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Q

Does the Michigan Catastrophic Claims Premium qualify as medical insurance for state income tax?


A

No, the Michigan Catastrophic Claims Association (MCCA) fee does not qualify as medical insurance for state or federal income tax purposes.

The MCCA is not medical insurance. The MCCA reimburses car insurance companies for Personal Injury Protection (PIP) claims in amounts that exceed a certain amount. Currently that amount is $480,000.

We verified with the Michigan Office of Financial and Insurance Regulation, the insurance regulator for the state, and they agreed that the MCCA fee passed onto you from your automobile insurance company is not medical insurance and in no way would qualify for state or federal income tax purposes to be written off as such.

The Michigan Catastrophic Claims Association fee you are referring to technically is not even assessed to you but is a fee required of your car insurance company. Car insurance carriers though are then allowed to pass the assessment on to you, their policyholder.

Some insurance companies may include the MCCA assessment in the Personal Injury Protection (PIP) portion of your insurance premium; however this does not make it medical insurance. In fact many auto insurance companies list this as a "statutory assessment" or "MCCA assessment" on the declarations page of a car insurance policy.

So that you understand better, the MCCA is a non-profit unincorporated association which was created by the MI legislature as a means of spreading costs across all Michigan motorists for providing the state's unique unlimited no-fault benefits. Every insurance company that sells automobile or motorcycle coverage in Michigan is required to be a member of the MCAA.

The MCCA pool of resources is funded by an annual premium assessment to each insurance company based upon the number of automobile and motorcycle policies written in Michigan. A MCCA assessment is mandated each year to make sure there are sufficient funds to cover the lifetime car insurance injury claims of all persons catastrophically injured; it is not medical insurance coverage.

The Michigan Office of Financial and Insurance Regulation can give you more information on the MCCA. If you need tax help when doing your Michigan state income taxes we would advise you to contact a professional tax accountant. As for federal income taxes, the IRS online has good information about what you can write off as a medical expense and again a tax professional can give you advice on what is or is not considered a medical deduction you can use on your taxes.


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