Workers’ Compensation insurance is mandatory in most states with employers obtaining coverage from a private insurance carrier or a state-administered fund if available or, depending on the size of the company, self-insurance. The Lone Star State is an exception with Workers’ Compensation insurance voluntary for most private employers. Employers not providing Workers’ Compensation insurance coverage in Texas are referred to as nonsubscribers.
If an employer has Workers’ Compensation insurance coverage, Texas law limits the employer’s liability for work-related injuries. Injured employees may get medical and income benefits set by state law, but generally may not sue their employers. However, according to the Texas Insurance Department, nonsubscribers lose these important legal protections, including immunity from most lawsuits by injured employees. They could also be forced to pay high damage awards if an injured employee can prove in court that the employer was negligent in any way.
Employees covered by Workers’ Compensation insurance coverage in Texas receive benefits based on the type and severity of their injuries. They can receive medical benefits for medically necessary treatment of work-related injuries and illnesses; disability income benefits for a specified period of time up to a certain dollar limit set by law; compensation for burial expenses for employees killed on the job; and death benefits for dependents of employees killed on the job. If there is a Workers’ Compensation claim for benefits, an employee’s family may be entitled to additional benefits if the employee was killed and the death was caused by the employer’s gross negligence or intentional act or omission.
Whether or not an employer carries Workers’ Compensation insurance, Texas laws requires that all employers comply with reporting and notification requirements under the Texas Workers’ Compensation Act. Nonsubscribers must report that they elect not to obtain Workers’ Compensation insurance coverage to the Division of Workers’ Compensation (DWC) each year. In addition, nonsubscribers with five or more employees must report to the DWC each work-related fatality, occupational disease, and injury that results in more than one day of lost time.
Nonsubscriber Options to Traditional Workers’ Compensation
According to a Texas Insurance Department, 33% of employers are nonsubscribers, but only 19% of Texas employees work for nonsubscribers. Among the industry sectors with the highest percentage of nonsubscribing employers is health care, including home care, hospice, medical staffing and others that make up this niche.
About 71% of nonsubscribing employers offer benefit plans to employees. Most small employers will use accident insurance that pays benefits directly to the employee with a low deductible for the employer. The scope of benefits offered by accident insurance can be limited and in many cases costly injuries may be subject to a maximum dollar amount determined by a disability schedule.
Mid-sized employers may opt to use a reimbursement policy that allows the employer to submit expenses to a carrier for reimbursement or a pay-on-behalf-of policy that pays on behalf of the employer. Coverage can be obtained for medical expenses, wage replacement benefits, legal costs and damages (which in some cases may include arbitration and mediation costs), occupational sickness, occupational disease and cumulative trauma. While benefits associated with reimbursement and pay-on-behalf-of policies may also be capped, the limits are usually greater than those offered by accident policies.
Larger employers will offer sophisticated benefit plans that provide for wage replacement and medical care to injured workers. Their programs have extensive safety components and focus on taking care of injured employees. They may employ the use of several coverage options, including excess insurance and stop loss coverage.
It should be noted that while both Workers’ Compensation insurance and nonsubscriber options offer benefits for workplace injuries, the similarities end there. Nonsubscriber insurance (and the related benefits) is not Workers’ Compensation and should not be represented as a substitute or alternative for Workers’ Compensation but rather as an option. In addition, responsible nonsubscriber programs generally require a greater commitment on behalf of an employer in terms of time and effort than Workers’ Compensation.
For your clients in the home health care industry operating in Texas, Manchester Specialty can assist you in providing them with Workers’ Compensation insurance. For nonsubscribers, we can also provide customizable Primary Employer’s Indemnity Coverage to help protect a company’s assets. The policy provides benefits for accidental death & dismemberment, accidental medical expenses, wage replacement and employers’ indemnity.
We specialize in offering comprehensive business insurance solutions for the broad spectrum of home health care, hospice and medical staffing organizations that serve communities throughout the country. In addition to Workers’ Comp coverage, we can also assist you in helping clients gain control over ongoing costs and rising premiums, with Return to Work programs and other risk management strategies offered by our carrier partners. If you would like additional information about our products and services, please contact us at 855.972.9399.