Online Quote

Alternative to Workers' Comp  (nonsubscribers)

Texas-National Insurance Agency - Workers' Comp Insurance - Serving all of TX, DFW and Texoma - 972-377-9700 ext. 104

Copyright ©2008 Texas-National. All rights reserved.

Why should you consider non-subscriber insurance?

Reduces impact on the employer's financial assets in the event of occupational accidents.
Complements loss control programs and ERISA plan documents that govern such programs.
Provides flexible coverage options to meet virtually any company's risk management programs.
Helps in recruiting and maintaining a skilled workforce by providing insurance to cover costs associated with workplace accidents.


Responsible Texas Nonsubscriber Programs

Responsible nonsubscription can serve both employers and
employees. However each situation is unique so the decision
to choose responsible nonsubscription must be based on
making a well informed decision. If after careful evaluation
a business decides to operate as a Texas nonsubscriber,
certain elements are essential including an exemplary
workplace safety program and a quality comprehensive
responsible nonsubscriber injury benefit program.


The Benefit Plan

The benefit plan acts the hub of the Texas nonsubscriber program. The plan is a written document that details the provision of workplace injury benefits, including what benefits are available, what’s required of the employer, what’s required of the employee, medical providers, claims procedures, dispute provisions and more. Every employee must receive a copy or detailed summary of the benefit plan called the Summary Plan Description (SPD) The SPD outlines how the plan operates and what it provides to participants. Federal law requires that the SPD must be be written in a manner calculated to be understood by the average plan participant, and must be sufficiently accurate and comprehensive to reasonably apprise such participants and beneficiaries of their rights and obligations under the plan. Many Texas nonsubscriber plans are regulated by the federal Employee Income Retirement Security Act or ERISA. ERISA requires any associated benefits must be paid in accordance with the plan and that the employer must not discriminate. ERISA also requires fiduciaries to discharge their duties “solely in the interest of the plan’s participants and beneficiaries” and “for the exclusive purpose” of providing benefits and defraying reasonable expenses of administration. Fiduciaries must also discharge their duties “with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims. Specific procedures also require the plan’s provisions are fairly implemented. These procedures include requirements that participants are free from coercion or undue pressure when making decisions. ERISA does not bar employees from seeking a common law cause of action under state law, against Texas nonsubscribers as addressed in Section 406.033 of the Texas Labor Code.


Funding

Section 406.052(b) of the Texas Labor Code states, “This section does not prohibit an employer who is not required to have workers' compensation insurance coverage and who has elected not to obtain workers' compensation insurance coverage from obtaining insurance coverage on the employer's employees if the insurance is not represented to any person as providing workers' compensation insurance coverage as authorized under this subtitle.” A responsible nonsubscriber must also secure a way to fund injury benefits and a variety of nonsubscriber insurance coverage options exist. Generally, smaller businesses tend to purchase insurance coverage with a low deductible but with limited coverage while larger businesses self-fund to a certain level and purchase high deductible products to address losses that exceed a set amount.


Dispute Prevention & Resolution


Preventing disputes should be a primary goal of a nonsubscriber injury benefit program. However, disputes may arise and as such all Texas nonsubscribers should have a fair plan in place to address any disputes that may arise. Internal Dispute Resolution procedures are typically a good fist step. Third-party mediators are oftentimes used as a second step and arbitration may be an option if the dispute is not resolved through mediation. In cases of arbitration, both parties select the arbitrator and all rules of arbitration must be well documented and cannot favor either party. Arbitration is a legal process that only changes the forum in which the dispute is addressed. Arbitration does not impinge on legal rules that govern the employment relationship. In fact the United States Supreme Court has emphasized that “by agreeing to arbitrate a statutory claim, a party does not forgo the substantive rights afforded by the statute; it only submits to their resolution in an arbitral, rather than a judicial forum.” Therefore, the arbitration process cannot disallow remedies that would otherwise exist if the claim was litigated and arbitrators must also be allowed to grant a full award, including costs and attorneys fees.


Managing Injury Claims

One of the advantages of operating as responsible nonsubscriber is the ability to implement a program to manage injury benefit claims. The rewards for adopting an effective program are primarily cost savings for the employer and quality benefits for the employees. The presence of tort liability is the main difference between a workers' compensation claim and a nonsubscriber claim and the reason a nonsubscriber claims should not be managed like a workers' compensation claim. Under workers' compensation, benefits are paid by the workers' compensation carrier generally without regard to fault. And since a subscribing employer is generally liable for only the payment of workers' compensation benefits, the fault or cause may not be important. In the case of a nonsubscriber claim however the fault or cause can be very important. Like workers' compensation claims, nonsubscriber claims may be provided without regard to fault but extra steps are oftentimes taken to determine the fault or cause of an injury. Determining the cause of an injury not only helps to limit reoccurrence, it also provides valuable information that could be useful in the event of a claim dispute. If a nonsubscriber utilizes the services of a Third Party Administrator it is important to ensure the TPA understands the differences too because outsourcing does not relieve an employer of the responsibilities associated with claims (or the overall nonsubscriber program). The employer should maintain effective communications with the TPA and receive regular reports that ensure claims are being handled appropriately and in accordance with the company's injury benefit plan.


Medical Care

One of the key ways an employer can succeed as a responsible nonsubscriber
is to ensure employees receive quality medical care following a work-related
injury. Direct employer involvement demonstrates the company’s commitment
employees while also helping to lower injury costs, reduce disputes, and
expedite return to work, productivity and impact on litigation rates.
Nonsubscribing employers and healthcare providers frequently work together to
establish relationships regarding the treatment of injured employees. These
agreements include how and when payments will be made, filing forms, if any,
rates and more. Provider agreements should promote incentives based on quality
care, employer and employee satisfaction and positive economic rather than price controls, regulation and legislation as the key method for reducing costs and improving care. Nonsubscribers typically pay medical providers quicker, allow higher rates and require much less paperwork but in return, they will expect quality care and good outcomes.


Regulatory Compliance

Texas nonsubscribers must comply with certain state and federal laws. For example, Texas nonsubscribers must report certain injuries and all occupational diseases and fatalities to the Texas Department of Insurance, Division of Workers’ Compensation-DWC. Texas nonsubscribers are also required to post certain notices in the workplace and notify employees in writing of their status as a nonsubscriber. Nonsubscribers should also comply with all federal laws and regulations such as those administered by the Occupational Health and Safety Administration (OSHA). Under OSHA, an employer is any "person engaged in a business affecting commerce that has employees, but does not include self employed persons or federal employers or any state or political subdivision of a state." So for the most part, OSHA applies to every type of business regardless of industry or number of employees. OSHA’s regulations generally require employers to adopt certain practices, means, and methods or processes reasonably necessary to protect employees from work-related injuries.


Program Review

A nonsubscriber program does not exist separate and apart from other company programs but is a part of everything the company does. Departments like human resources, safety and risk management all play a role in the success of your nonsubscriber program. Periodic comprehensive reviews will help all divisions understand the program and the role their functions play in the company’s program. There is no firm rule as to the frequency of program reviews but if you evaluate and amend your program routinely, you may want to consider conducting a review every three to five years. Significant changes to the program should also prompt a review of the entire program. For example, acquiring new insurance or adopting a new benefit plan or safety program should prompt a comprehensive review.

Texas-National Insurance

Do you have the right coverage for your employees to protect you and your business? At Texas-National we specialize in providing workers' compensation insurance. Click below, to receive a custom workers' comp insurance quote.