Nonsubscription in Texas

Laws providing protections and compensation to injured workers were first passed in Texas in 1913. Through the years, these laws have become the basis for a process known as workers’ compensation, which provides payment for medical expenses and a percentage of lost wages for employees who experience work-related injuries or illnesses.

… workers employed by nonsubscribers have indicated high satisfaction rates with the way their injury claim was handled …

In Texas, even though a workers’ compensation program is not required, those businesses wanting to provide occupational injury benefits to their employees have two options. One choice is participation in the state’s workers’ compensation system. A second choice allows businesses to administer their own benefits by “nonsubscribing” or “opting out” of the state system. The option to nonsubscribe affords Texas businesses the choice to manage their own occupational injury programs. Some of the state’s top employers have made this choice, providing medical and wage benefits to their injured workers through alternative occupational injury plans that are often better than the benefits available through the state workers’ compensation system.

It is important to remember that “nonsubscription” does not mean “going bare.” Many nonsubscribers are opting out of the state system because of their desire and ability to effectively manage safety, medical and rehabilitative programs for their employees.

Because of the focus employers place on their workers’ well-being and the personalized nature of most of their services, workers employed by nonsubscribers have indicated high satisfaction rates with the way their injury claim was handled. In addition to providing their workers excellent benefits, nonsubscription programs provide businesses significant savings, which they can, in turn, invest in their employees, their operations and their communities.

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    What is nonsubscription?

    Nonsubscription is the process of an employer “opting out” or “nonsubscribing” from the Texas Workers’ Compensation System in order to manage its own occupational injury claims. The choice to nonsubscribe in Texas has been available since the state’s first workers’ compensation laws were adopted in 1913.

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    What is the Texas Alliance of Nonsubscribers?

    The Texas Alliance of Nonsubscribers is a nonprofit trade association of responsible employers committed exclusively to preserving the choice of Texas businesses to manage their occupational injury claims. The Alliance is committed to educating policy makers on the benefits of nonsubscription for employees and employers. The Alliance also serves as a forum among its members for sharing information on how to increase worker safety, maximize employee protections and strengthen a company’s ability to reinvest in itself, its workers and its community.

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    Isn’t nonsubscription just another way of saying a company is “going bare” and exposing its employees to financial devastation should an injury occur?

    No. Alliance members are not “going bare.” In fact, members of the Alliance are required to have an occupational injury plan in place that protects their employees. Nonsubscribers are highly motivated to prevent employee injuries and avoid exposure to negligence liability settlements and judgments. 

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    Don’t these companies need to be regulated to ensure their employees are protected? Where’s the accountability?

    Most nonsubscribing companies providing occupational injury benefit plans are regulated under federal law through ERISA. The benefits offered by nonsubscribers must comply with the many employee protections of ERISA (the Employee Retirement Income Security Act). Additionally, nonsubscribers must comply with health and safety rules of OSHA (Occupational Safety and Health Act) and meet filing requirements of the Texas Department of Insurance.

    In opting out of the state’s workers’ compensation system, employers lose their statutory and common law defenses against work-related negligence lawsuits by their employees. As a result, nonsubscribers who do not provide safe work environments and adequate care for injured workers stand to be held accountable through the civil justice system. 

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    How does a responsible nonsubscriber save money without sacrificing care and wage replacement for its workers?

    By avoiding a “one-size-fits-all” approach to managing worker injuries, nonsubscribers are able to customize their safety and benefit plans to meet the needs of their employees. With increased focus on workers’ safety and a coordinated approach to treatment and rehabilitation programs, companies are able to produce significant savings through reduced injuries, quicker and more effective treatment, and a reduction in the premiums they pay for their occupational injury programs.

    Additionally, the flexibility brought about by nonsubscription allows injured employees to begin receiving wages immediately without waiting on an insurance company to pay. In many instances, injured employees of nonsubscribing companies receive higher wage benefits for longer periods of time.

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    Aren’t employees at the mercy of the employer when it comes to resolving financial and medical issues related to an injury?

    ERISA fiduciary rules prohibit an employer from withholding benefits in an attempt to force a settlement if an employee or family prefers to receive the promised benefits. Employers risk jeopardizing their nonsubscription programs, not to mention their company’s reputation and the morale and support of their employees, if they fail to deliver on established policies and practices that guide the management of occupational injury claims. Additionally, personal liability can attach to those who violate certain ERISA rules.

    One study conducted by the State of Texas found that employees of nonsubscribing businesses had a higher satisfaction level with their occupational injury benefit plans than their counterparts who have workers’ compensation coverage.

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    So what’s in it for the employers?

    By managing their own occupational injury claims, nonsubscribing employers are able to utilize alternative, market-driven plans to produce savings that allow for employee incentives, enhanced safety programs, training, profit sharing, new equipment, company expansion, job creation and community support. The greatest benefit a nonsubscription program can produce for a business is a safe, healthy and productive employee. Nonsubscription motivates employers to invest in and protect their greatest resource — their employees.