Nearly 4 million injuries and more than 6,000 fatalities occur in U.S. workplaces each year. To help employees and employers handle the high cost of medical care and lost wages, many states require that employers subscribe to Workers Compensation. This benefit system is designed to financially assist workers whose work environments or conditions result in illness or injury.
While offering Workers Compensation is required by law in many states, there are a few states, however, that allow employers to opt out of providing Workers Compensation coverage to their employees. Businesses that elect to opt out of Workers Compensation do so at a great risk, and typically seek an alternative group occupational accident plan that better fits their needs.
What is a Non-Subscriber?
The term “non-subscriber” is commonly used to describe a business that does not subscribe to a Workers’ Compensation program. A business may elect for non-subscription for a variety of reasons, including cost reduction, improved healthcare, increased flexibility with their group occupational injury benefit plans, or improved employee relations and increased productivity.
Who are Non-Subscribers?
It is estimated that more than half a million employers nationwide have opted out of providing Workers Compensation; among these, the retail and service industry comprise the largest number of non-subscribers. Non-subscribing employers come in all shapes and sizes, from Fortune 500 companies to “mom and pop” operations. Businesses that either cannot afford the high cost of workers’ compensation or that are able to reduce costs associated with occupational accidents by other means, like a group occupational accident insurance plan, are more likely to opt out.
Why would an employer choose to opt-out or non-subscribe to Workers Compensation?
As the economy continues in downward spiral trend, employers continue to look for ways to cut the costs in non-revenue-generating areas of their business. One of these key areas is group insurance. Also, employers may find that the coverage offered by their states Workers Compensation plan simply does not satisfy the needs of their business or employees as well as a group accident insurance plan.
How does group occupational accident insurance compare to Workers Compensation?
Group occupational accident insurance is widely perceived as a worthy alternative to workers compensation. These plans provide coverage for the medical costs associated with a work accident or injury, disability payments for the injured worker while he or she is recovering, and a scheduled benefit for accidental death and dismemberment. The employer chooses a benefit period, typically ranging from two to three years, as well as a deductible that is applied to each accident.
While the reduced cost of group occupational accident insurance is a major benefit for employers, this alternative coverage does present a few drawbacks. Group occupational accident insurance policies contain a dollar limit, which means an employer is responsible for any additional expenses outside the policy’s limits. These plans also include time limits, which determine the length of time that an employee will receive payments if he or she becomes disabled due to a work-related accident or injury. Additionally, injured workers may still take legal action against an employer even if a claim is covered under the group accident insurance policy.
To offset these additional risks, many employers utilize a wide array of programs and methods to prevent accidents and address specific safety hazards. These risk management programs may include additional safety training, redesigning job tasks or job sites, regular safety audits of the workplace environment, or other loss-control methods.
There are many instances in which a group occupational accident insurance plan is an ideal choice for a business. The reduced cost of coverage and increased flexibility and customization of health care benefits are major benefits of group occupational accident insurance plans. The choice to opt out of Workers Compensation requires careful consideration of the benefits as well as the potential risks. By putting employee safety and well-being at the forefront of a business’ priorities and implementing various programs and methods to increase employee safety, group accident insurance can deliver peace of mind and increase a business’ bottom line.
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