Sample interest calculation

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How to calculate interest on an award of benefits under workers’ compensation in Michigan.

The Michigan Legislature passed significant reforms in 2011. A change that did not get much attention involves how interest on an award is calculated. When weekly benefits are paid pursuant to an award, interest shall be paid at a rate calculated in the same manner as interest on a money judgment in a civil action under the Revised Judicature Act of 1961.

This is based upon 6-month intervals from the date of filing the Application for Hearing or Mediation at a rate of interest which is equal to 1% plus the average interest rate paid at auctions of 5-year United States treasury notes during the 6 months immediately preceding July 1 and January 1, as certified by the state treasurer, and compounded annually.

Unfortunately, the official WCA calculator does not include this functionality and it is an advertised limitation. Here is a sample calculation to do it manually.

Sample interest calculation

Mr. Smith is a factory worker who suffers a rotator cuff tear while lifting a heavy box. He has surgery and is unable to work for 6 months. The insurance company disputes the claim because an MRI shows preexisting degenerative arthritis.

Magistrate Jones awards 6 months of benefits from February 1, 2016 until August 1, 2016. The weekly comp rate is $500.00 based upon average weekly wage. Total comp owed is $13,071.43. Calculate simple interest by using the equation below.

Equation: I = Prt

I = Interest Amount
P = Principal Amount
r = Rate of Interest per year in decimal (R/100)
t = 6 month time period expressed in decimal (6 ÷ 12 = 0.5)

Calculation

I = 13,071.43× 0.02337 × 0.5 =
I = $152.74

Total interest owed is $152.74.

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 (855) 221-2667 for a free consultation today.

Related information:

2016 Calculator Program Released

Photo courtesy of Creative Commons, by FutUndBeidl.

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Author Bio Jeffrey Kaufman

Author
Jeffrey E. Kaufman
Michigan Workers Comp Attorney

Jeffrey E. Kaufman has extensive experience in workers compensation cases and has recovered millions of dollars in benefits for his clients. He believes all injured workers deserve to be on equal footing with insurance companies and employers, and fights tenaciously so their rights are secured and protected.


“Jeff also helped me with getting my Blue Cross bills paid. I would absolutely recommend him and the whole firm. Jeff and the firm did everything they were supposed to do for me and my case.”
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This field is for validation purposes and should be left unchanged.

Our attorneys post regularly about common issues related to workers’ comp, including common injuries, settlement calculations, laws, and more.

Our workers’ compensation and Social Security disability lawyers always put your needs first. Get to know your legal team.