benefits or exhausted, you pay nothing out of pocket (assuming the medical provider is properly pre-certifying and billing). Now, let’s look at your health insurance policy. Do you have a deductible? Do you have co-pays? Have you hit your out-of-pocket max this year? Well great, next year is a new year and we reset the clock on that which means more money out of pocket for each individual treatment.
Obviously, at the end of the day, the choice is yours, but do you feel like you can make a better-educated decision now about what kind of coverage you want? And sure, you might not be in an accident for years, but it only takes one, and now you have the tools to make the decision best for you with knowledge about what you are and are not choosing. See you next time. If you have any questions, we at the Law Office of Drinkwater & Goldstein, LLP are here to help so give us a call.