How Long will my benefits last?
Q. GM is paying me $775 a week in workers’ compensation benefits right now. How long will those benefits last? Is there any way that amount will be increased to help cope with inflation?
A. Employers in Michigan can be required to pay workers’ compensation wage loss benefits for the life of the injured employee. The requirement to pay weekly benefits used to terminate after 500 weeks of payments, but the Michigan Legislature changed the law in 1965 to provide benefits potentially for life. If you have a work-related disability that limits your ability to work within your qualifications and training, and as a consequence, you are unable to work and continue to suffer lost wages, the Michigan Workers’ Disability Compensation Act will require your employer to pay you weekly workers’ compensation benefits that represent 80% of your after-tax lost wages (but no more than 90% of the state average weekly wage at the time of injury– which amounted to $820/wk in 2015)
Although benefits can potentially be paid for life, Michigan law since 1982 has permitted an employer to reduce workers’ compensation payments if the worker receives a number of other benefits. When an injured worker, for example, draws Social Security Retirement Benefits, one half of what he or she receives in Social Security Retirement Benefits, will be used to reduce weekly workers’ compensation benefits (although under the 2011 Amendment to the Act, this reduction is sometimes limited). If, for another example, an injured worker receives regular pension benefits, the entire after-tax value of a regular pension will be used to reduce workers’ compensation benefits. How disability pensions effect workers’ compensation depends upon the terms of a workers’ collective bargaining agreement. (Because a regular pension reduces workers’ compensation, it is important to retain an attorney to consider negotiating a workers’ compensation buyout BEFORE retiring.)
Under Michigan law, workers’ compensation benefits do not increase to account for inflation; claimants do not have C.O.L.A. or cost-of-living-adjustments. The Michigan Legislature in 1980 did provide for workers, injured between 1965 and 1979, a modest “supplement” weekly benefit, paid for out of the State’s general fund, to help cope with the effects of inflation. The Granholm Administration recognized this limitation in Michigan’s workers’ compensation system in its biannual report and recommended that the Legislature “determine what can be done to address the continual loss of purchasing power by injured workers in Michigan over the life of the worker’s compensation claim.” (The entire report can be reviewed at: www.michigan.gov/documents/2003_Benefit_Adequacy_58780_7.pdf.) (2003)