Workers’ compensation insurance is optional for most Texas businesses. However, many employers choose to carry coverage because it’s a comprehensive and cost-effective option.
Texas is different from most other states because it doesn’t generally mandate workers’ compensation insurance. However, this coverage is still an appealing option for most business owners since it provides important protections for employees and employers after a work-related injury or illness. Companies that contract with government entities are required to have coverage.
Business owners that decide not to purchase workers’ comp insurance are called nonsubscribers. If an employee is injured on the job at a business with no coverage, that person can sue the employer. In that case, the employer is not allowed to defend itself in court with an argument of employee negligence.
There are a few industries that must provide employees with workers’ compensation. Texas requirements for coverage include:
Since workers’ compensation insurance in Texas is usually optional, that also extends to part-time employees. Even when workers’ compensation insurance is not required, it’s often in the employer’s best interest to provide coverage. If an employee is injured on the job, the employer could be held liable to pay for expenses associated with medical treatment, ongoing therapy, and lost wages.
There are no penalties for not having workers’ comp insurance for private companies that are not listed in the above section. Although workers’ compensation insurance in Texas is usually optional, it does limit liability of an employer in the event that an injury occurs. Purchasing workers’ compensation insurance for your business means that the policy will cover any eligible benefits for an injured employee.
An employer has a responsibility to provide a safe workplace and to take all reasonable steps to protect the life, health, and safety of employees. If an employer is providing workers’ compensation coverage and does not comply with its requirements, there are administrative penalties.
Estimated employer costs for workers’ compensation in Texas are $0.57 per $100 in covered payroll, according to the National Academy of Social Insurance [PDF]. A private sector employer may either use commercial insurance or become certified as self-insured.
A commercial insurance policy must be issued by a company licensed by the Texas Department of Insurance to underwrite workers’ compensation policies or be purchased from Texas Mutual Insurance Company. Insureon helps small business owners compare quotes from leading insurers licensed in Texas with a free online application tool.
Workers’ compensation rates are based on classification codes that convey the level of risk associated with a job. The codes are established by the commissioner of insurance, the insurer’s own system of classification (on file with TDI), or the National Council on Compensation Insurance (NCCI) classification system.
There are three aspects to workers’ compensation insurance in Texas:
Workers’ compensation medical benefits cover medical care that is reasonable and necessary for treatment of a work-related injury or illness. In order for an injured worker to receive medical benefits, the illness or injury must be treated by a provider on the state’s approved list, or the treatment must be approved by a listed physician.
For serious injuries or illnesses, a worker could be eligible to receive lifetime medical benefits, which would prohibit the insurance company from settling for a certain amount of money or time for treatment.
Within the income benefit, an injured worker can be eligible for:
Typically, unless treatment is received in an emergency situation, any medical provider who treats an employee who was injured on the job must be on the list of physicians approved by the Texas Workers’ Compensation Commission to receive workers’ comp benefits.
If an employee covered by workers’ compensation insurance in Texas dies as a result of a work-related accident or illness, that person’s survivors are entitled to death benefits. The following family members could be eligible to receive benefits:
A survivor’s death benefit is 75% of the deceased worker’s average weekly wage, up to an amount determined each year by the state. The amount would be split among the deceased person’s beneficiaries.
The workers’ compensation death benefit would also cover burial expenses up to $10,000 and transportation costs if the worker’s death occurred away from the usual place of employment.
A workers’ compensation settlement in Texas takes place when the injured worker and the insurer agree on the resolution to a claim. Texas does not allow lump sum settlements, with the exception of some cases of impairment income benefits.
When a doctor determines that the worker’s condition has stabilized, the worker is considered to have reached maximum medical improvement (MMI) and the case is then permitted to settle. The Texas Department of Insurance must approve every workers’ compensation settlement in Texas.
An employee must file a workers’ compensation claim within one year of the date of injury to be eligible for benefits. However, it’s the employee’s responsibility to notify the employer within 30 days of the injury so that the employer has the opportunity to resolve the issue or take any necessary steps to remediate the situation.
If you are ready to explore workers’ comp insurance options for your Texas business, start a free online application today to compare quotes from top-rated carriers.