Nearly every business needs workers’ compensation insurance; however, requirements and exceptions vary by state. Generally, workers comp covers work-related medical expenses, back pay while out of work, and death benefits for dependents. 

In Michigan, non-compliance with workers’ comp laws can result in fines and other penalties. Be sure to know the basics of Michigan’s workers’ comp laws to avoid these penalties. If you need help determining the best coverage for your business, consult with your insurance agent about what you need to do to remain compliant. 

Michigan Requirements, Exceptions, and Exemptions

Both public and private employers need workers’ comp in Michigan. Your policy must cover medical expenses, lost wages, vocational rehabilitation, and death benefits. Michigan workers’ compensation regulations require businesses with three or more employees to have coverage. Or, if you have one employee who works over 35 hours a week, you’ll also need a workers’ comp policy. 

However, agricultural employers only need workers’ comp if they have three or more employees who work over 35 hours a week for at least 13 consecutive weeks to be eligible for coverage. 

Additionally, households with a housekeeper working over 35 hours a week for at least 13 consecutive weeks will also need to provide workers’ comp. All public employees need to be covered, but independent contractors are exempt from coverage. 

In Michigan, your business also needs proof of insurance. Doing so can help you prove you’re adequately covered if you work with a client or another company that requires workers’ compensation for all employees working on a given project. Furthermore, Michigan requires proof of insurance to participate in many state-sponsored programs, such as COVID-19 recovery funds.

Compensation Details

By law, Michigan workers’ comp policies provide employees benefits starting the day of their injury. For the first 28 days after the injury, employees can choose to use their employer’s doctor for treatment. However, afterward, employees must use their own doctors. When this happens, your employees should notify you and your insurance company. 

Michigan insurers don’t require authorization to issue employee benefits after their injury if their claim isn’t disputed. However, Michigan does require a seven-day waiting period before your employees can be eligible for wage-loss benefits. Benefits will start on the eighth day after the injury if the employee can’t go back to work yet. If, after 14 consecutive days, they still can’t work, they can get pay for the first seven days they missed work. Weekly benefits will generally be about 80 percent of employees’ income after taxes. 

Insurer Options

Similar to other states, Michigan offers three ways for you to provide workers’ comp to your employees. These options may be similar to those offered in other states, but they also are treated differently under Michigan law. These options include:

  • Private Insurance Through the Voluntary Market– Private insurance allows companies to pick and choose their clients, just as it would be an individual. Businesses generally need to prove they have no prior lapses in insurance, have been open for a few years, and can pay for the insurance to be eligible. 
  • The Michigan Workers’ Compensation Placement Facility (MWCPF)– The MWCPF is Michigan’s assigned risk pool. Businesses that can’t obtain coverage from a private insurer can apply online for coverage. The MWCPF was created by the state to ensure all Michigan businesses can obtain state-required workers’ comp. 
  • Self-insurance– Michigan also allows independent or group self-insurance for eligible businesses. For independent self-insurance, the business pays out of pocket for workers’ comp expenses and must prove they are financially able to do so. Businesses can also opt for a group self-insurance plan. Multiple companies in related industries self-insure together to have greater control and better management of their workers’ comp costs.

Understanding Michigan Workers’ Comp 

Most Michigan businesses will need to provide workers’ comp to their employees. Failing to do so can result in penalties, such as fines, that your business will be responsible for. While you can provide workers’ comp through several different marketplaces, these policies still need to reach Michigan’s required minimum coverage threshold. To ensure your employees have proper coverage, you can work with an insurance agent to help you better understand the laws and your policy options.