Concerns Arise over Texas Workers’ Comp. State System After Walmart Drops Out

With Walmart, one of Texas’ largest private employers, dropping out of the state’s workers’ compensation system in March, Texas’ unique approach to workers’ comp. is receiving renewed attention from both critics and supporters, according to stories in The New York Times and the Texas Tribune.

According to the Texas Tribune story,Texas is the only state in the country that allows employers of any size to decline to carry state-regulated workers’ comp. coverage, allowing businesses to develop their own injury-benefit programs.

The story cites 2010 Texas Department of Insurance figures noting that 15 percent of businesses in the state with over 500 employees do not carry state workers’ comp. coverage.

The article cites Terry Frakes, senior vice president of public affairs at Texas Mutual, which is the largest provider of workers’ compensation coverage in Texas, as saying benefits for injured employees are not as good under private plans, noting, for example, that Walmart’s in-house plan caps total medical coverage at $300,000 for individual injuries, compared with lifetime coverage for the injury under state workers’ comp.

The Texas Tribune also quotes Rick Levy, an AFL-CIO lobbyist, who says the private plans pose a “real threat” to the workers’ compensation system by putting competitive pressures on companies remaining in the state’s workers’ comp. system to find cost savings similar to those with private plans.

Advocates of the private systems quoted in the story argue that the plans “restore the balance between adequate benefits and employee accountability,” and also that the plans could pressure insurers to keep workers’ comp. premiums low as more companies opt out.

For more information, see the Texas Tribune story, Walmart Stirs Concern Over Workers' Compensation System.

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