Texas is the only state where employers are not required to participate in the workers compensation system. Non participation in the workers compensation (WC) system does not let employers off the hook for being responsible for payment for injuries to employees. All employers are required under the common law to provide medical compensation, death and disability benefits and lost wages to employees injured in the course of employment.
Why then do employers not purchase workers compensation insurance? A recent survey found that the number one reason given by employers for not purchasing WC insurance was high premiums. In spite of the fact that WC premiums and rates have declined in Texas over the last several years due to lower claims costs and competition among insurance companies, many employers have failed to purchase WC insurance.
There is an increasing trend of participation in the WC system and this is a good thing for workers, employers and for the 250 insurance companies who write WC insurance in Texas. It should be noted that not all employers are without insurance for employee injury claims. In fact, non subscription insurance, otherwise known as occupational accident insurance, is still a viable option for employers who want to provide benefits for injured employees.
Non subscription insurance can be purchased with or without employer’s liability. However, it is well worth the additional cost to purchase employers liability to protect and defend the employer from employee law suits and pay damages due the injured employee.
A surprising finding in a recent study shows that non-subscription employers are more satisfied with their alternative occupational accident programs than are employers covered by workers compensation insurance. The employers in the study perceive that alternative programs present a better value and a better way to manage medical and wage replacement benefits.
It is still a simple process to become a non subscriber. All an employer has to do is:
If an employer does not do all of the above steps, that employer is technically still a subscriber and is still liable for WC benefits. The process of becoming a non subscriber is made easier by purchasing non subscription insurance because the company furnishes the employers with all the necessary forms, notices and ERISA documents.
- File annually form DWC -5 with the Texas Department of insurance.
- Post the required non subscription form on your bulletin board in English and Spanish.
- Advise your employees.
Non subscription insurance has been 30% to 50% less costly than WC, but that gap is narrowing and in the opinion of this agent, if the savings is less than 25%, then purchase WC because this is the exclusive remedy thereby avoiding law suits from employees except in rare cases of gross negligence. The lifetime medical payments received from the WC system that always complies with medical benefits prescribed by the statutes is a comfort level that an employer will never reach with non subscription insurance.
Employers and agents will continue to be challenged to purchase the right product considering the employer’s size and objectives. We have noticed that employers who have purchased non subscription insurance for many, many years can now purchase workers compensation insurance for almost the same premium. So if you have not done so lately, we urge you to test the marketplace again by obtaining a WC quote.
If your company does not have WC or any insurance at all to cover work related injuries, then consider non subscription insurance. A serious injury to an employee could cause a lot of heartache and suffering not only for the injured employee, but it could also lead to the bankruptcy of the business.