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Workers compensation is actually an occupational injury benefit plan with the benefits determined by the State. On the other hand, Non-subscription is an occupation injury insurance plan with the benefits determined by the Employer. Over 124,000 employers, which constitutes 331/3   of the private sector businesses in Texas are non-subscribers; of these, approximately 1.5 Million employees are at work for  employers such as: Home Depot, McDonalds, Tom Thumb and Memorial Hermann Hospital as well as  your local restaurant, grocery store and auto repair shop. And yet, many folks are unaware of this 100+ year option available to Texas Employers.

Today, we continue with Part 4 of the five part series on “Texas Non-Subscription vs. Workers Compensation".
 
The first six questions we have covered are listed below. Please refer to the prior blog entries.
 
1. How does the price compare between Non-subscription and workers compensation?
2. Are benefits the same between Texas Non-subscription and workers compensation?
3. Are there any other main differences between workers compensation and Texas Non-subscription?
4. What is “Exclusive Remedy” and does it apply to both workers compensation and Texas Non-subscription?
5. Many Non-subscription plans require mandatory arbitration for negligence claims. Why is that?
6. Does only Texas have Non-subscription and is it new to the State?
  
This week’s questions are:
7.      Should all eligible employers be non-subscribers?
Texas does not allow governmental entities, or private sector businesses engaged in state building and construction projects, to non-subscribe. Virtually all other employers are legally able to non-subscribe. But, as one can imagine, just because they can opt out of workers compensation does not mean they should. Of those that can, Insured's required under contract to carry workers compensation should not be non-subscribers. In addition, We feel that the more hazardous classes should never consider anything other than workers compensation. In our estimation, these classes include, but are not limited to; oil and gas, airlines, things that go “boom”(refineries, explosive mfg., etc) and regular height exposures above two stories (roofers, window washers). Employees in these industries are regularly at risk for severe burns, quadriplegia and paraplegia, as well as amputation and clearly could have the need for the lifetime medical provided by workers compensation. Because we feel these classes of business should remain in workers compensation, we do not offer The “CPro Texas Option” to them.
The following industry sectors represent the five highest percentages of non-subscribing employers. As you will quickly note, these are all low to mid hazard classes. The “CPro Texas Option” is available for all classes listed below as well as many, many others.
•        Food Services/Accommodations/Arts/Entertainment                      
•        Health Care/Educational Services                                                         
•        Manufacturing                                                                                              
•        Retail/Wholesale Trade                                                                              
•        Real estate/Finance/Professional Services                                           
8.        Are all non-subscriber policies the same?
All workers compensation forms are the same. Every non-subscriber carrier has a different form than the other non-subscriber carriers. However, limits and how they apply can be generalized into two basic classes: CSL and per employee.
•        Virtually every non-subscriber policy offers four coverage parts: medical, disability, AD&D and employers liability. When non-subscriber policies with legal liability first began being offered in the late 1980s, a form was developed called “CSL” or “Combined Single Limit”. Under a CSL Policy, everything paid under any one of the sections above goes to deplete the “CSL” limit. If an employer purchases a policy with a CSL limit of $2,000,000 and has a very serious claim with $1,000,000 of covered medical, that $1M would be deducted from the policy limit of $2M, leaving only $1M left to cover any remaining disability, AD&D and Employers Liability. As you can see, this operates loosely like an umbrella policy. In addition, every CSL policy has an occurrence and aggregate limit. In multiple employee accidents, the occurrence and aggregate limits could become depleted leaving the employer with an uninsured exposure. Every non-sub carrier,    except 1, offers only the old CSL policy limits.
•        A Per Employee policy is very different and has become the “state of the art”. First, every one of the sections of the policy (medical, disability, AD&D and EL) has its own separate limit. Medical has its own limit, disability has an additional limit, AD&D is a 3rd separate limit and employers liability has a 4th separate limit. In the example above, if a $2,000,000 limit is purchased on a per employee policy, the medical under the policy would be fully covered, leaving a full $2,000,000 EL to protect the employer plus an additional limit for disability and a 4th limit for AD&D. For clarity purposes, I will give a further example below. In addition, a per employee policy has no occurrence or aggregate limits. If 20 people are injured in one accident, each of the limits will be available for each and every employee and employers liability will be available to protect the employer for each EL claim. If the employer buys a $2,000,000 policy, he will have available to him up to $40,000,000 of legal liability ($2,000,000 for each of the 20 employees) plus each employee will have their own medical, disability and death benefits. As you can see, this coverage operates more like workers than an umbrella. An additional similarity is that the per person policy form also has “No Dollar Limit” medical benefits for each and every employee. The “CPro Texas Option” is the only policy that offers  a Per Employee Policy. The “CPro Texas Option” also provides “No Dollar Limit” medical for each employee for benefit periods up to 260 weeks.
•        Let’s assume the Insured had a catastrophic claim that had covered expenses of $2,000,000 medical, $109,200 disability, $2,000,000 legal settlement and $400,000 of defense costs. Let’s also assume the Insured was looking at a $2,000,000 CSL Policy and alternately, a $2,000,000 “CPro Texas Option” policy. The CPro policy would respond as follows:
 
•        The $2,000,000 CPro Policy would pay $4,660,000 less the SIR
•         A $2,000,000 CSL policy would pay $2,000,000 plus a share of the defense costs

If you have any specific questions or would like a quote, contact us at 888-834-4252 or click the link for out quoting questionnaire   

     
 
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