Texas workers' compensation insurance

Texas is different from most other states because it doesn’t generally mandate workers’ compensation insurance, although employers without this coverage must notify the state and their 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.

Business owners that decide not to purchase workers’ comp insurance are called nonsubscribers. They must report to the state that they do not have coverage, and they must report workplace injuries.

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.

Though it's not required by law, sole proprietors, independent contractors, and other self-employed individuals may elect to buy workers' comp insurance for themselves. Their clients might also require them to carry this coverage.

Buying workers' comp is a smart financial move, especially if you work in a risky industry or do physical labor. Your health insurance company might deny a claim for an injury related to your work, which could leave you responsible for costly medical bills.

Workers' comp also provides disability benefits for disabled workers and death benefits for fatal incidents.

There are a few industries that must provide employees with workers’ compensation. Texas requirements for coverage include:

• Any public employer, including cities, counties, and state agencies
• Companies that contract with government entities
• State universities
• Building and construction contractors for public employers
• Motorbus companies
• Motor carriers (providing transportation over public highways)
• Liquid propane gas and compressed natural gas dealers
• Employers of inmates in work furlough programs

To secure workers' comp coverage, Texas employers may either buy 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.

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.

To save money on workers' comp insurance, it's important to make sure you classify your employees correctly. Employees with desk jobs or other jobs with a low risk of injury cost less to insure. This also helps you avoid misclassification fines.

In some cases, small business owners can choose to buy pay-as-you-go workers' compensation. This type of workers' comp policy has a low upfront premium, and lets you make payments based on your actual payroll instead of estimated payroll. It's useful for businesses that hire seasonal help or have fluctuating numbers of employees.

Finally, a documented safety program can help lower workers' comp costs. A safer workplace means fewer accidents, which helps keep your premium low.

The Division of Workers' Compensation (DWC) administers and operates the Texas workers' compensation system. Insurance companies and self-insured employers pay benefits on workers' compensation claims.

There are three types of workers’ compensation benefits in Texas:

• Medical benefits
• Income benefits
• Burial and death benefits

Policies usually include employer's liability insurance, which can help cover legal expenses if an employee blames their employer for an injury. However, the exclusive remedy provision in most workers' comp policies prohibits an employee from suing their employer if they accept workers' comp benefits.

Workers’ compensation medical benefits cover medical care that is reasonable and necessary for treatment of a work-related injury or occupational disease.

In order for an injured worker to receive medical benefits, the treating doctor must be 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 employee can be eligible for:

• Temporary income benefits
• Impairment income benefits
• Supplemental income benefits

The Texas Workers' Compensation Act also allows for lifetime income benefits for severe permanent injuries, including loss of sight in both eyes.

Typically, unless treatment is received in an emergency situation, the medical provider must be on the list of physicians approved by the Texas Workers’ Compensation Commission for the injured worker to receive income benefits.

If an employee covered by workers’ compensation insurance in Texas dies as a result of a job injury or illness, that person’s survivors are entitled to death benefits. The following family members could be eligible to receive benefits:

• Spouse
• Child under 18, or under 25 if a full-time student
• Child of any age who was dependent on the worker at the time of the worker’s death
• Grandchild who was at least 20% dependent, if the child’s parent is not eligible for death benefits
• Other family members who relied on the worker for financial support, if none of the above are applicable

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.

A workers’ compensation settlement in Texas takes place when the injured worker and the insurer agree on the resolution to a claim. The Texas workers' compensation system 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.

The State of Texas requires employees to file workers’ compensation claims 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’ compensation coverage for your Texas business, start a free online application today to compare quotes from top-rated insurance carriers.