Wage Loss Under No-Fault Law and Social Security Disability

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Wage Loss Under the Michigan No-Fault Law and Social Security Disability – An Important Interplay

One of the most important benefits under the Michigan no-fault law is the wage loss benefit. When the Michigan legislature enacted the No-Fault Act in the 1970s, government officials wanted to ensure motor vehicle accident victims had access to the prompt recovery of items that were lost as a result of the accident.

Back then it often took years to get a case to a jury. Cases would meander through the court system with little to no over sight by overworked judges and court clerks. As a result of the wait, accident victims waited years to get reimbursed for even basic things such as lost wages.

The Michigan No-Fault Law sought to change this when it required auto insurance carriers to pay 85% of gross wages within 30 days to an accident victim so long as he or she presented proof of wages and disability.

The wage loss benefit, which is found under MCL 300.3107(1)(b), continues to be a cornerstone of the Michigan no-fault law. However, how does this benefit interact with Social Security, namely Social Security Disability (SSD) benefits that are awarded because of an auto accident?

MCL 300.3109(1) addresses the subtraction of certain benefits from PIP no-fault benefits. Under the statute, benefits “required to be provided under the laws of any state or the federal government shall be subtracted from the personal protection insurance benefits otherwise payable for injury” under the Michigan no-fault law. What does this mean? It means that Social Security Disability benefits – a federal benefit – is subtracted from wage loss benefits a claimant would otherwise receive from a no-fault claim.

In effect, the car insurance carrier can set-off the SSD payments the claimant receives each month.

An example will help clarify this. Mary Smith worked for General Motors and was injured in a car accident, forcing her to miss work. Let’s say she earned $1,000 a week in gross wages. Under the Michigan no-fault law, she would be entitled to 85% of this amount, or $850 per week in wage loss benefits from her auto insurance carrier.

However, let’s assume that the injuries Mary sustained in the car accident were catastrophic, disabling her from work under the guidelines of the Social Security Administration. As a result, she qualified for Social Security Disability and receives $750 per month in federal SSD benefits. Under the law, Mary would only receive $850 – $750 = $100 in wage loss benefits from her auto insurance carrier each month.

Car insurance companies are only entitled to this set-off if the need for SSD benefits are from the car accident. If the claimant already received SSD benefits from a different disability, and the claimant is then injured in a subsequent car accident and is entitled to wage loss benefits, the car insurance carrier cannot set off wage loss benefits against SSD benefits.

The interplay between Michigan no-fault wage loss benefits and Social Security Disability (SSD) benefits is an important attribute of Michigan car accident law.

The Michigan auto accident attorneys at the Lee Steinberg Law Firm, P.C. can answer your wage loss and other Michigan car wreck questions.

Please call 1-800 LEE-FREE (1-800-533-3733) with any questions. There is no fee unless we get compensation for you.