A dollar doesn’t go as far as it used to. Each year, inflation increases the cost of everything from housing to haircuts. That is why many employees receive cost-of-living raises over time. The Michigan No-Fault Act takes inflation into account as well. Now injured motorists will be able to claim more in wage-loss benefits from their no-fault insurance providers in 2018.
Michigan’s No-Fault Act controls how much an insurance company is required to pay its customers after an auto accident. While the recovery of reasonable and necessary medical expenses has no limit, the same is not true for wage loss benefits. Under the Michigan No-Fault Act, an insurer is only required to pay the actual 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.” This applies to wage loss benefits paid to the injured motorist directly and to survivors’ loss benefits paid to the spouse or dependents of the victim of fatal auto accidents.
Injured motorists should not expect their insurance benefits to line up with their pay stubs. Wage loss benefits are required to take into account raises, overtime, and bonuses that the employee would have earned if he or she had been working. However, because of differences in the way taxes are applied to salaries and insurance benefits, auto insurance providers are only required to pay 85 cents for every dollar a person would have earned. High wage earners will find their benefits further limited by the law. The Michigan No-Fault Act sets a maximum no-fault wage loss benefit that can make it difficult for high wage earners to maintain their existing standard of living.
Every year, the State of Michigan Department of Insurance and Financial Services calculates the maximum no-fault wage loss benefit available under the Michigan No-Fault Act. Internal Administrative Rule R 500.811 requires the department to adjust the benefits paid according to the cost of living effective October 1st of each year.
On August 24, 2017, the department announced the new numbers for 2018. Starting October 1, 2017, Michigan residents may claim up to $5,541 in lost wages over a 30-day period. This amount will be pro-rated for any shorter period of work loss. The 2018 number represents an increase of $89 from the 2017 maximum wage loss benefit, and a total of $252 above the amount originally set in the statute in 2012.
Even the newly increased limit on wage loss benefits can substantially affect the lifestyle of some high wage earners. Those with high incomes often have expensive mortgage payments, auto leases, and other costs that don’t disappear simply because they are injured. When another driver causes a serious auto accident, an injured motorist can file a third-party lawsuit against that driver to cover the excess wage loss, among other damages. This recovery can be used to offset the difference between the motorist’s maximum no-fault wage loss benefit and his or her actual monthly expenses.
At Sachs Waldman, our experienced auto accident attorneys understand the impact annual changes to the Michigan No-Fault Act can have on our clients and their families. We can help the victims of serious injury car accidents understand the limits of the law, and develop a strategy to cover living expenses and other damages not paid for by no-fault benefits. We will review your case, and your needs, and work to help you maintain your standard of living, even when your insurance benefits fall short. Contact our Detroit personal injury law office at 1-800-638-6722.