If you run a business and have employees, you’ll need to purchase Michigan workers’ compensation insurance. In fact, this type of insurance is a requirement in most states, including Michigan, with some exceptions. It helps pay your employees’ medical bills if they sustain an injury on the job. And limits your liability for workplace accidents, is a requirement in most states, including Michigan, with some exceptions.
Workers’ compensation insurance in Michigan generally costs around $0.74 per $100 of covered payroll. That means, for example, if your company has a total annual payroll of $100,000, you will pay $740 a year for workers’ compensation insurance, or around $61 a month. These rates can vary, though, depending on a number of factors.
One of the most important factors in determining your rates for workers’ compensation insurance is your employees’ risk, or the likelihood of a workplace injury occurring at your business. To assist insurers in determining risk exposure, you can use a variety of workers’ compensation class codes, since, for example, office employees may have lower workers’ compensation costs than those who work outside of your office and face more risks.
If one of your employees is injured at work or becomes ill because of workplace conditions. Workers’ compensation in Michigan can help pay for their medical bills. The weekly average wage of an employee is used to calculate workers’ compensation benefits. The type of claim determines the exact amount.
The most important thing that workers’ compensation does is offer coverage for your injured employee’s medical treatment. This would include doctor’s appointments, hospital stays, and surgical procedures. Following a return to work, an employee may need ongoing care. Such as follow-up appointments or extra surgeries; workers’ compensation will also cover these medical bills.
Additionally, if the incident causes permanent or temporary disability, the employee will receive compensation in the form of weekly or lump sum payments. If your employee suffers a temporary disability, their injury is preventing them from performing their regular job while they recover. They have a permanent disability if a doctor determines that they will not fully recover from their injury.
These two classifications fall into two subcategories:
- Temporary total disability (TTD) – These payments will be made if your employee is unable to work at all during their recovery.
- Temporary partial disability (TPD) – TPD payments will be made if your employee is still able to work, but with certain restrictions, such as requiring lighter duties or fewer hours. Even if your company does not provide work that meets these requirements, the employee may still be eligible for these payments.
- Permanent total disability (PTD) – If the accident or illness leaves your employee unable to work at all, even after recovery, they will be eligible for PTD payments.
- Permanent partial disability (PPD) – If an employee has permanent impairments but is able to work with those impairments, they will be eligible for PPD.
Michigan’s Workers’ Compensation Death Benefits
If an employee passes away from a work-related illness or injury, family members may be entitled to workers’ compensation death benefits.
Beneficiaries in the state of Michigan can include:
- Children or grandchildren
- Parents or grandparents
- Other family members who were financially dependent on the deceased employee
Anyone who falls into one of these categories may be eligible for benefits if they are determined to be the deceased worker’s dependent. Any other person must demonstrate complete or partial dependence on the worker’s earnings at the time of death in order to qualify.
Children are considered dependents if they are under the age of 16, or if they are 16 or older but physically or mentally unable to work. Additionally, children must have been living with the employee or a former spouse at the time of death in order to receive death benefits.
After deducting federal and state income taxes, Social Security, and Medicare, dependents can receive 80% of the worker’s average weekly wage. But workers’ compensation death benefits need to fall within a minimum and maximum weekly benefit amount, which is set by the state of Michigan each year.
Dependent family members who are considered “wholly” dependent will share benefits equally, and if there are no wholly dependent family members, partially dependent individuals become eligible.
Dependents can receive benefits for up to 500 weeks, or until a minor beneficiary reaches the age of 21. If the deceased employee’s widow/widower remarries, their benefits end, but their children’s benefits continue until they reach the age of 18 (or 16 if the child has been self-supporting for six months).
In Michigan, workers’ compensation benefits also cover funeral expenses up to $6,000.
Michigan’s Workers’ Compensation Laws
According to Michigan’s Workers’ Disability Compensation Act, most businesses in Michigan require workers’ compensation insurance. If you have three or more employees, or if one employee works more than 35 hours per week for 13 weeks or longer, you’ll need workers’ compensation coverage.
Both public and private employers in Michigan require workers’ compensation insurance. There are some exceptions to the state law, such as:
- Employers with agricultural workers, unless they have three or more employees working more than 35 hours per week for 13 weeks
- Housekeepers and other domestic workers
- Sole proprietors who are classified as self-employed
- Family members working as employees for a relative
- Independent contractors
It’s critical to understand Michigan’s laws and regulations surrounding workers’ compensation insurance. If you fail to comply, your business may face fines or penalties.
How to Buy Workers’ Compensation Insurance
There are three types of workers’ compensation insurance that will satisfy your coverage requirement in Michigan:
- Coverage from a private insurer: The majority of small businesses obtain coverage from a private insurance company.
- Individual self-insurance: If you can demonstrate financial stability, you may be able to self-insure, meaning you would be allowed to forgo traditional workers’ comp insurance and pay for claims out-of-pocket as they arise. This requires authorization from the Workers’ Compensation Agency (WCA).
- Group self-insurance: Group self-insurance programs, which are an alternative to commercial insurance, are made up of a group of employers in the same industry who are willing to pool their premiums in order to get the best rate and coverage. These groups, like individual self-insurance, must be approved by the WCA.
If you’re looking for an affordable workers’ compensation policy, talk to EZ about your free quotes today. EZ offers small businesses competitive, no-obligation quotes and can assist you in navigating your coverage options.
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How to Get the Most Savings
The majority of the cost of workers’ compensation comes from factors beyond your control. However, there are still ways to save. Implementing a safety program is a great way to reduce workplace injuries and claims, which will lower your premiums. So regardless of your industry, it is important to have safety and standard operating procedures in place. Employees who have safety training are less vulnerable to injuries, lowering your workers’ compensation costs.
It is also a good idea to regularly review your claims history. Evaluating your claims history on a regular basis can help you identify and correct patterns. You might discover that certain aspects of your business operations are frequently causing claims. This allows you to adjust the operation to make it safer. You can save money by keeping an eye on potentially dangerous operations.
Correctly classifying your employees is one of the most effective ways to save money. When you apply for your workers’ compensation policy, you will classify each of your employees depending on their job’s risk. And this risk classification influences the cost of your workers’ compensation. For example, you might pay less to insure an office worker than you would a manual laborer. It’s also important to correctly classify your employees because you may receive a fine if you fail to do so.
Begin a free online application today to compare workers’ compensation insurance quotes for your small business from leading U.S. insurers. EZ’s agents specialize in insurance for a wide range of small businesses. Working with our agents can save you hundreds of dollars a year on coverage.
Michigan Workers’ Compensation FAQs
Are you required to have workers’ compensation insurance in Michigan?
Most employers in Michigan are required to have workers’ compensation insurance. The Workers’ Disability Compensation Act is enforced by the Michigan Workers’ Compensation Agency (WCA). If you fail to carry the required insurance coverage under the Workers’ Disability Compensation Act, the WCA can petition the court for an order prohibiting you from hiring anyone else until the required coverage is obtained.
You could also face a $1,000 fine or imprisonment for 30 days to six months. Every day you go without insurance is considered a separate offense. Your company could also face civil court action brought by your injured employee.
How do workers’ compensation settlements work in Michigan?
Most workers who are injured on the job can seek a workers’ compensation settlement. With a few exceptions, once a workers’ compensation claim is settled, a worker’s rights to additional benefits are terminated.
If the worker sustains injuries that require ongoing medical treatment, the insurance company may occasionally continue to pay for it. However, most claims result in either a lump sum or a structured settlement.
Lump sum settlements: A lump-sum settlement means that the insurance company will make a single payment to settle the entire workers’ compensation claim.
Structured settlements: Instead of a single payment, the insurance company will make periodic payments on a predetermined schedule (monthly, annually, etc.).
Any workers’ compensation settlement in Michigan must be heard before the Michigan Workers’ Compensation Agency.
What is the statute of limitations in Michigan?
An injured employee must notify you, either verbally or in writing, within 90 days of their injury. Your employee must then file a claim within the workers’ compensation statute of limitations, which is two years from the date of injury, according to state law.
Why Use EZ
If you’re looking for workers’ compensation insurance, come to EZ. We pride ourselves on doing everything we can to give you an easy and stress-free shopping experience. We give our customers our full attention and offer fully personalized service and fast results. As soon as you fill out our form, you will receive free quotes from one of our agents, who will understand your needs right from the start. We want to ensure that you make the best decision and get the best coverage for the best price. Our services are completely free so check out your personalized quotes today!
If you still have questions, feel free to give us a call at 877-670-3538. You will connect to a local insurance agent who can answer all of your questions, and help you find the workers’ compensation policy that works best for your business.