Companies with employees are required to have a worker’s comp in almost all US states. But in some states like Texas, businesses can use workers comp alternatives. But for a company to opt-out of the mandatory workers’ comp insurance, it is important to understand the risk involved should an employee sustain injuries while in the line of duty. Here is what employers should reckon with before choosing an alternative to workers’ compensation.
Feasibility of the Alternative Plan
The opt-out plan should be viable from a financial perspective. A feasibility test allows the company to see if they can afford the new program for compensating injured employees. It is imperative to look into the benefits of the plan, potential cost, and the loss history of the company, including the types of injuries and time that victims take to recover and get back to work. If the costs are too much or the risk of injury is too high, then the company should stick to the traditional workers’ comp system.
The Legal Risk Involved
The workers comp alternatives are a good idea only if they are worth the legal risk. For instance, an employee could sue a company for negligence if they do not provide a traditional workers’ compensation plan. So, if the workers accept the opt-out plan, they must agree to never sue the employer in case they are hurt during normal working hours. They ought to submit the claim to arbitration. However, the alternative plans are optional to the employees who still retain the right to file legal claims against the company if they’re injured.
The Terms of Coverage
Opt-out plans come with a lot of freedom for employers. Companies have a say on what is covered, for how long, by who, and what amount. Usually, the worker is taken care of by a medical practitioner picked by the employer. Most health professionals like this plan as it involves less paperwork, minimum administrative headaches, and a higher reimbursement rate. In an alternative program, the injured person is assured of the best medical care, fast treatment, and the process is made easier.
Quick Injury Reporting
For most workers comp alternatives, all incidences should be reported with immediate effect, i.e. within 24 hours of injury. If the case is not reported in good time, the worker may lose the benefits including wage replacement and payment of medical bills. This provision is designed to ensure that the injured person receives the medical attention they deserve. It also enables accurate diagnosis so that treatment can start immediately.
If an employee is injured while working, their recovery journey is not always easy. That is why workers’ compensation exists to pay medical bills and part of the lost income. Even though this is a good thing, it is never enough to get an injured employee back on their feet in many cases. However, employers can adopt workers comp alternatives that suit the circumstances. To make sure that the plan fits the company and the workers’ needs, employers must consider the aforementioned factors.