Jump ahead to learn:
- Is Workers’ Compensation required in Michigan?
- How does Workers’ Comp work in Michigan?
- Workers’ Compensation benefits in Michigan
- Michigan Workers’ Comp death benefits
- MI Workers’ Comp insurance rates
- What if you don’t have Workers’ Comp insurance in Michigan?
- Who is exempt from Michigan Workers’ Compensation rules?
- How NEXT helps Michigan small business owners
Is Workers’ Compensation required in Michigan?
Yes, workers’ compensation insurance coverage is mandatory for most Michigan employers, including corporations and limited liability companies (LLCs). You must provide coverage if you:
- Have three or more employees.
- Have at least one employee working 35 hours per week for 13 weeks or more during the year.
- Are an agricultural employer with three or more employees working 35 hours per week over 13 consecutive weeks.
Corporate officers and LLC members are considered employees and typically must be covered unless they qualify for specific exemptions.
Sole proprietors and partners aren’t required to insure themselves but must cover eligible employees.
Michigan businesses can self-insure if they demonstrate financial stability and can pay claims directly. They must apply for self-insurance approval through the Michigan Workers’ Disability Compensation Agency and provide audited financial statements.
How does Workers’ Comp work in Michigan?
The Disability Management Office administers Michigan’s Workers’ Compensation Program through its third-party administrator, Sedgwick.
In Michigan, the workers’ comp system helps provide wage replacement, medical and rehabilitation benefits to workers suffering work-related injuries. Typically, workers’ compensation in Michigan helps cover
- Medical expenses
- Lost wages
- Rehabilitation and physical therapy services
- Retraining if you can no longer do your job
- Permanent injury
- Death benefits and survivor benefits
Employees must report injuries to their employer within 90 days, and the employer must notify their insurance carrier and the Michigan Workers’ Disability Compensation Agency.
Benefits begin after a seven-day waiting period and may include vocational training if the employee cannot return to their previous role.
Workers’ Compensation benefits in Michigan
Workers’ Compensation in Michigan provides various benefits for injured workers or employees made ill due to their jobs. These include:
- Wage-loss benefits: Cover approximately 80% of an employee’s after-tax average weekly wage, subject to limits.
- Partial disability: If you are partially disabled and can still earn wages in some capacity, you must seek reasonably available work, taking into account your limitations.
- Medical benefits: Pays for necessary and reasonable medical care related to workplace injuries, including medical treatment, doctor visits, surgeries, prescriptions, and rehabilitation services.
- Vocational rehabilitation: Assists employees who cannot return to their previous jobs by providing training to re-enter the workforce.
Weekly benefits are available for the duration of your disability, which could be a lifetime. However, payments may be reduced by up to 50% after age 65, at 5% every year until age 75, or upon receiving social security benefits.
Michigan Workers’ Comp death benefits
If an employee dies from a workplace injury or illness, employers must pay weekly death benefits to eligible survivors. The deceased worker’s dependents may include spouses, children under 18 (or up to 25 if a full-time student), and other dependents who relied on the worker for financial support.
Weekly payment amounts are equal to 80% of the worker’s after-tax average weekly wage, subject to state limits. Benefits are paid for a maximum of 500 weeks unless the spouse remarries or children age out of eligibility.
Michigan workers’ comp may also cover funeral and burial expenses up to $6,000.
MI Workers’ Comp insurance rates
Workers’ compensation costs vary across industries. Factors that influence price include:
- The number of employees and the type of work they do
- Your total payroll
- Your insurance claims history
- The locations where you do business
The best way to determine the insurance rate for your business is to get a free instant quote from NEXT.
What if you don’t have Workers’ Comp insurance in Michigan?
Failure to obtain workers’ compensation insurance in the state of Michigan can result in serious penalties. Employers may be fined up to $1,000 per day or imprisoned for up to six months. Noncompliance is considered a misdemeanor in Michigan.
The employer can also be personally liable for all medical and wage-loss payments to injured employees.
Who is exempt from Michigan Workers’ Compensation rules?
Michigan state workers’ compensation laws exempt employees such as:
- Sole proprietors and partners: They’re not required to cover themselves but must cover eligible employees.
- Corporate officers: This group may be exempt if they own at least 10% of the company and opt out of coverage.
- LLC members: Usually exempt unless they choose to be included in coverage.
- Independent contractors: Must meet specific criteria to be exempt.
- Domestic workers. All workers in this category are exempt.
- Agricultural workers: Employers with fewer than three workers or those employing workers for less than 35 hours per week over 13 consecutive weeks are exempt.
- Casual employees: Those working fewer than 35 hours per week for less than 13 weeks may not require coverage.
- Family members. Exceptions are made for relatives working in your business.
How NEXT helps Michigan small business owners
NEXT can give you a free workers’ compensation coverage quote in about 10 minutes. Buy affordable coverage online and instantly share a certificate of insurance at no extra cost.
You can manage your policy 24/7 via web or mobile app.
And if you have questions, our licensed, U.S.-based insurance professionals are available to help.
We strive to resolve every claim quickly. Learn more about our claims process and how our claims advocates will work with you after an employee injury.
