Wal-Mart has decided to manage its own injury benefits program in one state. That’s led proponents and opponents of such an option to weigh-in on whether it’s a good idea for businesses or not.

The retail giant dropped out of Texas’ workers’ comp system in March. Wal-Mart is one of the largest private employers in Texas, where 15% of businesses with more than 500 employees have opted out of the system. Texas is the only state that provides such an option. Instead of having workers’ comp insurance, businesses administer their own injury benefits programs. They save a significant amount of money, but in exchange they increase their liability risks.

Opponents say companies dropping out of the system puts more pressure on workers’ comp insurers to cut costs at the expense of injured employees.

Proponents see putting that sort of pressure on workers’ comp insurers as a good thing.

Another point of contention: Benefits for employees aren’t equal. Terry Frakes, a Sr. VP with Texas Mutual quoted in the Texas Tribune, said Wal-Mart’s plan caps total medical coverage at $300,000 compared with lifetime coverage under the state workers’ comp system. He says Wal-Mart’s plan provides 90% of lost wages for up to 120 weeks (2.5 years), compared with 70% of lost wages for up to 401 weeks (almost 8 years) in the state system. Maximum Wal-Mart pay-out: $54,000 compared to $140,350 under the state system.

Bill Minick, president of PartnerSource which has designed private injury benefit policies for dozens of large companies, including Wal-Mart, said the private plans emphasize employee responsibility. Examples: Employees are required to report injuries in a timely manner, visit pre-approved doctors and follow medical advice.

Plans similar to the one in Texas could spread to other states. A bill to do that is being considered in Oklahoma.

The idea to spread this system to other states is being led by large national companies such as Nordstrom and Lowe’s.

Tags: Oklahoma, Texas, Walmart, workers' comp opt out