Incentives to Subscribe in the Texas Workers’ Compensation Act

Aside from the peace of mind offered by workers’ compensation insurance, existing regulations in Texas give employers an incentive to get coverage. Under the Texas Workers’ Compensation Act, subscribers essentially get total immunity from lawsuits that are brought by employees as a result of illnesses or injuries arising from their work. When an employer retains workers’ compensation coverage and an employee submits a claim, the injured employee can obtain compensation in the form of:

  • Medical benefits
  • Disability income benefits
  • Certain funeral benefits paid out to dependents of an employee killed on the job
  • Death benefits paid out to the employee’s dependents

Subscribers versus Non-Subscribers

In Texas employers can be classified as subscribers (those who elect workers’ compensation coverage) and non-subscribers (those who choose not to obtain workers’ compensation insurance). When hiring a new employee, an employer has the responsibility to inform that new hire about whether the company is a subscriber or a non-subscriber. In addition to letting employees known when they start working, an employer is also required to post a notice in the workplace explaining whether they subscribe to workers’ compensation or not. In 2012, approximately one-third of Texas employers were non-subscribers.

The Downside of Non-Subscribing

Employers who are attempting to save money by avoiding the high costs of workers’ compensation coverage in Texas probably think they are doing themselves a favor, but this is not always the case. If an employee does get injured on the job, non-subscribers have zero immunity from lawsuits. If an injured worker successfully sues an employer for an injury or illness on the job, the employee may also be entitled to more damages and recovery under workers’ compensation law. Employees may be entitled to pain and suffering, medical expenses, and the full value of future lost wages.

Just like with any other benefit program, there are factors that should be considered by an employer, and choosing not to subscribe to workers’ compensation coverage in Texas is no exception to this general rule. Many employers in Texas wish to operate freely without having to adhere to workers’ compensation mandatory coverage, but there are also responsibilities that come along with this. The employer must invest resources and time to ensure that any non-subscriber program is successful. In many cases, this means that there is a higher commitment of time and effort on the employer’s part when compared with subscribing to workers’ compensation coverage.

Some of the elements that make up a quality non-subscriber program are that:

  • It includes an occupational injury benefit plan to govern workplace injury benefit benefits
  • Benefits are funded through either insurance or a combination of self-funded and insured benefits.
  • The program has a means for managing benefits
  • There is a plan to communicate program elements to employees
  • There is a selection of quality medical providers is available
  • There are plans for how to address and prevent disputes in a way that is fair to employers and employees

 

One of the biggest differences between subscription and non-subscription has to do with the liability an employer faces, as mentioned above. Under a workers’ compensation policy, an employee may get workers’ compensation benefits in exchange for giving up the right to sue the employer over this injury in the future.

Unlike an employer who uses a workers’ compensation policy both to provide immediate payment for limits on future claims against the employer for the same injury, a non-subscribing employer does not get this protection of the “exclusive remedy doctrine”.

If an employer does take extra steps to insure this liability, there may be some legal protections available, but choosing to have no plan in place can be very risky for an employer. An employer who does not understand all the risks of opting out of workers’ compensation coverage could be in for an unfortunate surprise when an injured employee uses his or her right to pursue liability claims related to an unsafe workplace.

Under a workers’ compensation policy, the benefits available to the employee are clearly outlined. In order to get benefits, the employee must comply with the policy’s stipulations such as notifying the employer in a timely manner and attending doctor’s appointments. Without a workers’ compensation plan, however, an employee should:

  • Determine whether another policy is in place and what the requirements are to comply with that policy
  • Consult with a Texas workplace accident attorney to determine whether other compensation is available through legal action

 

Why Would An Employer Avoid Workers’ Compensation Coverage?

There are many reasons that businesses in Texas elect to avoid subscribing to a workers’ compensation policy, including:

  • The structure of workers’ compensation can make it quite expensive for employers to have coverage, and taking the actions of a non-subscriber can help the employer avoid unnecessary costs associated with using workers’ compensation coverage. Many employers elect to use their own insurance policies to help cover expenses in the event that an employee is injured.
  • Flexibility is a primary benefit because Texas non-subscribers can tailor their insurance policies to line up with a benefit plan of their choice.
  • Some businesses are in a critical financial situation, and not being forced to purchase workers’ compensation coverage allows them to survive or to eventually expand their business.
  • Being able to reinvest the cost savings from avoiding paying expensive workers’ compensation insurance premiums allows companies to provide other benefits for the workplace and for their employees.

In order to help promote health and overall well-being, many nonsubscribers choose to work with area healthcare professionals to prevent injuries and provide other opportunities for quality care after an injury happens.

What Do I Need to Know About Non-Subscribing Employers and Private Policies?

Some employers see the huge risk involved in non-subscribing, so they obtain a private insurance policy to protect against cases where workers are injured or become ill. This is often referred to as a responsible non-subscriber, meaning that the employer has undertaken steps or a program that would allow them to provide benefits if employees do become injured on the job and that the employer has put steps in place to prevent injuries to begin with.

More often than not, these policies provide for lost wages and medical expenses under an “occupational injury benefit plan” or an “employee injury benefit plan”. Employees who work for a company with this type of plan should review the specifics of the employer’s policy to ensure that they follow protocol in the event of an accident on the job or the development of an illness from work.

Failing to follow the protocol under such a plan can lead to termination of all benefits, so be sure that you report any such injury immediately to the supervisor, working only with the medical providers you are directed to visit with under the plan, keep all your doctor appointments and follow instructions given to you at those appointments, and keep your employer informed about the status of your injury and recovery.

If you are not sure whether your employer has such a policy or if you do not have a copy of it, you should ask your supervisor immediately to clarify. Having a copy of the policy is helpful in the event that you do become injured so that you can be sure to follow the proper steps to receive benefits. Request a copy of the plan in writing. From there, the plan administrator has a 30 day deadline in which to provide you with the basics of the plan so that you can be informed of your rights and responsibilities in the event of an injury.