NONSUBSCRIPTION AND ERISA BENEFIT PLANS

Texas is now the only state allowing most private sector employers to choose not to participate in the workers’ compensation system. The Texas Workers’ Compensation Act has continuously allowed this option since the first Act was passed in 1913. In many cases, employers can forgo using workers’ compensation and protect their injured employees by setting up alternative benefit plans that provide better benefits to legitimately injured employees at lower costs. Today, approximately 35 to 40% of Texas employers, including many of the state’s largest, choose not to participate in workers’ compensation. These employers are called “nonsubscribers”.

“ERISA,” the acronym for the federal “Employee Retirement Income Security Act of 1974,” is the federal law governing employer sponsored benefit plans (both pension and welfare plans). ERISA Plans also are regulated by the U.S. Department of Labor and the Internal Revenue Service. In short, once a nonsubscriber to the Texas Workers’ Compensation Act purchases an insurance policy that provides funds for benefits for the company’s employees, that company has an ERISA plan and is subject to DOL and IRS regulations—and penalties for noncompliance.

Sarles & Ouimet is one of Texas’ premier firms assisting employers who wish to explore opting out of the workers’ compensation system. The firm has extensive experience in assisting employers to responsibly choose nonsubscription, and has written literally hundreds of alternative ERISA benefit plans over the last decade. The firm also assists clients by advising on the transition process, drafting the ERISA plans, assisting with initial plan implementation and subsequent enforcement, updating Plans when employer conditions or insurance policies change, and complying with ERISA, IRS, DOL and Department of Health and Human Services regulations.

Sarles & Ouimet has experience in working with insurers who back occupational injury plans and in implementing and using alternative dispute resolution programs to resolve any disputes that may arise with beneficiaries.

If you have any questions about becoming a nonsubscriber to the Texas Workers’ Compensation Act, about insurance coverage available as a nonsubscriber, about ERISA, about the new HIPAA privacy regulations, or about employee claims in general, please feel free to contact Gary Sarles.