Occupational Accident for Workplace Injuries Insurance Overview
Posted by: Communications Team | May 7, 2024
Texas is the only state that joined the United States as a nation via treaty and though it’s been 179 years since the Republic of Texas, the Lone Star State has no problem still showing its independent streak.
This is a state, after all, with a capitol building larger than the Washington, D.C. capital, the highest posted speed limits in the country at 85 mph in some areas, its own power grid separate from other states, and Texas is unique among the 50 states in its approach to workers' compensation insurance.
While other states require businesses to carry workers' compensation coverage, Texas allows companies to opt out of the state-run program.
“Business owners have many decisions to make, including whether to provide workers’ compensation coverage to their employees. Texas is the only state that gives private-sector employers that choice,” explains the Texas Department of Insurance (TDI).
While TDI’s latest research shows that in 2022, 83 percent of private-sector employees worked for an employer that had workers’ compensation coverage, the highest in 12 years, the other 17 percent are likely covered under an alternative insurance option called Occupational Accident for Workplace Injuries insurance.
“Most employers who chose not to get workers’ compensation coverage do carry alternative benefit plans, some of which are regulated by the Employee Retirement Income Security Act (ERISA),” says TDI.
Subscribers vs. Non-Subscribers
In Texas, companies that choose to participate in the state's workers' compensation program are referred to as "subscribers."
These businesses provide employees with access to state-regulated benefits in the event of a work-related injury or illness.
“Workers’ compensation is an insurance program managed by the State of Texas. It provides pay and medical benefits to employees who have a work-related injury or illness. Not all Texas employers provide workers' compensation insurance, but most do,” says TDI.
On the other hand, "non-subscribers" are companies that opt out of the state-run program, leaving them open to personal injury lawsuits from employees.
However, non-subscribers have the option to purchase alternative insurance coverage, such as Occupational Accident for Workplace Injuries insurance.
What is Occupational Accident for Workplace Injuries Insurance?
Occupational Accident for Workplace Injuries insurance is a policy designed to provide coverage for employees who suffer work-related injuries or illnesses while working for a non-subscribing employer.
This type of insurance offers benefits similar to those provided by traditional workers' compensation, such as medical expenses, disability income, and death benefits.
However, the specific coverage and limits may vary depending on the policy and the insurer.
“This specialized coverage offers organizations a practical way to help protect their employees by insuring them in the event of an accident while on the job. Occupational accident insurance provides an affordable alternative to workers' compensation coverage for certain industry groups and gives options for employers who seek to reduce the costs and risks associated with job-related accidents,” says Chubb.
Typical Coverage and Exclusions
Occupational Accident for Workplace Injuries insurance typically covers:
- Medical expenses related to work-related injuries or illnesses, including hospitalization, surgery, and rehabilitation.
- It may also provide disability income for employees who are unable to work due to a covered injury or illness.
- In the event of a work-related fatality, the policy may offer death benefits to the employee's beneficiaries.
However, it's important to note that these policies often have exclusions, such as injuries resulting from intentional acts, intoxication, or illegal activities.
Occupational Accident for Workplace Injuries Insurance Offers Various Benefits
Occupational Accident for Workplace Injuries insurance policies often include a variety of benefits to support employees and their families in the event of a work-related injury, illness, or fatality. Some typical benefits include:
- Medical Expense Benefit: This covers the cost of medical treatment, hospitalization, surgery, and rehabilitation related to a work-related injury or illness.
- Disability Income Benefit: If an employee is unable to work due to a covered injury or illness, this benefit provides a portion of their lost wages for a specified period.
- Death Benefit: In the event of a work-related fatality, this benefit provides financial support to the employee's designated beneficiaries.
- Burial Benefit: This benefit helps cover the expenses associated with funeral and burial costs in the event of a work-related fatality.
- Bereavement Benefit: Some policies may offer a bereavement benefit to provide additional financial support to the employee's family during the difficult time following a work-related death.
- Catastrophic Injury Benefit: This benefit provides additional coverage for severe injuries, such as paralysis, blindness, or traumatic brain injury, which may require long-term care and support.
- Rehabilitation Benefit: To help employees recover and return to work, some policies may include coverage for physical therapy, occupational therapy, and other rehabilitation services.
- Accidental Dismemberment Benefit: In the event of a work-related accident resulting in the loss of a limb or other permanent disability, this benefit provides financial compensation to the employee.
- Accident Follow-Up Care Benefit: This benefit covers the cost of follow-up medical appointments, treatments, and medications related to work-related injury or illness.
It's important to note that the specific benefits and coverage limits may vary depending on the insurance provider and the policy purchased by the employer. Employers should work closely with their insurance broker to design a plan that meets their unique needs and provides adequate protection for their employees.
Employers Also Benefit from Choosing this Coverage
It’s not just the employees who benefit from Occupational Accident for Workplace Injuries insurance as non-subscribing companies that provide their workers with this protection will also benefit from it.
This coverage can help mitigate the financial impact of employee injuries on the business while also demonstrating a commitment to employee well-being.
Additionally, having this insurance in place may help attract and retain talent in a competitive job market.
One plus for employers is that Occupational Accident for Workplace Injuries insurance is often designed to be an ERISA plan.
ERISA is a federal law that sets minimum standards for employee benefit plans, including health and welfare plans. By structuring the insurance as an ERISA plan, employers can take advantage of certain legal protections and benefits, such as the ability to preempt state laws and access to federal courts for disputes.
Pros and Cons of Opting Out of Workers' Comp
The decision to opt out of the state-run workers' compensation program and choose an alternative insurance method, like Occupational Accident for Workplace Injuries insurance, comes with its own set of pros and cons.
On the positive side, non-subscribing employers may have more flexibility in tailoring their insurance coverage to their specific needs and potentially lower costs.
However, non-subscribers face the risk of personal injury lawsuits from employees, which can be costly and time-consuming.
Additionally, the benefits provided by alternative insurance plans may not be as comprehensive as those offered through the state-run program.
Understanding the options available can help employers make informed choices that prioritize both their business interests and the well-being of their employees.
It's essential to work with experienced insurance professionals such as Dean & Draper to navigate the complexities of workplace injury coverage in Texas.
And don’t forget, regardless of your decision to get workers’ compensation insurance, every Texas employer must report their coverage status every year between February 1 and April 30.
Contact Dean & Draper today for help making sure your employees and business are properly covered.
The recommendation(s), advice, and contents of this material are provided for informational purposes only and do not purport to address every possible legal obligation, hazard, code violation, loss potential, or exception to good practice. Dean & Draper Insurance Agency specifically disclaims any warranty or representation that acceptance of any recommendations or advice contained herein will make any premises, property, or operation safe or in compliance with any law or regulation. Under no circumstances should this material or your acceptance of any recommendations or advice contained herein be construed as establishing the existence or availability of any insurance coverage with Dean & Draper Insurance Agency. By providing this information to you, Dean & Draper Insurance Agency does not assume (and specifically disclaims) any duty, undertaking, or responsibility to you. The decision to accept or implement any recommendation(s) or advice contained in this material must be made by you.
The recommendation(s), advice and contents of this material are provided for informational purposes only and do not purport to address every possible legal obligation, hazard, code violation, loss potential or exception to good practice. Dean & Draper Insurance Agency specifically disclaims any warranty or representation that acceptance of any recommendations or advice contained herein will make any premises, property or operation safe or in compliance with any law or regulation. Under no circumstances should this material or your acceptance of any recommendations or advice contained herein be construed as establishing the existence or availability of any insurance coverage with Dean & Draper Insurance Agency. By providing this information to you, Dean & Draper Insurance Agency does not assume (and specifically disclaims) any duty, undertaking or responsibility to you. The decision to accept or implement any recommendation(s) or advice contained in this material must be made by you.