At the 2016 WCRI Conference, several hours were devoted to opt out – what’s happening in TX and OK, variations among and between proposals to expand opt out to other states, employer views and challenges and problems and opportunities and…
No stone was left unturned. Now, some folks think this was way too much time spent on what is a pretty small issue. I’d suggest the exhaustive and complete review was helpful and needed, providing attendees, reporters, and you, dear reader with a source for a 360 perspective.
Trey Gillespie opened the Opt Out session with a dispassionate, thorough, and compelling demolition of the idea itself and execution thereof.
There are four different types identified by Gillespie
Tx – WC is not mandatory – so companies “opt in” to work comp
OK – qualified employers must have a benefit plan that meets specific requirements
TN – a proposed hybrid of the TX and OK models
SC – pending legislation proposes both models
Really, opt out moves occupational injury coverage from work comp to an ERISA plan – a federally-regulated benefit plan. Gillespie identified a number of differences between ERISA and work comp; the ones I captured are below (I may well have missed others).
- ERISA – there is no statutory or contractual entitlement to benefits
- eligibility is based on employment status at the time of benefit – not the time of injury
- employer decides what – if any – injuries are covered, and which employees, if any, are eligible.
Opt-out coverage commonly excludes industrial diseases caused by asbestos and silica and similar substances, along with assaults and terrorism. It’s also much harder to “file a claim” as the reporting requirements, conditions, and limitations are much stricter than under work comp statute.
This last is key; according to NCCI, less than 20% of LT injuries were reported on the date of injury. As opt out plans typically require immediate reporting, there’s a reasonable question as to the impact of opt out on those workers who can’t or don’t report their claim “immediately”.
There are also quite a few restrictions around the kinds and types of medical care that is covered. Definitions such as “medically necessary” are fungible and, more disturbingly, almost all of the OK approved plans incorporate language that allows the Claims Administrator to terminate or change a previously-agreed-upon treatment plan at any point.
All in all, this makes a mockery of employers’ responsibility to make employees injured or hurt on the job whole.