As more and more states (including Oklahoma, South Carolina and Tennessee) make moves to allow employers the choice to ‘opt out’ of state-regulated systems in favor of their own approaches, a new study from the International Association of Industrial Accident Boards and Commissions [IAIABC] sought to determine the feasibility of such plans by analyzing the Oklahoma alternative.
Proponents of the opt-out option believe that the option could allow employers to voluntarilyoffer equal or more generous benefits than the ones being offered through the state. The study, however, found that this depends on the specific circumstances of the plan. Opt-out programs might have the potential to provide employees with more benefits, but equity is far more valued in the community, said IAIABC president R.D. Maynard.
“Workers’ compensation protects employers and employees … and it is critical to understand and maintain that equal protection,” he said.
Because most opt-out plans would vary wildly from each other, the “lack of uniformityand consistency” could draw ire from the workers’ compensation community, the study said. Opt-out programs will also need to address oversight concerns.
“There have been anecdotes about the equality of benefits and employer costs savings with opt-out, but workers’ compensation goes well beyond the payment of wage replacement benefits and employer premiums,” said IAIABC executive director Jennifer Wolf Horejsh. Opt-out plans could handle dispute resolution, hearings and determinations, all at the discretion of employers.
Without proper oversight, however, there is a risk of abuse. While it looks good on paper, the study concludes the idea of offering opt-out plans still needs a lot of work especially on how it would manage regulatory oversight and equity for all parties involved. Even Oklahoma’s opt-out law is currently undergoing review.