When you cannot return to work, No-Fault wage loss benefits are a lifeline
You’ve been injured in a car accident, and for the moment you cannot return to work. Panic sets in. How do you pay the bills? The mortgage?
Being injured in a car accident is bad enough. But being disabled from earning a living because of injuries suffered in a crash may be the thing that pushes a victim and her family into financial ruin. Michigan No-Fault wage loss was created nearly 40 years ago to stop that from happening.
How wage loss works
No-Fault wage loss benefits pay injured car accident victims 85 percent of the wages they would have earned had they not been injured. That is why it is called “wage loss.” These are wages you have “lost” because of your injuries from a car accident. It therefore, cannot be speculative. There is no such thing as “earning capacity.” These are wages you can show you would have earned but for being injured in a car accident.
Under Michigan’s No Fault Law, MCL 500.3107(1)(b), an auto accident victim whose accident-related injuries have disabled her from working is entitled to wage loss benefits on the following basis:
“Work loss consisting of loss of income from work an injured person would have performed during the first 3 years after the date of the accident if he or she had not been injured.”
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“Because the benefits received from personal protection insurance for loss of income are not taxable income, the benefits payable for such loss of income shall be reduced 15% …”
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The maximum “benefits payable for work loss sustained” is $5,104 per month for accidents occurring between October 1, 2011 and September 30, 2012.
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No Fault “wage loss benefits” are the “work loss” benefits referenced in the Michigan No Fault Law.
Wage loss formula
For a Michigan auto accident victim who was employed at the time of the accident, she is entitled to receive from her No-Fault auto insurance company “wage loss benefits” equal to the “income” she would have earned “from work [she] would have performed … if she .. had not been injured.”
Temporarily unemployed at the time of a car accident
For a Michigan auto accident victim who was “temporarily unemployed” — or working reduced hours — at the time of the accident, her wage loss benefits “shall be based on earned income for the last month employed full time preceding the accident.” (MCL 500.3107a) That means people who are actively looking for employment when they are injured in a car accident can still recover wage loss from their No-Fault insurance companies.
The critical factor in establishing that an auto accident victim is entitled to No-Fault wage loss benefits is showing that the victim’s accident-related injuries have disabled her from working and, thus, prevented her from returning to work.
A victim’s work disability is most commonly verified through a certificate, statement, note or prescription by one or more of the physicians who are treating the victim for his accident-related injuries.
A physician-issued work disability certificate or statement will specify the following:
o Whether the auto accident victim is totally disabled from working;
o Whether the auto accident victim is partially disabled and may return to work but only with certain specified restrictions;
o The period of time during which the work disability is expected to last;
o The injury and/or injuries that causing the victim to be disabled from working.
Work restrictions may include any or all of those identified in the non-exhaustive list below:
o Sit-down job duties only.
o Right hand/arm job duties only.
o Left hand/arm job duties only.
o No prolonged sitting.
o Limited walking.
o No overhead reaching.
o No pushing, pulling, stooping or bending.
o No lifting.
o No lifting over _______ lbs.
Proof of income
Any or all of the following documents can be used to prove a victim’s income for wage loss benefits purposes:
o A “Michigan Motor Vehicle No-Fault Insurance Law Wage, Salary and Benefits Verification” form completed by the victim’s employer.
o A copy of the victim’s pay stubs for the two months prior to the auto accident.
o A copy of the victim’s most recent W2, i.e., the Internal Revenue Service’s “Form W-2 Wage and Tax Statement.”
85 percent limit for wage loss
The amount paid in N- Fault wage loss benefits is limited to 85 percent of the income that an auto accident victim would have earned had he not been injured.
Monthly limit for lost wages
The maximum monthly amount payable for No-Fault wage loss benefits is $5,398 per month for auto accidents that occur between October 1, 2015 through September 30, 2016.
The maximum monthly wage loss amount is “adjusted annually to reflect changes in the cost of living …”
Here is a copy of the August 2011 Insurance Bulletin, 2011-15-INS, which set the current maximum monthly wage loss amount. The bulletin also lists the monthly maximums going back to October 2006.
More information about maximum monthly wage loss amounts can be found in the “Insurance Bulletins” section of the website for the State of Michigan Department of Licensing and Regulatory Affairs (LARA).
3-year limit for lost wages
A Michigan auto accident victim is entitled to receive No-Fault wage loss benefits for the first three years after the date of the accident.
Excess wage loss
If the monthly limit and/or the three-year limit on wage loss benefits is insufficient to cover a Michigan auto accident victim’s actual lost wages resulting from his accident-related injuries, then the victim can pursue a claim for “excess wage loss benefits.” (MCL 500.3135(3)(c))
To do so, the victim will have to sue the driver who allegedly caused the accident and prove in court that the driver was actually “at fault” in causing the accident.
Stay tuned for more blogs about each of your No-Fault benefits.
– Steve Gursten is one of the nation’s top insurance attorneys handling auto accident lawsuits. He is head of Michigan Auto Law and president of the Motor Vehicle Trial Lawyers Association. Steve has received the highest verdict in the state for a car accident or truck accident victim in 2008, 2009 and 2010, according to Michigan Lawyers Weekly.
Related information to protect yourselves:
Michigan Auto Law is the largest law firm exclusively handling car accident, truck accident and motorcycle accident cases throughout the entire state. We have offices in Farmington Hills, Detroit, Ann Arbor, Grand Rapids and Sterling Heights to better serve you. Call (800) 777-0028 for help from a Michigan insurance attorney.