According to the Texas Association of Responsible Non-subscribers, employers who have implemented a non-subscription program save approximately 40 to 80 percent of the cost of providing workers’ compensation insurance coverage each year. This is based on factors such as the size of the company and its claims history.
Besides the cost benefit there are six other benefits of being a non-subscriber to Texas Workers’ Comp Insurance:
1. Significantly lower costs associated with job-related injuries or illnesses.
A non-subscriber administers his/her own employee benefit plan. He/She has greater control over how job-related injuries are reviewed and compensated, thus significantly reduce the costs associated with employee injury claims.
2. Greater ability to control fraud.
The self-administered employee injury plan provides a means to control fraud through careful claims investigation. This capability is a huge incentive for employers and is something insurance companies have neither the time, interest or resources to do.
3. Employers have greater control over medical treatments.
A non-subscriber benefit plan can designate the doctor its employees will see for work-related injuries as a condition of providing benefits under the plan. As a result, the employer can consult with the doctor to ensure that medical treatment and absence from work are not unnecessarily extended. The medical reports are promptly submitted to the employer for treatment verification. This benefits the employer for future work planning and, if necessary, for litigation.
4. Benefits paid to injured employees
A non-subscriber is not obligated to pay workers’ compensation benefits to employees for personal injuries or illnesses sustained in the course of employment. The employer may chose the option to provide similar benefits through its own voluntary benefit program. As a non-subscriber the employer has complete control over the determination of the amount of benefits paid to employees who sustain legitimate injuries and the duration of eligibility for medical and wage replacement benefits.
As a subscriber to Texas workers’ compensation, the employer has no discretion or authority on how long benefits are paid to injured employees and in what amounts. The medical and income benefits provided to injured employees are established by law and cannot be changed by the employer. There is no specific time limit on eligibility for reasonable and necessary medical benefits. Potentially, such benefits may be payable for an employee’s lifetime.
5. Administration of employee injury claims
For a non-subscriber, injury claims are administered by the employer rather than a third party insurance company. The employer is responsible for, and in control of, its losses and the cost of its program. The employer is actively involved in each claim and remains in constant contact with the injured employee and his medical care providers.
The employer has complete control of the resolution of a work injury claim. For example, if sued by an injured employee, the employer can determine if the claim will be settled and the amount of the settlement, or go to trial. In the case of a subscriber, injury claims are administered by the workers’ compensation insurance company. Unlike a non-subscriber, the employer has no appreciable role in the claims handling process. The employer has little or no information about the medical status of the employee or his date of return to work.
6. Risk of litigation
A non-subscriber loses its immunity from suit. An employee may recover damages if the employee proves that the company’s negligence was the cause of the injury. The non-subscriber can minimize the risk of litigation by purchasing an excess employer’s indemnity insurance policy that provides for the reimbursement of any loss (including attorneys’ fees, medical expenses, lost earnings, earning impairment, pain and suffering, judgments, and punitive damages) sustained by the non-subscriber above a certain deductible selected by the company.
A subscriber is generally immune from suits by injured employees for personal injuries sustained on the job because under the Act the employee relinquishes his common law right to sue for negligence in exchange for the payment to the employee, without regard to fault, of state regulated pre-determined benefits.
Non-subscription is a cost effective option to Texas workers’ compensation insurance coverage. Approximately 106,308 Texas businesses operate as non-subscribers and employee more than three million employees statewide.
By James Goldman