Michigan Workers’ Compensation: Laws, Providers & Costs

Michigan state law requires most employers to carry workers’ compensation insurance if they have at least three employees or one who works more than 35 hours per week. The average cost of Michigan workers’ compensation insurance is 70 cents per $100 in payroll across all industries.

Michigan workers’ compensation laws are complicated, so you want to get your coverage from a company with lots of experience in the state. The Hartford not only offers small business expertise but it’s also an industry leader in workers’ compensation. Get a free, no-obligation quote in as soon as five minutes.

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What Are Michigan Workers’ Compensation Requirements?

Workers’ compensation is a state-run program, so requirements can vary. Michigan workers’ compensation laws, for example, are administered by the Workers’ Disability Compensation Agency and are a bit more nuanced than other states. At first glance, it says that all private businesses with three or more employees, including part-time workers, must carry a valid policy. However, the laws also state that employers must have workers’ comp if they:

• Employ at least one worker at least 35 hours per week for 13 weeks or longer in the preceding 52 weeks
• Own an agricultural business and employ three or more workers for 35 hours per week for at least 13 consecutive weeks
• Run a household and employ domestic workers for 35 or more hours per week for 13 weeks or longer in the preceding 52 weeks
• Are public employers

This means that the majority of Michigan companies must have a valid workers’ compensation insurance policy.

Who Needs Workers’ Compensation Insurance in Michigan?

The state mandates those with at least three employees to get workers’ comp, but it’s a good idea for any business, regardless of industry, to have a policy. An employee who gets hurt on the job or contracts a work-related illness may sue. Businesses with workers’ compensation insurance, however, may avoid lawsuits because the policy covers the injured employee’s medical bills and lost wages. Additionally, Michigan workers’ compensation typically includes employers’ liability coverage to pay for lawsuits when an injured employee forgoes benefits and decides to sue.

Where Can I Obtain Workers’ Compensation Insurance in Michigan?

Most companies in Michigan purchase workers’ compensation through private insurance carriers in what is called a competitive market. Those who are ineligible for coverage due to their risky industry or high claims history may obtain workers’ compensation through the state’s assigned risk plan Michigan Workers’ Compensation Placement Facility.

When possible, getting insurance through private carriers saves business owners money. Assigned risk plans are generally a last resort place to obtain insurance and are often more costly than getting it in the competitive marketplace.

Top Michigan Workers’ Compensation Insurance Companies

The Hartford

The Hartford is a leader in small business insurance and workers’ compensation. Its workers’ comp policies are tailored for industry-specific risks and include added coverage, such as extended reporting times and voluntary compensation, to extend coverage to exempted employees. Professionals in industries, such as law, accounting, and architecture, often see preferred rates for Michigan workers’ comp as these fall within The Hartford’s desired appetite.

CommercialInsurance.net

CommercialInsurance.net takes the work out of shopping for insurance. With one simple form, your business gets connected to the best match among CommericalInsurance.net’s 200 plus partners. This ensures that you get the right policy at a low price for your industry while also saving you hours of time.

Liberty Mutual

Liberty Mutual is a nationally recognized insurance brand that is best known for its personal home and auto policies. However, the company has developed industry-specific business insurance policies and provides coverage to many types of companies. Those in the food and beverage industry will find competitive rates with Liberty Mutual.

Chubb

Chubb is a national leader in insurance, serving both consumers and small business owners. It offers a full suite of business insurance products, including a versatile workers’ compensation policy for contractors who need a waiver of subrogation in their policies. On the claims side, Chubb continues to innovate, utilizing real nurse case managers in the claims process to improve efficiency and provide a better experience to injured workers.

Michigan Workers’ Compensation Placement Facility

The Michigan Workers’ Compensation Placement Facility (MWCPF) is a state-owned resource for workers’ comp insurance. It provides policies for those unable to find insurance via the private market. Policies may not be cost-effective through the MWCPF because it represents the highest risk classifications in both claims and job classes.

How Much Does Workers’ Compensation Insurance Cost in Michigan?

Your workers’ compensation policy premium will vary from other companies depending on your industry, work classifications, claims history, and payroll. Plus, every insurance carrier has what is known as an appetite for certain industries, meaning it understands the industry well and can write policies there at competitive prices.

When looking across all industries in the state, the average cost of workers’ compensation insurance is 70 cents per $100 of payroll, according to the latest data from the National Academy of Social Insurance. That means $100,000 of payroll is $700 in annual premium on average.

Below are common examples of rates based on industry classifications. We’ve listed low and high rates to account for company history and industry.

Sample Rates for Michigan Workers’ Compensation Insurance

Michigan Workers’ Compensation Cost Example

A towing company has two drivers and one clerk. The drivers each get paid $65,000 per year, and the clerk gets $30,000 per year, making the company’s total payroll $160,000. We’ll use this information to determine the company’s premium estimate.

First, let’s look at the drivers. Because their job activities are essentially the company’s line of work, they’re assigned class code 7208. Using the low rate from the samples above, that gets calculated as:

($130,000 / $100) x $ 5.72 = $7,436

However, the clerk is a special case. Certain employees show up across many industries and have a lower risk than other employees in the industries, so they’re usually assigned a specific class code and charged a different rate. In this example, the workers’ comp premium for the clerk (class code 8810) is calculated as:

($30,000 / $100) x 7 cents = $21

This makes the total estimate for the towing company’s workers’ compensation insurance $7,457 annually. The estimate could change depending on the company’s claim history. Most insurance carriers also factor in a number called an experience modification rate (EMR). Businesses with more losses than other similar businesses receive an EMR that increases their annual premium.

Michigan Workers’ Compensation Audit Requirements

Your annual workers’ compensation premium is an estimate; this is standard for the industry because insurance carriers base their premiums on your payroll for the year. But payroll can fluctuate due to overtime, people leaving, or new hires and expansion. This means some businesses do not pay the correct premium for their workers’ comp insurance.

The workers’ compensation audit at the end of the premium term is designed to reconcile the estimated payroll with the actual payroll. This allows the insurance carrier to bill for underpayments. Don’t worry, if you overestimated, you’ll get a refund. Audits are also used to determine the next term’s premium. Failure to comply with a premium audit can result in the cancelation of your policy and difficulty in obtaining a new policy with another provider.

What Does Workers’ Compensation Insurance in Michigan Cover?

Michigan workers’ compensation insurance covers employees who get injured on the job or contract a work-related illness from the day of injury or diagnosis. It pays the costs associated with medical care, such as:

• Emergency room visits
• Doctor appointments
• Hospital stays
• Prescription medication

In some cases, policies cover medical devices, dentists’ bills, and attendant care. Employers choose the physician for the first 28 days. After that, workers can switch doctors as long as they notify their employer.

Michigan workers’ comp also pays wage loss benefits to employees who cannot return to work for more than seven days following an injury or illness. If employees cannot work for more than two weeks, they are compensated for the first seven days. Disability payments are 80% of the injured employee’s after-tax average weekly wage in most situations but are capped at a per week maximum. For injuries in 2020, the cap is $934 per week. Injuries in 2021 are capped at $975 per week.

If an employee dies from their work-related injuries, their surviving dependents are entitled to benefits for 500 weeks. Again, these benefits run about 80% of the deceased’s after-tax average weekly wage. Surviving dependents can also apply for funeral benefits of up to $6,000.

Michigan Workers’ Compensation Coverage Example

Emily works as a clerk for an attorney. One of her job duties is organizing files for court cases in bankers’ boxes. When preparing for a hearing, Emily bends down to move a box and throws out her back. She cannot stand straight and is in so much pain that she can’t work.

Emily notifies her boss of the injury and seeks medical attention from a chiropractor. It takes three weeks of adjustments to get Emily back to work, followed by three more weeks of maintenance care from the chiropractor.

The law firm’s workers’ compensation policy covers Emily’s chiropractor bills, and she receives $425 per week (80% of her average weekly wage) on the eighth day. Because she’s out for three weeks, Emily also receives compensation for the first seven days she missed work. When she returns to work, her boss makes sure to adjust how they prepare the case files to make sure Emily doesn’t get reinjured.

What Are the Penalties for Not Having Workers’ Compensation Insurance in Michigan?

There are penalties associated with those who don’t follow workers’ compensation laws in Michigan. For example, an employer could face:

• Fines of up to $1,000 or up to six months in prison for failing to provide workers’ compensation
• A court order preventing them from employing anyone until coverage is obtained
• Lawsuits from injured workers

Additionally, the employer could be fined $50 per day for wage claims not paid within 30 days up to $1,500.

How Do I File a Workers’ Compensation Claim in Michigan?

When an employee is injured on the job, it is imperative they inform their employer as soon as possible. The employer will then file a claim with their workers’ compensation insurer. Each insurance carrier has its own process for filing claims, but most need to know:

• The date of the incident
• The nature and extent of the injuries
• What immediate medical attention was provided
• The employee’s average weekly wage
• Witness statements and contact information

If the worker’s disability lasts for seven consecutive days, the employer needs to submit Form WC-100 with their insurer and Michigan’s Workers’ Disability Compensation Agency. Employers must also provide a copy of the form to the injured employee. Workers can also file their own claim if their employer refuses to by submitting Form WC-117 to the Agency. They can also request mediation for disputed claims by filing Form WC-104A.

Michigan Workers’ Compensation Deadlines

The first deadline workers need to know is that they have 90 days from the date of injury―or the date they’re aware that an injury or illness may be work-related―to notify their employer. Failure to meet this deadline may impact their benefits.

Additionally, the initial workers’ comp claim must be made within two years of the injury. Why does Michigan give people so much time to file? Think about a work-related illness that progresses slowly over time. In that situation, it may take a while for physicians to recognize the connection between the illness and the person’s employment. The two-year claim deadline provides for that possibility so that workers get the benefits they deserve.

Michigan Workers’ Compensation Resources

Contact information

Michigan Department of Labor and Economic Opportunity
Workers’ Disability Compensation Agency
P.O. Box 30016
Lansing, MI 48909
wcinfo@michigan.gov
888-396-5041

Key Forms

• Employer’s Basic Report of Injury: Employers file Form WC-100 with the state and their insurance carriers once an employee’s disability exceeds seven days.
• Employee’s Report of Claim: Employees can file Form WC-117 if their employer refuses to file a claim.
• Application for Mediation or Hearing: Employees can request a hearing over a disputed claim by filing Form WC 104-A.

Publications

• Employer Insurance Requirements
• Michigan Workers’ Disability Compensation Rights & Responsibilities
• Employees — Know Your Rights!

Bottom Line

Michigan employers need to be sure they are covered by workers’ compensation insurance if it is required for them. Without it, they could face serious penalties and be on the hook for tens of thousands of dollars’ worth of medical bills. Finding the right policy for a fair price can be tricky.

This is why the folks at The Hartford are an excellent choice for Michigan workers’ compensation insurance. The company is a leading workers’ comp provider and has a team of specialists dedicated to small businesses. Fill out one simple form, and you can get a quote and coverage in as fast as five minutes.

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