Workers’ Compensation Loans: What You Need To Know

Workers’ Compensation Loans: What You Need To Know

Michigan attorney explains how to get workers’ compensation loans (advanced payment option) or lump sum cash settlement.

Getting hurt on-the-job can result in serious financial problems. This is because workers’ compensation only covers 80% of an employee’s lost wages. Many people live paycheck-to-paycheck and even a small income reduction can be devastating. Here is some information about workers’ compensation loans that can help. Please remember that every situation is different, and it is best to speak with an attorney before acting.

Advanced Payment Option

A rarely used section in the law says disabled employees can seek workers’ compensation loans (advanced payment options) of his or her weekly benefits. Only employees who are currently receiving workers’ compensation will qualify. Interest can be charged by the insurance company at a rate of 10%. It is common for weekly checks to be reduced or eliminated until the money is paid back.

Insurance companies frequently oppose requests for workers’ compensation loans because there is a strong possibility that a disabled employee will recover before the money can be paid back. If the insurance company objects, an Application for Advanced Payment (Form WC-108) can be filed. A magistrate will conduct a hearing weighing the best interests of the disabled employee against the legal rights of the employer/insurance company.

Situations that might justify a loan include needing money for an emergency, transportation costs to and from a new job, or business ventures that have a reasonable chance of success. Needing to pay off debt is not a valid reason.

Workers’ compensation loans does not mean that a disabled employee gives up all his or her benefits. Medical should continue to be paid without interruption. Weekly checks should resume once the loan has been paid back.

It is important to speak with an experienced attorney before making a request for advanced payment. We have seen claims where a disabled employee gave up too much or put themselves in a worse financial situation for a quick buck. Advanced payments should be treated like any other negotiation with the employer/insurance company.

Some insurance companies see an advanced payment request as a sign of financial distress and make low ball settlement offers instead. Watch out for this insurance company tactic and do not get pushed into a bad deal.


Another option is to negotiate a redemption settlement. This is when workers’ compensation benefits are traded for a lump sum cash payment. The amount paid will depend upon length of disability and future medical needs. Our experience shows this to be a good option when an employee is ready to find a new job and move on with his or her life.

Settlement money can be used for any purpose including paying off debt, getting retrained for a new career, starting a business, or retirement. There is a 15 day appeal period once a magistrate approves the settlement. It is possible to waive the 15 day appeal period and get money immediately under specific circumstances.

Michigan Workers Comp Lawyers never charges a fee to evaluate a potential case. Our law firm has represented injured and disabled workers exclusively for more than 35 years. Call (844) 201-9497 for a free consultation today.

Related information:

Workers’ Comp Disability Settlement: What’s A Fair Offer?

Workers’ Compensation Loans: What You Need To Know
Injured On The Job: A Guide to Michigan Workers Compensation Law Injured On
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A Guide to Michigan Workers Compensation Law Free Book
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