Michigan Disability Insurance: What you need to know

Disability insurance pays wage replacement benefits to employees who are not working due to non-job-related accidents or illnesses. (Workers' compensation covers job-related injuries.) It also provides coverage for employees who may not be eligible for workers' compensation, or it may supplement workers' compensation.
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A few states have laws that require employers to provide disability insurance, but Michigan is not among them. Michigan employers may provide such insurance, but they are not required to do so. State law may require specific provisions in a group disability policy sold by insurers in Michigan.
State regulations prohibit insurers from including discretionary clauses in insurance contracts or policies. Such clauses provide that courts will give deference to a plan administrator's decision to award or deny benefits or interpretation of plan terms in any court proceeding challenging such decisions or interpretations (Mich. Admin. Code Rules 500.2201-500.2202 and 550.111-550.112). The 6th Circuit of Appeals has ruled that the ban is not preempted by ERISA (American Council Of Life Insurers v. Ken Ross, 558 F.3d 600 (3/18/2009)).
For additional information, visit the Michigan Department of Insurance and Financial Services's website at http://www.michigan.gov/difs.
Last reviewed on April 22, 2016.

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