What are the rules for Texas workers' compensation insurance?

Why is having workers’ compensation insurance something Texas employers should consider?

If an employee is injured or becomes ill on the job (and is unable to work for an extended period), workers’ compensation insurance can provide the funds for medical treatment, and even partial wages while they recover. Additionally, this type of insurance also protects employers from litigation related to workplace injuries. Employees who are covered by workers’ compensation are usually unable to sue their employers for damages related to their injuries or occupational illnesses.

For employers that offer coverage to employees, here are the most common benefits they will have access to, per the Texas Department of Insurance.

Lost wages

With the exception of impairment income benefits, these options can replace some of the employee’s wage losses due to a work-related injury or illness. Types of income benefits can include:

• Temporary income benefits (TIBs)
• Impairment income benefits (IIBs)
• Supplemental income benefits (SIBs)
• Lifetime income benefits (LIBs)

Medical care

This can cover reasonable and necessary medical care for an employee who has been injured or ill at work.

Funeral costs

Burial benefits can reimburse some of an employee’s funeral expenses to the person who paid those expenses.

Death benefits

This can help surviving spouses and family members replace some of the lost income when an employee dies due to a work-related injury or illness. Spouses of first responders can receive lifetime death benefits even if they remarry (for marriages on or after September 1, 2017).

Now that we better understand why a company might purchase workers’ compensation insurance coverage, let’s find out if there are requirements for those doing business in Texas.

What are the workers’ compensation insurance requirements in Texas?

In many cases by law, private employers are not required to have a policy, though some consider carrying coverage because it can offer protection from potential lawsuits in the event that an employee is injured while on the job. Simply put, only businesses in Texas that contract with government entities are required to buy coverage, which is used to safeguard workers on state-related projects.

Note that employers without coverage are required to complete Form DWC 005 with the state. In addition to completing the form, employers must:

• Post a written notice at their workplace in English, Spanish, and any other language that is appropriate
• Place the notice where employees can regularly see it
• Write the notice in the format adopted by DWC (Notice 6)
• Provide new employees with a written notice of non-coverage

For companies that are interested in obtaining a policy, let’s find out how they can go about purchasing one.

Buying workers’ compensation coverage in Texas

For companies that want to carry coverage, there are different options.

Private carriers

Employers should only purchase workers’ compensation insurance from companies licensed by the Texas Department of Insurance. According to the state agency, if you purchase a policy from a company that isn’t licensed, it will not be considered as valid coverage under state law.

Self-insure

In some cases, private employers are able to self-insure workers’ compensation claims. For companies that self-insure, they are required to pay the cost of the employee claims themselves, must get approval from DWC, and meet the financial requirements.

Group self-insurance

Additionally, some companies may join a self-insurance group. The group must get approval from the Texas Department of Insurance. The group members must be in the same or similar business and meet other requirements.

Are there penalties for not having coverage in Texas?

Though Texas does not issue penalties for private companies without workers’ compensation coverage, per the employer’s rights and responsibilities, all businesses must provide a safe workplace and take all reasonable steps to protect their employees. Even if the business purchases insurance, but does not comply with its requirements, there are administrative penalties that can be imposed.

How does an employer with workers’ compensation report an employee’s work-related injury or illness?

Once an employee shares that they have experienced a work-related injury, here are the steps to take, per the Texas Department of Insurance:

• The first step is to file an Employer’s First Report of Injury or Illness (or DWC Form-001) with your insurance carrier within eight (8) days from the date that your employee is unable to work for more than one day due to their injury, or immediately if their injury is a work-related disease or death
• Provide a copy of the completed DWC Form-001 and Employee’s Rights and Responsibilities to your employee at the time the DWC Form-001 is filed
• Contact the insurance carrier you work with to see what reporting methods they have available to you

What should an employee do if they have coverage and there’s a work-related injury?

In case of an injury, it’s their responsibility to notify the employer within 30 days of the event, so that the employer has the opportunity to resolve the issue or take any necessary steps to remediate the situation. To be eligible for benefits, an employee must file a workers’ compensation claim within one (1) year of the date of injury.

More resources for Texas employers

• Texas Department of Insurance
• FAQs for employers with workers’ compensation coverage
• History of Texas Workers’ Compensation
• Employer rights and responsibilities
• Guide for employers without coverage