If you're business has one or more employees than you need to carry workers’ comp in Michigan. This policy provides medical benefits for work-related injuries.
Who needs workers’ compensation insurance in Michigan?
In Michigan an employer must be able to prove it can pay benefits in the event that a worker is injured on the job. There are a lot of questions to ask when a business evaluates its workers’ compensation needs. It’s important to understand what workers’ comp covers and when it is mandatory.
An employer must carry workers’ compensation insurance in Michigan if:
If you employ one or more people for 35 hours or more per week for 13 weeks or longer during the preceding 52 weeks. (or one year).
You are a private employer that regularly employs three or more people at a time.
You're a farm that employs three or more employees for 35 hours or more per week for 13 or more consecutive weeks.
Your household has staff for 35 hours or more per week for 13 weeks or longer during the preceding 52 weeks.
It is a public employer.
Is workers’ comp mandatory in Michigan for part-time employees?
You regularly employ three or more people at one time in your business. If that's the case, then part-time employees are eligible for workers’ compensation.
Do you need workers’ compensation if you are self-employed?
If you own a business as a sole proprietor, meaning the business is not a partnership, LLC, or corporation. Then as a sole proprietor you are not employed by another person and not required to have workers’ comp. However, if that person employs other people, workers’ comp coverage would be required.
Who else needs workers' compensation coverage in Michigan?
If your business is a partnership, LLC, or S Corp, employees must be covered by workers’ comp insurance. In Michigan, we use the IRS-20 Factor Test. This test determines if workers are classified as employees or as independent contractors. If employees, you would need workers' comp.
Under Michigan law there are some cases where you may get an exemption. Partners and corporate officers who are also shareholders may be exempt. Check with the Insurance Compliance Division for more info on exemption certificates.
How much does workers' compensation insurance cost in Michigan?
Number of employees
Industry and risk factors
How are workers' compensation rates determined in Michigan?
Michigan offers a competitive marketplace for insurance. Insurers set their own rates and business owners can compare workers’ comp quotes. The cost of workers' comp insurance varies depending on the risk of each occupation at a business. People with low risk jobs (desk jobs, for example) will cost less to insure than those with riskier Jobs. Contractors and roofers, for example. Occupational risk is determined with an NCCI code assigned to each occupation.
How does workers' compensation work in Michigan?
If an employee is hurt on the job or develops an occupation related disease, workers' comp is there. It will cover the cost of their medical bills. It also provides disability benefits while the employee is recovering.
Workers' compensation benefits for injured workers in Michigan include:
Medical care, from emergency treatment to physical rehabilitation
Wage replacement for temporary or permanent disability
Specific loss benefits. This could be amputation involving bone loss, loss of vision, total loss of hearing, or death.
Vocational rehabilitation benefits, including retraining for a new career
Death benefits for fatal injuries
What are the penalties for not having workers’ comp insurance in Michigan?
The Michigan Workers’ Compensation Agency (WCA) enforces the Workers’ Disability Compensation Act.
Employers must provide the coverage required by the Workers’ Disability Compensation Act. The WCA can petition a court to stop your company from employing anyone else until the coverage is in place.
The employer could also be subject to a fine of $1,000 or imprisonment of between 30 days and six months. Every day that the employer is uninsured is a separate offense. The business could also face legal action from the employee in civil court.
Michigan workers’ comp death benefits
If an employee dies in an on-the-job accident, family members could be eligible for workers’ comp death benefits. The State of Michigan allows beneficiaries to include:
Children or grandchildren
Parents or grandparents
Other family members
If a person is determined to be a dependent they can be awarded benefits . Children under 16 are presumed to be dependents. If they are older, but are disabled and unable to earn a living can also be a dependent.
To receive death benefits, a child must have been living with the worker at the time of death or with a former spouse. For any other person to qualify, they would need to prove dependency on the worker’s earnings at the time of death.
All dependents combined can receive 80% of the worker’s average weekly wage. This follows deduction of federal and state income, Social Security, and Medicare taxes.
There is a maximum and a minimum amount for weekly benefits under the workers’ comp death benefit. Michigan adjusts these rates each year. Wholly dependent family members would share benefits equally. Any partial dependent individuals would become eligible if there are no whole dependents.
Dependents are able to receive benefits for up to 500 weeks, or until a beneficiary turns 21 years old. A spouse’s benefits end when that person is remarried. Children’s benefits would continue until age 18. Or 16 if the child has been self-supporting for six months).
Workers’ comp benefits in Michigan include funeral expenses up to $6,000.
Michigan workers' compensation law for settlements
Most workers who are injured on the job are able to pursue a workers’ comp settlement. In Michigan a worker’s rights to additional benefits is closed once a workers' comp claim is settled. This is with a few exceptions.
If the injured worker needs ongoing medical treatment, the insurance company will usually continue to pay. Usually, however, a claim will result in either a lump sum or structured settlement.
Lump sum settlements
Once a settlement is reached, the insurance company makes a single lump sum payment to cover the claim. Sometimes, the insurer will make a voluntary payment. This means that it will pay the worker a certain amount of payments. The worker could still demand additional benefits in the future with voluntary payments.
A structured settlement would exist in lieu of a lump sum. Instead of a single payment by the insurance company, it will make periodic payments according to a set schedule (monthly, annually, etc.). This is still a settlement that closes the case to future benefits, even though it is paid over the course of time.
To close a workers’ comp settlement in Michigan it would need to be heard before the Michigan WCA.
Workers’ compensation statute of limitations in Michigan
An injured worker must give notice to the employer within 90 days of the injury. This can be either verbally or in writing. It’s then the worker’s responsibility to file a claim within the statute of limitations. State law requires that a claim is made within two years of the date of injury.
Industries we specialize in:
Automotive Manufacturing Insurance
Tool & Die Shop Insurance
Staffing Agency Insurance
Food and Agriculture Insurance
Freshwater Technology and Services Insurance
Disclaimer: The analysis of coverage is in general terms and is superseded in all respects by the Insuring Agreements, Endorsements, Exclusions, Terms and Conditions of the Policy. Some of the coverage mentioned in this material may not be applicable in all states or may have to be modified to conform to applicable state law. Some coverages may have been eliminated or modified since the publishing of this material. Please check with your local Independent Insurance Agent for details.