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.
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.
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.
Occupational Accident for Workplace Injuries insurance typically covers:
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 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:
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.
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.
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.
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