A Quick Guide to Workers' Compensation in Texas
Texas has long prided itself as a rugged and independent republic. It carries a swagger that comes with being the largest contiguous state, the second-most populous state, the second-largest economy in the nation and home to 48 Fortune 500 companies. So, it‘s not surprising Texas also has an independent streak when it comes to workers’ compensation insurance.
Choice to opt out: Know the risks
Texas workers’ compensation law allows employers to opt out of carrying workers’ compensation insurance, which covers medical expenses, physical therapy expenses and lost wages for employees who get sick or injured at work. Benefits can sometimes also include compensation for economic loss (past and future) and benefits payable to the dependents of workers killed on the job or in the course of employment.
While workers’ compensation laws in Texas require public entities to provide workers’ compensation insurance, coverage is voluntary for most employers, according to the state’s Division of Workers’ Compensation (DWC). The DWC also reports, “about 28% of private, year-round employers do not have workers’ compensation, and they employ about 18% of the private workforce in Texas.”
Employers that opt out are called “non-subscribers” and must notify employees they do not carry workers’ compensation insurance and file an annual notice, or DWC Form-005, with the state’s DWC. Employee notification is covered by posting a Notice 5 at the place of employment and informing new hires in writing that the business doesn’t have workers’ compensation insurance coverage. Non-subscribers must also report workplace injuries to the DWC on DWC Form-007.
In addition to the safety net workers’ compensation can provide employees -- a business’ most important assets -- workers’ compensation insurance also provides businesses with important protections, including from costly lawsuits.
If a work-related injury occurs, employees retain the right to sue non-subscribers for related damages. The Texas Department of Insurance (TDI) notes, “if they’re sued, nonsubscribers can’t argue in court that: the injured employee’s negligence caused the injury; another employee’s negligence caused the injury; or the injured employee knew about the danger and voluntarily accepted it.”
That should be concerning news to business owners, as the Lone Star State saw 2.3 workplace injuries per 100 full-time private and public employees in 2017, according to the TDI’s most recent data.
Because Texas workers’ compensation law makes coverage optional, the onus is on employees to, first and foremost, know if their employer carries workers’ compensation insurance and the name of the employer’s provider. Workers in the state can verify if their employer has a workers’ compensation insurance policy by checking here.
Rights and responsibilities
Texas employers who do not opt out buy workers’ comp insurance from private insurance companies, which then pay any benefits to the injured worker once the claim is filed and approved. (Employers who opt to self-insure and essentially pay their own workers' compensation losses must “apply to the Texas Department of Insurance, Division of Workers' Compensation (DWC) Self Insurance Regulation (SIR) program for a Certificate of Authority to Self-Insure.”)
Under Texas law, injured workers have the right to get income benefits after they meet certain requirements, the right to get reasonable and necessary medical care for the work-related injury and the right to keep the claim private. Employers must tell the injured worker if their claim is in a healthcare network so the employee uses a doctor in that network. Some doctors in Texas do not treat workers’ comp patients. TDI-DWC provides some tips for locating a doctor that treats workers’ compensation injuries here.
Employees also bear certain responsibilities when making a claim. They must inform employers about work-site injuries and illness within 30 days. They must also inform the DWC about the incident within one year using the DWC 041 form. When seeking medical treatment, injured employees must let their doctor know how they were hurt and if the cause was work-related. They must let the DWC know about any changes in pay or the work they do. Finally, they must let the insurance carrier and DWC know if there are any changes in their mailing address or phone number.
The DWC provides help filing claims and offers claims dispute assistance. Workers battling unresolvable disputes with insurance companies can ask for help from the Office of Injured Employee Counsel.
In Texas, workers’ compensation insurance covers medical benefits, income benefits (including temporary income benefits, impairment income benefits, supplemental income benefits, and lifetime income benefits), and death and burial, according to the DWC. Following is a high-level overview of these benefits:
- Medical benefits pay for the costs associated with treating a workplace illness or injury. An employer’s insurance company pays the doctor for those costs, and the employer must tell the employee if it is necessary to see an in-network doctor when seeking treatment to have costs covered.
- Income benefits cover some of the money an employee loses due to workplace illness or injury. The benefit amount is based upon average weekly wage in the 13 weeks prior to the workplace injury. An employer must report this amount with a wage statement submitted to its insurer, which then pays the injured employee.
- Injured workers in Texas are eligible for temporary income benefits when they have lost money from a job for more than seven days due to a work-related injury. Those days do not have to be in the same week or consecutive. Temporary benefits amount to 70 or 75% of what the worker’s average weekly wage before the injury. These benefits end when the injured worker returns to work and the worker’s pay equals what it was prior to the injury or on the day the worker reaches clinical maximum medical improvement or statutory maximum medical improvement. Clinical maximum medical improvement is the date the doctor reports no further healing or recovery is expected, and statutory maximum medical improvement is 104 weeks from the date an injured worker started getting temporary income benefits.
- Texas workers can receive impairment income benefits if they sustained permanent bodily damage due to the workplace injury. This benefit equals 70% of the worker’s average weekly wage prior to injury. These benefits do not depend on ability to work and could continue even after the injured worker returns to the job. Doctors assign an impairment rating to the injured worker based on the percentage of permanent physical damage. For each percentage point, the injured worker gets three weeks of impairment income benefits.
- Supplemental income benefits get paid to injured workers who sustained a lot of permanent damage and who have not returned to work or are earning less than they previously made. To qualify, injured workers must have an impairment rating of 15% or greater, be out of work or earning less than 80% of what they made before the injury, show that they are looking for work, and have not accepted a lump sum payment for their injury. Recipients must apply for Supplemental Income Benefits every three months. Supplemental income benefits are equal to 80% of the difference between 80% of the employee’s average weekly wage before the injury and what the injured employee gets paid weekly after the injury.
- Lifetime income benefits are paid when workers sustain certain serious injuries, such as blindness, brain injuries, or the loss of two limbs. These benefits equal 75% of the worker’s average weekly wage before the injury plus a 3% cost-of-living increase every year. This benefit is the only one that does not have a time limit.
- Death and burial benefits replace 75% of lost income for eligible family members of workers who die on the job; burial benefits pay up to $10,000 of the deceased worker’s funeral costs.
In Texas, getting an injured employee back to work is considered a responsibility shared by employers, employees, healthcare providers, insurance carriers and the DWC.
“The longer employees are away from work after an injury, the harder it is for them to get back to work at all,” according to the DWC. “And the longer an employee is away from work, the higher the employer's workers' compensation costs and related business costs.”
Return-to-work programs can also help reduce employee turnover, maintain productivity and boost employee morale. DWC offers an comprehensive guide to return-to-work programs here.
Understanding the requirements and benefits related to workers’ compensation insurance is important for business owners and making the decision to protect one’s employees – and business – is just smart business.
EMPLOYERS is committed to helping small businesses operate safer, more efficient work places. Contact EMPLOYERS® today to learn more about our cost-effective workers’ compensation insurance.