Options in Oklahoma
The Oklahoma Option is up and running, with four qualified employers and three approved carriers as of July 1.
Scott Taylor, president of qualified employer Taylor & Sons Pipe & Steel, is a believer in the alternative structure. He expects opting out of the traditional workers’ comp system to not only save costs, but deliver better care for injured workers.
The Option “allows you to have a discourse with the employee instead of being taken out of that conversation,” Taylor said. “Under the workers’ comp system, once there’s an injury that’s documented and enters the system, as an employer, your hands are tied completely. You never have an idea what’s taking place. You’re just given decisions and expected to accept those decisions.”
By offering benefits outside of that system, he said, employers can sit down with their workers and figure out which doctors and facilities will best suit them. Greater control over their care, as well as requirements to immediately report injuries, will theoretically instill greater accountability in injured workers and speed return to work.
“The Option allows you to have a discourse with the employee instead of being taken out of that conversation.” — Scott Taylor, president, Taylor & Sons Pipe & Steel
Which benefits employers’ budgets as much as employees’ well-being and productivity.
“We’re probably looking at 20 to 25 percent cost savings,” said Taylor, who employs around 40 workers. “The type of doctors that were available in the system have abused that system for quite some time. Now our employees can go to different facilities that may be half the cost.”
The three other qualified employers are Brookhaven Hospital, Inc. and Alpha Home Healthcare Inc., both offering healthcare services, and Regis Corporation, a hair care franchise.
For now, though, the interest from many other employers is somewhat tentative. Because Oklahoma’s workers’ comp system – previously one of the country’s most expensive – was overhauled at the same time as the Option’s introduction, many employers will wait to see how the two new frameworks compare.
“Accomplishing workers’ compensation reform was a significant challenge for the legislature,” said James Mills, director of workers compensation for Oklahoma. His department is “busy educating the insurance industry, employers and all other interested parties in how to take part in the Option.”
“A lot of employers will wait a year or two to see what their numbers look like under the new workers’ comp system before deciding if they want to opt out,” said Mark Walls, VP of communications and strategic analysis for Safety National, whose Option policy was the first to win state approval . “They want to see what the new normal will be. It’s going to take a couple of years before you see opt-out gaining full traction in Oklahoma.”
Darlene Freeman, ECA division president at Great American Insurance Group, said she expects the number of submissions for Option policies to grow “substantially” as employers realize its benefits. To date, Great American Security Insurance Co. has received more than 70 submissions as well as daily inquiries from all company sizes.
“It’s going to take a couple of years before you see opt-out gaining full traction in Oklahoma.” — Mark Wall, vice president, communications and strategic analysis, Safety National
Now the second state to allow opting out of the workers’ compensation system, Oklahoma still requires employers using the alternative system to meet the minimum benefit standards set by traditional workers’ comp plans.
“That’s very different from Texas,” Walls said. “Under the Texas system, employers simply need to notify the state and their employees that they are opting out and they don’t have to provide any workers’ comp benefits,” though many do choose to provide coverage of some kind.
Safety National and the two other approved carriers, including Great American and OneBeacon Insurance Co., already offer alternative opt-out plans in Texas.
“There are several employers who opted out of workers’ comp in Texas that also do business in Oklahoma, so the thought is they’ll eventually consider opting out in Oklahoma, too,” Walls said.
Freeman echoed the prediction. “Many large national employers who non-subscribe in Texas will be among the first to elect the Option for their Oklahoma operations,” she said.
The increased employee accountability and better medical outcomes that Option advocates are counting on will also mean quicker claims, a boon to both employers and carriers.
“Our experience with Texas non-subscription has proven that when employers take some of the risk with a self-insured retention or deductible, the result is a safer workplace and overall reduction in losses,” Freeman said. “The resulting reduction in claims costs will allow employers to use their savings to grow their businesses, hire more employees and offer additional benefits.”
Claim disputes will still be adjudicated in the workers’ compensation court system rather than civil court, another key difference from Texas. This preserves exclusive remedy for employers and results in a “much more structured” opt-out system than the one established in Texas, according to Walls. Freeman also claims that immediate reporting requirements and better medical care will ultimately result in fewer fraudulent claims for those courts to handle.