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Oklahoma – Is Opting Out Really Worth It To Be Like Texas?

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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.

Picture of oklahoma Tag On Gavel
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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.

Gavel In Oklahoma Court Room
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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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James Moore

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications

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