Michigan Workers Compensation 101 - Benefits

Mark Tarpinian, CLU, ChFC, LIC
Commercial Insurance
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mark@tfi4insurance.com

Michigan Workers Compensation 101: Benefits

We’ve been reviewing Michigan workers’ compensation: what it is, what it’s not, and how it relates to owning a business. Let's use a lawn care & landscaping business as an example and assume you own the business and employ three or four people during the spring, summer, and fall seasons. In the first week of August, you receive a call from one of your two-man lawn crews: one of the workers has been injured. They were fixing the belt on a deck mower, it fell on them, dislocating the shoulder and breaking the arm of one of your workers. If you have a current workers comp policy, what benefits may you and the injured worker expect?

This week's blog takes a look at 6 features of required benefits. Michigan workers' compensation law ("The Act") provides and stipulates specific benefits that individual workers or their dependents can receive as the result of a job related injury or disease.

Employers run the severe risk of penalties and legal action if they refuse to provide or prevent the employee from getting necessary medical care

1) Medical Benefits: Michigan law is crystal clear: employees are entitled to reasonable and necessary medical care for work-related injuries or diseases. This includes medical, surgical, nursing and hospital services, and, under certain conditions, dental care, crutches and such artificial appliances as limbs, eyes, teeth, eyeglasses and hearing aids—all as required by law, by the Workers’ Compensation Act (418.301-391). A typical Michigan workers’ comp policy states:

“That it will furnish … to all employees of the employer all reasonable medical, surgical, and hospital services and medicines when they are needed, which the employer may be obligated to furnish … and that it will pay … for all such services and medicines when they are needed for all compensable injuries or … occupational diseases ….” (NCCI – WC 21 03 04)

During the first 28 days of treatment, the employer has the right to choose the physician. After 28 days employees are free to change physicians, but the employees must notify your employer of the change, and shall obtain and promptly furnish a report to the employer. If the employer or their insurance carrier shows good cause as to why employees should not be allowed to continue treatment with a physician of their own choosing, then, following a hearing, employees may be ordered to discontinue that treatment. Employers run the severe risk of penalties and legal action if they refuse to provide or prevent the employee from getting necessary medical care. Employees should not receive bills from health care providers for work-related injury or illness treatments. All billings for care should be directed to the employer or the employer’s workers comp insurance company.

2.) Wage Loss Benefits: Employees are entitled to weekly compensation for lost wages stemming from their work-related injury or disease, essentially for as long as they are disabled and have a resulting loss of income. For most injuries the benefit rate is 80% of after-tax average weekly wage, subject to a maximums. If employees return to work at a job that pays less than they were earning prior to the disability, because they are still unable to perform previous job duties, they are entitled to and will receive partial compensation benefits. Certain specific injuries, such as loss of an eye, finger, arm or other body member, trigger specific benefits amounts for a prescribed number of weeks. The Act also contains a special provisions the disability of retirees. A person is considered a "retiree" if he or she is receiving a pension or retirement benefit—that is, those NOT on a disability pension—that was paid for by the employer. And the retiree must prove that he or she is unable work according to their work qualifications, including the retiree’s prior training or experience.

3.) Rehabilitation Benefits: Michigan Workers’ Comp also include benefits for rehabilitation (418.319). An essential purpose of MI Workers Comp is to get an affected employee back to their previous job and employment. Typical Michigan workers comp insurance policy language cites that

“[The Policy] will furnish or cause to be furnished such rehabilitation services for which the insured employer may become liable to furnish or caused to be furnished under the provisions of the … Act for all compensable injuries or compensable occupational diseases happening to his employees during the life of this contract or policy.” (NCCI WC 21 03 04)

Employees unable to do their previous duties, and wanting to still return to work in some other capacity, may access benefits for assistance in finding a new job. These vocational rehabilitation benefits can take many different forms, and could include: 

• An employer making some minor change in the worker's job station so that he or she can return to the work in spite of some continuing problem. 
• Arranging an outside rehabilitation counselor will work with the employer and the employee to aid in a return to work at the same job or a similar job with the same employer. 
• Organizing a vocational rehabilitation agency, either a state agency or private agency, to help the worker find a job with some other employer, guidance in starting their own business 
• Establishing a short-term training to help the worker find a new job or, in some unusual circumstances, long-term re-education.

4.) Death Benefits: Michigan state law also requires death benefits to be accounted for under workers compensation (418.321). In general, benefits are treated the same in death situations as in disability circumstances, including

“… the reasonable expenses of the last sickness and burial of all employees whose deaths are caused by compensable injuries or compensable occupational diseases … arising out of and in the course for their employer, which the employer may be obligated to pay under the provisions of the … Act.” (NCCI EC 21 03 04)

A major difference for situations involving death is there must be a dependent in order to receive wage loss benefits. Periodically a childless, unmarried worker is killed on the job leaving no dependents. In this circumstance, his or her estate would receive a burial allowance of up to $6,000 but nothing else. Children of a deceased worker are conclusively presumed to have been dependent upon the worker. All other persons, including a spouse, must prove that they were, in fact, dependents of the deceased worker. If they were only partially dependent upon the worker, this will reduce the amount of benefits that they can receive.

5.) Coordination of Benefits: Employees eligible for or currently receiving social security, pension, retirement benefits, or benefits from a wage continuation plan, self-insurance plan, or disability insurance policy paid for by your employer, are subject an offset or coordination with workers’ comp benefits. But any coordination or offsets do not apply to special, specific situations such as the loss of fingers, eyes, arms, and legs, and they do not apply to social security disability insurance benefits. For benefit calculations, if an employee works for more than one employer, they get credit for all wages earned in all employments covered under the Workers’ Disability Compensation Act.

6.) Prompt Payment: Prompt payment of benefits is required by Michigan law (418.801). The first payment is due on the 14th day after your employer has notice or knowledge of a disability or death, and all compensation accrued should be paid weekly. If medical bills and/or weekly compensation benefits are not paid within 30 days of becoming due, a $50 per day penalty many be due the injured employee for each day over this 30 day deadline. An employer who has notice of work-related injury or death and fails to notify their workers compensation insurance company may be responsible to pay the $50 per day penalty.

These are the major benefits of your workers compensation insurance and what you can expect your workers comp insurance to provide for your workers in Michigan.