About Nonsubscription

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About Nonsubscription

Texas is unique among the states in allowing employers to not participate (be nonsubscribers) in the Workers Compensation system. Legal authority for this employer option resides in the original Workmen's Compensation act passed in 1913. That language remains unchanged and is the basis for today's nonsubscription products. The act provides that if an employer elects to nonsubscribe he must give up certain common law defenses to suits for negligence. These certain defenses are not relevant in today's legal climate and the loss of these defenses does nothing to remove the burden of proof from the employee as to the employee's injury being incurred during the course and scope of employment and as to the injury being due to the negligence of the employer.

Combined Group Insurance Services, Inc. (CGIS) has long been the recognized leader in providing insurance products and support services to those employers electing to become nonsubscribers for their Texas employee injury exposure. These products and services provide indemnity for an employer's expenses under an ERISA employee welfare plan designed to provide maximum employer control of claims cost, administration, and choice of medical and service providers. Subject to a binding arbitration provision, these policies also provide defense and legal liability expense coverage for suits in Federal court for ERISA benefits and in State court.

A properly implemented nonsubscription program presents several advantages to employers and insurers over the traditional subscribed (W.C.) occupational injury plan.

By electing to become a nonsubscriber, an employer assumes effective control of his employee occupational injury plan and can participate in the savings and management opportunities generated by controlling the exposure, claim cost, and lost time elements of his business operations. Fraud and malingering are greatly reduced because of the employer's interest and control of benefits.

Employers realize material claims cost savings, generally 50-70% over traditional Workers' Compensation, resulting from an ERISA plan defined benefit plans, formalized medical provider selection, a loss control program, employer and industry specific benefit plans and mechanisms in place to minimize employers liability potential. As contrasted to W.C., the burden of proof is reversed and it lies on the employee to prove damages, course and scope of employment and negligence as a result of an alleged workplace injury. Together, the insurance policy and ERISA plan provide for an employee's agreement to participate in binding arbitration in order to receive benefits, a 36 month sunset clause on losses, and a definition of the occurrence date of Occupational Disease and Cumulative Trauma of the last day of the last exposure to the causative agent or activity which must be during the policy term.  All these constitute to the "short-tail" nature of the employers nonsubscription claims.

An employer who nonsubscribes loses certain common law defenses to a negligence suit. Negligence is covered under a nonsubscription policy just as are the employer's costs for medical expenses, employee wages during disability, and accidental death and dismemberment. While the direct injury expenses are defined and limited by the employer's ERISA plan (Federal jurisdiction) the negligence exposure will be addressed in State Court. The defenses lost to a nonsubscriber are: assumption of risk; contributory negligence; and, injury caused by a fellow employee. These defenses are not available in a nonsubscription negligence suit and they are not as relevant to a defense as they were in 1913 when the Texas W.C. statute was written. The burden of proof is on an employee to prove that his injury was incurred during the course and scope of his employment, that the employer was negligent, and that the employee has suffered loss.  If the employee's medical expenses and lost wages are paid under the employer's ERISA plan, the question of damages is mitigated greatly and the probability of successful litigation is reduced.

Employee communication and an ERISA occupational injury benefit plan are elements of any effective nonsubscriber program.  We require that an approved ERISA plan be adopted and implemented by each insured. The ERISA plan details, among other items, the provisions, procedures and requirements for:  benefit levels, benefit periods, medical payments, approved medical providers, employee injury reporting requirements, drug and alcohol testing, loss of benefits for failure to comply with rehabilitation and other plan requirements, disability benefit levels and time periods, definitions of all key terms, and requirements for payment of death, burial and dismemberment benefits. The ERISA Plan's Summary Plan Description and Mandatory Arbitration Agreement are presented to the employees in formal meetings. The arbitration provisions are designed to be binding on employees simply through disclosure in the employee meetings.  They represent a condition of continued employment and do not require any signed agreement (except for new hires, who will need to sign a receipt form that acknowledges the disclosure).  Current employees simply sign a "Meeting Sign-In Sheet".  The meetings are conducted either by a trained, experienced representative of Combined Group Insurance Services, Inc., or by the insured's management.  One English/Spanish videotape that explains the SPD Arbitration Agreement is provided to each insured to assist in that initial enrollment and to standardize and facilitate the enrollment of the insured's new hires.  To protect the insured, the ERISA plan provided fits the policy without gaps in provisions and without promising employees benefits beyond the policy's coverage limits.  Because of the importance of good employee communication and an ERISA plan, we insist on the use of our plan with its cost built into our nonsubscription program or an approved plan within 60 days of the policy effective date.

  

Our Products and Services

Combined Group has been the leader in nonsubscription for more than twenty years by offering products and services that our competition cannot match. We are continually looking to improve our products, which is evident with the $25,000,000 limit and low SIR options. Our nonsubscription program provides:

Carriers

  • North American Specialty (A.M. Best Rating A+)
  • American Fidelity (A.M. Best Rating A+ VIII)

Liaison- Anchor Claims will be the contact for any/all claims with the Insurance Carrier. Note, any claim reported to Anchor Claims, is deemed reported to the Carrier (which means no coverage issues on late reporting).

Consulting Services- included -Use Anchor Claims as your resource for questionable claim situations, coverage issues/concerns with Insurance Carrier, legal issues, or just to "run a scenario" by us for additional guidance. We are confident through our handling of over 46,000 claims, that we can provide you with recommendations.  Anchor's claims administration may be "unbundled" and serve as the TPA for other nonsubscription carriers.

Medical Bill Review-  "State of the Art" Medical Bill Review Software - we will audit any/all of your medical bills for any allowable reductions.  Just submit your bills to Anchor Claims. Once submitted, Anchor Claims will return an Explanation of Review (EOR). Simply take this EOR, attach your payment, and mail to the Medical Provider. On average, we provide a 40% savings to our Clients. (Please note, there is a fee for our Bill Review Service.)

Safety/Loss Control- An on-site loss control visit is included in our program.  Anchor Risk will evaluate loss patterns and give safety recommendations as needed.  If Insured felt they needed more attention in a specific area, Anchor Risk can assist.

ERISA Oversight- An ERISA plan will be provided by Combined Group, customized for Insured. Combined Group will assist in planning and implementation of the ERISA roll out.

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Where Do Savings Come From?

By electing to become a nonsubscriber, an employer assumes effective control of his employee occupational injury plan and can participate in the savings and management opportunities generated by controlling the exposure, claim cost, and lost time elements of his business operations. Fraud and malingering are greatly reduced because of the employer's interest and control of benefits.

Insurers can participate in the claims cost savings of insuring loss conscious employers who have ERISA plan defined benefit plans, formalized medical provider selection, a loss control program, employer and industry specific benefit plans and mechanisms in place to minimize employers liability potential. As contrasted to W.C., the burden of proof is reversed and it lies on the employee to prove damages, course and scope of employment and negligence as a result of an alleged workplace injury. Together, the policy and ERISA plan provide for an employee's agreement to participate in binding arbitration in order to receive benefits, a 36 month sunset clause on losses, and a definition of the occurrence date of Occupational Disease and Cumulative Trauma of the last day of the last exposure to the causative agent or activity which must be during the policy term.

Where Do The Savings Come From?

Improving Medical Outcomes:
• Providers utilized
• Immediate medical treatment
• Elimination of experimental, investigational, unproven, etc.

Encouraging Return to Work:
• Wage replacement stops when released to full or modified duty

Eliminate Fraudulent Claims:
• Drug and alcohol related
• Limited pre-existing coverage
• Underlying degenerative disease and disorders of aging, etc.

Employee Paradigm Shift - It's no longer about entitlement

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Texas Nonsubscription Study

 Texas Nonsubscribers 1993-2010

 

Source:  Survey of Employer Participation in the Texas Workers' Compensation System, 1993 and 1995 estimates from the Texas Workers' Compensation Research Center and the Public Policy Research Institute (PPRI) at Texas A&M University; 1996 and 2001 estimates from the Research and Oversight Council on Workers' Compensation and PPRI; and estimates from the Texas Deparment of Insurance Workers' Compensation and Evaluation Group and PPRI.

Benefits of Nonsubscription

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