Michigan workers' compensation insurance

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Any business with one or more employees is required to carry workers’ compensation insurance in Michigan. This policy provides medical benefits for work-related injuries.


Who needs 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:

  • It employed one or more people for 35 hours or more per week for 13 weeks or longer during the preceding 52 weeks (or one year).

  • It is a private employer that regularly employs three or more people at a time.

  • It is an agricultural employer that employs three or more employees for 35 hours or more per week for 13 or more consecutive weeks.

  • It is a household that employs domestic servants 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?


If a private business regularly employs three or more people at one time, part-time employees are entitled to workers’ compensation.


Do you need workers’ compensation if you are self-employed?


A person who owns a business alone is a sole proprietor, which means that the business is not a partnership, limited liability company (LLC), or corporation. Since a sole proprietor is not employed by another person, they are not required to have workers’ compensation insurance. However, if that person employs other people, workers’ comp coverage would be required.


Who else needs workers' compensation coverage in Michigan?


If a business is a partnership, LLC, or small corporation, employees must be covered by workers’ comp insurance. Michigan uses the IRS-20 Factor Test for determining whether workers are classified as employees who need workers' comp or independent contractors.

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.


How much does workers' compensation insurance cost in Michigan?

Estimated employer rates for workers’ compensation in Michigan are $0.70 per $100 in covered payroll. Your cost is based on a number of factors, including:

  • Payroll

  • Location

  • Number of employees

  • Industry and risk factors

  • Coverage limits

  • Claims history

How are workers' compensation rates determined in Michigan?


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. The cost of workers' comp insurance varies 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.

How does workers' compensation work in Michigan?

When an employee suffers a workplace injury or develops an occupational disease, workers' compensation covers the cost of their medical bills. It also provides disability benefits while the employee is recovering and unable to work.

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 (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.

If an employer is not providing the correct insurance 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 workers’ comp death benefits


If an employee dies in an on-the-job accident, family members could be eligible for workers’ compensation death benefits. The State of Michigan allows beneficiaries to include:

  • Spouse