Workers Compensation Insurance Information

Workers compensation is a system that is used to provide wage replacement, medical expenses, death benefits, and rehabilitation benefits to workers who suffer a work-related injury in exchange for wavering the employee’s right to sue his or her employer. This is regulated by the individual states and has a set of rules that govern the benefits, coverages, or premium computations.

Workers Compensation Laws for Michigan Businesses

Michigan laws do not ordinarily pay workers’ compensation benefits. Most employers purchase an insurance policy from a private insurance company or they are authorized to be self-insured.

If injured on the job:

  • Report the injury immediately
    • This is so medical benefits should be provided from the day of jury
  • The employer has the right to choose the doctor
    • This is done during the first 28 days
    • After those 28 days, the worker has the freedom to change doctors, with notice to the employer and insurance company

A worker does not need authorization from the insurance company or employer to be medically treated, as long as the treatment is reasonable and necessary and the claim is not in dispute.

For wage-loss benefits

  • There is a seven-day waiting period
    • If wage loss occurs longer than the 7 consecutive (any weekends and/or holidays are not excluded) days then benefits start on the 8th
  • If it continues for 14 days or more then there is an entitlement to payment for the first week of disability
    • Weekly benefits are about 80% of after-tax wages

Filing a claim can be done by the employer; however, if an employer does not file it for you, can fill out a WC-117 with the agency. If the claims have been disputed by the insurance company or are a self-insured employer, a worker will need to file a WC-104A application for mediation or a hearing.

Who Needs Workers Compensation Insurance

Not every business is required to purchase workers’ compensation. Those who must carry coverage in the state of Michigan include:

  • All private employers who regularly employ 1 or more employees for 35 hours or more per week for 13 weeks or longer during the preceding 52 weeks
  • All private employers who regularly employ 3 or more employees at one time (part-time employees included)

Sole proprietors, independent contractors, and partnerships aren’t required to purchase workers’ compensation insurance; however most states will allow for these types of workers to cover themselves for workers’ compensation if they choose. A general rule to know whether a business is in need of workers’ compensation or not is if your company has non-owner employees, then insurance is most likely needed. It is important to remember that even if a business chooses not to have workers’ compensation that the employer still is financially responsible for injured workers (which can be anyone that you hire to do work on the business’s premises).

Independent Contractors

In the state of Michigan, an independent contractor is defined as a person who maintains a distinct business entity that is separate from where the injury occurred and offers their services to the general public; whereas, an employee is a person who only works at one place of business that is controlled by the company in which verbal agreements are made.

Michigan Law States:

If one company hires another company to come in and do some work for it, the second company is ordinarily an independent contractor. There is a 20-factor test to determine if an employer/employee relationship exists for workers’ compensation liability. Workers’ compensation liability for injuries sustained by an independent contractor or his/her employees will only revert back to the business “if” the contractor does not have workers’ compensation insurance of his/her own.

Self Employed

If a person is a freelancer or sole proprietor, such as a graphic designer or small web design company, they are not automatically covered by workers’ compensation. When employers hire self-employed workers, it is important for these workers to obtain their own coverage. When there is a contract with companies, the companies then may decide to provide workers’ compensation insurance to them.

For freelancers and self-employed individuals who don’t work a high-risk job, policies may be very small or difficult to obtain. The base cost of these types of policies depends on the type of profession. Most states also have workers’ compensation funds for workers who are unable to buy policies on the voluntary market.

Looking into Workers Compensation or More Information for You or Your Employees?

Compass Insurance Agency works with over 15 insurance companies to help guide you through the decision of workers compensation insurance. Our agents are dedicated to find you the best answers and policies for your business. Just click the link below or call us to get started.

 

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