Oklahoma – Is Opting Out Going To Be Worth The Trouble?
Oklahoma made a very bold move this week to allow opt out programs for Workers Compensation coverage. “Coverage” may not be the right term as no insurance carriers will be involved with the opted-out companies.
One of the concerns with opting out is the Affordable Health Care Act has provisions for Summary Plan Descriptions (SPD’s). Employers provide these to their new-hire employees. The SPD’s have a breakdown of all provided benefits.
The WC benefits will be listed in opted-out companies’ SPD’s. SPD’s have many federal rules on areas such as the language/terms used in SPD. In other words the SPD’s will actually move WC from state mandated rules to federal rules. The federal rules allow much more leeway in employees’ benefits.
Even though the SPD’s will be constructed and applied according to federal rules, the opted-out employers will have a greater input as to how benefits are provided. The new benefit that replaces WC is no longer actually WC. The new benefit will be more of a accident and disability internal benefit.
The Oklahoma employers will enjoy the benefit of directing care and providing benefits which will likely improve the bottom line of most companies that do opt out. One company that had opted out in Texas and one that was planning to do the same in Oklahoma had presented their views at the LRP Las Vegas Workers Comp conference last November. The presentations were eye-opening to say the least.
The presentations seemed to have a small amount of drawbacks. The ones that came to mind were:
- SPD’s are federally regulated
- SPD’s fall under the jurisdiction of the IRS
- The Affordable Healthcare Act (Obamacare) has SPD provisions – the SPD’s are under the jurisdiction of Obamacare
- The employer loses their no-fault benefit as under WC – employees can employer directly with no upper limits on damages
- The Law of Large Numbers – only large companies can afford to opt out
- Using another type of policy to cover the benefits lessens the employer’s input to the claims process
- Will employees have no backstop to certain egregious employers?
- The court system will likely have a large amount of input over the next few years
There are many positive developments for Oklahomans. One of the most important developments is the opt out program has been successful in Texas. The blueprint was already in place. Oklahoma will not have new ground to cover.
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