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Opt-out workers' comp can leave workers out of luck

 

Saving money is usually considered a good thing. If you can save, you can avoid paying interest when you buy a car or put money away for an emergency or even retirement. But you understand the basics of the equation. To put more money in savings, you have to spend less on something else or earn more money.

A promoter of a new type of workers' compensation system chortles that "We can objectively show you that we have saved our clients over a billion dollars" as compared to the cost of workers' comp costs in Texas over the past decade. He claims that is why workers are not losing any benefits in the deal because these employers are now awash in savings. 

 

Let's point out one little fact. Unless Texas insurers were robbing their clients blind with premiums and administrative fees, the arithmetic is likely to show that that billion dollars in savings came out of the lower or non-existent benefits that would have been paid to injured workers.

Insurance costs are calculated on the number of persons paying into a program and the amount of claims paid out, plus the company's administrative costs. In order to save a billion dollars in premiums, you would have to wipe out a billion dollars in claims. Otherwise, the insurer would go bankrupt.

The plans in these opt-out states allow employers to draft their own rules, and unsurprisingly, the companies draft plans that benefit them the most. For instance, many demand that an injury must be reported during the same shift where it occurred.

Which means if you suffer an injury and do not recognize its severity before you leave work, it doesn't matter if it leaves you permanently disabled.  If you attempt to report it after the end of your shift, it will be denied and you no longer have any valid claim. Ever.

Source: salon.com, "Corporate America’s unforgivable new swindle: Leveling workers' compensation to nothing," Michael Grabell, Howard Berkes, NPR and ProPublica, October 22, 2015

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