A private employer that regularly employs three or more people is required to carry workers’ compensation insurance in Michigan.
There are a few differences between Michigan and other states when it comes to workers’ compensation insurance. Michigan law requires that 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 variety 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 a private business regularly employs three or more people at one time, part-time employees are entitled to workers’ compensation.
A person who owns a business alone is the “sole proprietor,” which means that the business is not a partnership, limited liability company, or corporation. Since a sole proprietor is not employed by another person, he or she is not required to have workers’ compensation insurance. However, if that person employs other people, workers’ comp coverage would be required.
The Michigan Workers’ Compensation Agency (WCA) enforces the Workers’ Disability Compensation Act.
If an employer is not providing the correct coverage required by the Workers’ Disability Compensation Act, the WCA can petition the court to seek an order that prohibits the company from employing anyone else until the right coverage is secured.
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 offers a competitive marketplace for insurance, which means that insurers are able to set their own rates and business owners can compare workers’ compensation insurance quotes before purchasing a policy.
Estimated employer costs for workers’ compensation in Michigan are $0.81 per $100 in covered payroll, according to the National Academy of Social Insurance [PDF]. However, the cost of insurance could vary significantly depending on the risk of each occupation at a business. People who have occupations that are considered to be lower risk (desk jobs, for example) will cost less to insure than those with occupations that are inherently riskier (like contractors or roofers).
Occupational risk is determined with an NCCI code assigned to each occupation.
The first step to acquiring the required workers’ comp insurance is to determine what kind of coverage your business needs. For example, if a business is a partnership, limited liability company, or small corporation, employees must be covered by workers’ comp insurance.
Michigan law indicates that in some cases, partners and corporate officers who are also shareholders of small companies might be exempt. If all of a company’s employees are also partners or owners in a small business, it is possible to obtain an exemption certificate from the Insurance Compliance Division.
If an employee dies in an on-the-job accident, family members could be eligible for workers’ compensation death benefits. Michigan allows beneficiaries to include:
Anyone who falls into one of these categories can be awarded benefits if that person is determined to be a dependent of the deceased worker. Children are presumed to be dependents if they are under 16 years old, or if they are 16 or older but physically or mentally unable to earn a living.
In addition, 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, she or he would need to prove complete or partial dependency on the worker’s earnings at the time of death.
All dependents combined can receive 80% of the worker’s average weekly wage, following deduction of federal and state income, Social Security, and Medicare taxes.
There are maximum and minimum amounts for weekly benefits under workers’ compensation death benefits. Michigan adjusts these rates each year. Wholly dependent family members would share benefits equally, and the partially 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, but the children’s benefits would continue until age 18 (or 16 if the child has been self-supporting for six months).
Workers’ compensation death benefits in Michigan include funeral expenses up to $6,000.
Most workers who are injured on the job are able to pursue a workers’ comp settlement. Michigan closes a worker’s rights to additional benefits once a claim is settled, with a few exceptions.
If the worker has injuries that require ongoing medical treatment, the insurance company will occasionally continue to pay for that treatment. Usually, however, a claim will result in either a lump sum or structured settlement.
Lump sum settlements: When a lump sum settlement is reached, it means that the insurance company will make a single payment that resolves the entire claim. Sometimes, the insurer will make a voluntary payment, which means that it will pay the worker a certain amount of payments, but the worker could still demand additional benefits in the future.
Structured settlements: 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 workers’ compensation settlements in Michigan, any settlement needs to be heard before the Michigan Workers’ Compensation Agency.
An injured worker must give notice to the employer within 90 days of the injury, either verbally or in writing. It’s then the worker’s responsibility to file a claim within the workers’ compensation statute of limitations. Michigan requires that a claim is made within two years of the date of injury.
If you are ready to explore workers’ comp insurance options for your Michigan business, start a free online application today to compare quotes from multiple carriers.