Understanding the Concept of Non-subscribers in Connection with Workersâ€™ Compensation Insurance
In this article, we focus on employers who are non-subscribers and why they opt out of the workersâ€™ compensation insurance program.
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Providers of litigation support services including medical record review and medical case chronology will agree that the workers’ compensation claim process can be complex and long drawn out. Many employees are unaware of the ins and outs of this insurance, and the rules related to it are updated or modified often; moreover, the benefits vary from state to state. All this makes consultation with a workers’ compensation lawyer immensely helpful. In this article, we focus on employers who are non-subscribers and why they opt out of the workers’ compensation insurance program. Who Are Non-subscribers? Most of the U.S. states require employers to carry workers’ compensation insurance. The state of Texas, however, has made this optional. Employers who opt out are called nonsubscribers, and they must instead make alternate arrangements to provide injured employees with medical benefits and financial compensation. Most of these employers will be self-insured through non-subscriber insurance. Among the Texas businesses that do
McDonald’s, The Home Depot, Lowe’s and Burger King among others. With this type of insurance coverage becoming popular, more states have started to consider opting for a similar model. Oklahoma is among the most recent states to pass legislation and implement the option to move to an insurance coverage model that allows for options other than the Workers’ Compensation system. South Carolina and Tennessee have also introduced bills that could allow for such a structure. Why Do Employers Opt out of Workers’ Compensation Programs?
One reason is that it is generally less expensive in the long run. A non-subscriber program is an insurance policy that will pay for indemnity and medical treatments. The employer can customize or change the benefits on the basis of the insured employee’s needs or requirements. The Workers’ Compensation policy on the other hand, does not allow such customization and the benefits are decided by State laws.
As they are self-insured, they have more control over what benefits they will give.
It allows them to specify which doctors the injured workers can see. Such doctors are usually sympathetic to the employer’s wish to minimize claims or deny benefits.
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Requirements for Non-subscribers By law, non-subscribers are required to annually notify the DWC (Division of Workers’ Compensation) regarding their decision not to obtain workers’ compensation insurance coverage by submitting the DWC Form-005, Employer Notice of No Coverage or Termination of Coverage. Non-subscribers must also report each workplace injury, occupational illness or fatality resulting in more than one day of lost time by filing DWC Form-007, Employer’s Report of Non-covered Employee’s Occupational Injury or Disease. A non-subscriber must file the DWC Form-005:
Between February 1 and April 30 each year
Within 30 days of hiring its first employee; or
Within 10 days of DWC’s request
Non-subscribers with five or more employees must report each fatality, occupational disease, and on-the-job injury that results in more than one day of lost time to the DWC. They must submit the DWC Form-007 to the DWC within the seventh day of the month following the month in which:
The death occurred
The employee was absent from work for more than one day as a result of the onthe-job injury; or
The employer acquired knowledge of the occupational disease.
Grace Period Offered for Non-subscribers The Texas Department of Insurance, DWC is offering a grace period for employers who are non-subscribers to provide any late required reports to DWC without penalty.
As a result, non-subscribers who have not reported their non-coverage status for prior years to submit the DWX Form-005 without an administrative penalty during the current February 1, 2017 through April 30, 2017 reporting period.
It also allows these employers who have not previously reported their injuries, illnesses, and fatalities for prior years to submit the DWC Form–007 without an administrative penalty until April 30, 2017.
The DWC Form-005 can be filed with DWC online, by fax, or by mail. The DWC Form-007 may be filed by fax or by mail.
Texas law limits the employers’ liability for occupational injuries of employees if they offer workers’ compensation coverage. Non-subscribers, however, are not given such legal protections. Therefore non-subscriber employers could face the risk of high damage
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awards including punitive damages and damages for pain and suffering of the employee. Moreover, they may also have to pay defense-related legal expenses such as attorneysâ€™ fees. Responsible non-subscribers must implement a comprehensive program that provides workplace injury benefits to their employees. They can choose from many insurance programs available that offer medical benefits, wage replacement benefits, disability benefits and death benefits. In addition to this, they must also give great consideration to workplace safety.
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