Between 2016 and 2018, the percentage of private sector employers participating in the workers’ compensation system in Texas fell from 78 percent to 72 percent, according to a report released in February by the state insurance department.
However, according to the report, Employer Participation in the Texas Workers’ Compensation System: 2018 Estimates, subscription rates in those two years still were at the highest levels since 1993.
Since 1913 in Texas, private sector employers have been able to opt out of, or non-subscribe to, the requirement to obtain workers’ compensation insurance coverage for the protection of their injured employees. The report, published by the Texas Department of Insurance Workers’ Compensation Research and Evaluation Group, points out that while some states allow exceptions to private sector employers, Texas is the only one that allows any private sector employer to non-subscribe.
The non-subscriber report is based on 2,377 completed interviews with year-round private sector employers in Texas, 1,711 of which subscribed to the workers’ comp system and 666 of which were non-subscribers. The interviews were conducted by the Public Policy Research Institute at Texas A&M University from June through September 2018.
Researchers found that subscribers primarily buy workers’ comp coverage in order to provide medical care to injured employees through networks and at lower premium rates. Between 67 and 72 percent of subscribers reported that their workers’ comp premiums had decreased or stayed the same in 2018.
For the most part, non-subscribers say they don’t participate because they have few employees and/or few workplace injuries.
Occupational Injury Benefits
While they might not purchase workers’ compensation insurance, some non-subscribers do provide occupational injury benefits for their employees. Among non-subscribers in 2018, 30 percent said they provide occupational injury benefits and 80 percent said they pay medical benefits if they are medically necessary.
Of those non-subscribers providing medical benefits in 2018, 20 percent said they cap them based on the duration of the treatment, treatment costs or both. In 2016, 30 percent of non-subscribers said they had such caps.
In addition to medical benefits, some non-subscribers pay wage replacement benefits to injured employees. Among 2018 non-subscribers, 16 percent said they pay wage benefits. Of those, 79 percent said such benefits are based on the duration of lost time.
In 2018, 36 percent of non-subscribing employers paid permanent impairment income benefits to injured employees in lump sum payments, compared to 29 percent in 2016 and 34 percent in 2014.
Among non-subscribers in 2018, an overall 15 percent use arbitration as a method of resolving injury benefit disputes. Among large employer non-subscribers, 49 percent use arbitration agreements. About 35 percent of non-subscribers that use arbitration agreements said they require the employee to pay all or a portion of the arbitration costs.
Employers without workers’ compensation insurance must notify the DWC of their coverage status; those employers without workers’ comp coverage that have at least five employees must report to the DWC all work related deaths, occupational diseases and injuries resulting in at least one day of lost time. However, in 2018 only around half of non-subscribers were knowledgeable about the requirement for filing such information with the DWC.
The insurance department’s report on employer participation in the workers’ comp system is available online at: https://www.tdi.texas.gov/reports/wcreg/documents/nonsub2019.pdf.
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