An Alternative to Workers Compensation

Transcription

1 A Brief Overview of the Oklahoma Option An Alternative to Workers Compensation by Updated 4/23/14 Disclaimer: These new laws are ground-breaking and open to different interpretations. This document sets forth positions and interpretations that were relied upon by authors of SB1062 in developing, educating legislators on, and promoting the final enactment of the Option Act. The appropriate courts and regulatory agencies may advise with contrary opinions and interpretations in the future. This document does not purport to offer legal advice. Some views expressed herein may represent the opinion of only PartnerSource. The discussion herein of various laws and techniques may also become outdated or obsolete (for example, due to more recent regulatory, judicial or legislative activity), and no representations are made regarding the accuracy or completeness of the information herein. Before taking any action in this area, consult with experienced professionals. Copyright 2014 PartnerSource 1

2 Considering the Oklahoma Option What is the Oklahoma Option? Oklahoma Senate Bill 1062 was signed into law on May 6, 2013, eliminating Oklahoma s courtbased Workers Compensation system as of February 1, The new law provides for employer choice between a reformed administrative Workers Comp system and an Option to provide benefits outside of the Workers Comp system for all on-the-job injuries occurring on or after February 1, The Option combines attractive elements from successful Workers Comp programs and Texas Nonsubscription. The general premise of the Option is that an employer can, and will, take great care of injured workers and that savings can result as well. The Oklahoma Option & revised Oklahoma Workers Compensation have many similarities, such as: Similarities New OK Workers Comp OK Option No Cost/No Fault Coverage? Yes Yes PPACA Applicability? No No Exclusive Remedy Applies? Yes Yes Mandated Minimum Benefits? * see attachment A - Dollar, %, Duration Limits Yes Yes - Lifetime Medical Yes Yes Financial Security Required? Yes Yes Guaranty Fund Protection? Yes Yes Government Employers Participate? Yes Yes Differences between the systems: Differences New OK Workers Comp OK Option Free Market Approach No Yes Medical Management Approach Regulated Flexible Employee Accountability Improved Optimal Insurance Competition Price Price & Coverage Ability to Settle Claims Commission Approved Agreement of Parties w/ EE Protections There is a $1500 annual filing fee to be exempt from Workers Compensation. It is not a permanent decision and an employer can return to Workers Compensation, if desired. Copyright 2014 PartnerSource 2

3 Why consider the Oklahoma Option? The primary objectives of the program are: - Employee Accountability. Requiring immediate notice of injury & adherence to treatment plans. - Better Medical Outcomes. Earlier medical care for employees from the best medical providers. - Physician Medical Management. Physicians instead of committees & government agencies making medical judgments. - Savings & Increased Cash Flow. The above advantages drive cost savings on OK injury claims. - Higher Employee Satisfaction. Employees appreciate more direct communication & engagement with their employer, and tangible benefit enhancements can be built into the program. Risks: Exclusive remedy applies, so employer risk is minimal. However, consider: - $1500 annual filing fee. - Time & expense to develop and roll out the program (which varies by employer). - Further challenges to law s constitutionality. Employers are currently implementing Option programs. Some employers are focused mainly on cost savings, while others highly value the cultural impact of employee accountability, administrative simplicity, and the opportunity for employer engagement when claims occur. Practically speaking, the constitutionality risk appears low and simply requires return to the Workers Comp system. Components of Oklahoma Option: The primary components of the Oklahoma Option are: Benefit Plan & Related Documents. The roadmap for a successful program. Communication. For current employees & new hires. Claims Management. Utilizing the processes & protections available to Option employers through in-house, TPA, or insurance carrier claims administration. Compliance. State & (for most employers) Federal requirements. Oklahoma Option Insurance. Policies vary from carrier-to-carrier. Different than Workers Compensation. PartnerSource has the ability to integrate all of these program components for better medical outcomes and cost savings. Copyright 2014 PartnerSource 3

4 Characteristics of a good Oklahoma Option Candidate: Has Frequency of Injury in OK, and/or Focused on Employee Accountability, Administrative Simplicity & the opportunity for Employer Engagement when claims occur Headquartered Anywhere Common Industries* Construction Food Processing Hospitality Manufacturing Transportation, distribution, & logistics Energy Restaurant Retail Healthcare Government employers The option will be successful in union & non-union environments. * Consider available strategies for compliance with contractual obligations. Copyright 2014 PartnerSource 4

5 Timing: Employer Design & Implementations (commonly, a 1-to-3 month process) are currently underway. The first programs will be effective in late Spring Program effective dates do not need to coincide with Workers Comp renewals. Who is PartnerSource? PartnerSource is the leading, national authority on how employers can develop injury benefit programs outside of a state workers compensation system. PartnerSource works with most of the largest nonsubscribers to Texas workers comp, as well as employers, casualty insurance brokers, TPA s, attorneys, and insurance companies implementing Texas nonsubscriber and Oklahoma Option programs. We have been instrumental in legislative, regulatory, best practice, and employer coalition development. PartnerSource hosts an annual October conference in Dallas on the subject of alternatives to Workers Compensation (one of the largest risk management events in the southwestern U.S.). Dates for 2014 are October What services does PartnerSource offer? PartnerSource works with employers, brokers, TPA s, attorneys, and insurance companies, utilizing existing data and experience to estimate savings for employers. We support these programs by designing and implementing the Option programs. After programs are effective we provide ongoing consulting for optimal performance and compliance. See More Information: Russell Huber Executive Vice President & CFO rhuber@partnersource.com PartnerSource 8117 Preston Road Suite 530 Dallas, TX HUwww.partnersource.comU (for education, conference info & more) Copyright 2014 PartnerSource 5

6 *attachment A Mandated Benefits Medical -Duration 100% No Limit New OK Workers Comp 100% No Limit Minimum OK Option Benefits Vocational Rehabilitation (+52) (+52) Temporary Total Disability -Benefits Begin -Duration Limit 70% of AWW 4 th Day 104 weeks (+52) 70% of AWW 4 th Day 104 weeks (+52) Temporary Partial Disability -Duration 70% of difference b/w Pre & post AWW 70% of difference b/w Pre & post AWW Permanent Total Disability -Duration 70% of AWW until Longest of SS max Retirement age or 15 years 70% of AWW until Longest of SS max Retirement age or 15 years Permanent Partial Disability (impairment) -Max Duration 70% of AWW up to $ weeks max (for body as a whole) 70% of AWW up to $ weeks max (for body as a whole) Dismemberment 70% of AWW up to $323 X # of weeks for scheduled member 70% of AWW up to $323 X # of weeks for scheduled member Disfigurement Up to $50,000 Up to $50,000 Death Surviving Spouse Children $10,000 Funeral expenses $100, % of EE s AWW Lump Sum + % of EE s AWW depending on # of children $10,000 Funeral expenses $100, % of EE s AWW Lump Sum + % of EE s AWW depending on # of children *This chart does not include Option benefit enhancements made by many employers or all legal requirements. Contact PartnerSource for further information. Copyright 2014 PartnerSource 6