RIPEC suggests reforms of TDI/TCI programs

THE RHODE ISLAND PUBLIC EXPENDITURE COUNCIL released recommendations for reforms regarding the state's Temporary Disability Insurance and Temporary Caregiver Insurance Program to save money. The top graph shows TDI and TCI payments last year, while the bottom show the reasons for TCI claims last year. / COURTESY RHODE ISLAND PUBLIC EXPENDITURE COUNCIL
THE RHODE ISLAND PUBLIC EXPENDITURE COUNCIL released recommendations for reforms regarding the state's Temporary Disability Insurance and Temporary Caregiver Insurance Program to save money. The top graph shows TDI and TCI payments last year, while the bottom show the reasons for TCI claims last year. / COURTESY RHODE ISLAND PUBLIC EXPENDITURE COUNCIL

PROVIDENCE – To reduce Rhode Island’s status as a “national outlier” regarding its temporary disability insurance and temporary caregiver insurance programs, the Rhode Island Public Expenditure Council is recommending that the General Assembly explore potential reforms to save money.

Rhode Island is one of five states nationally to administer a public disability insurance program and one of three states with a legally-mandated paid family leave program, according to RIPEC’s latest report.

RIPEC is suggesting that Rhode Island adopt a model similar to one used by California and New Jersey that would allow employees to choose between the public TDI/TCI program and a private plan “that may better meet their needs or be less costly.”

A second potential reform involves exempting small businesses with fewer than 50 employees from compliance with the TCI program. A final reform would eliminate the job protection provision that requires employers to “protect” the position of a person that takes TCI leave, RIPEC said.

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“This would reduce the burden facing businesses, particularly those with a small number of employees, when workers take TCI leave,” the report states.

Besides Rhode Island, four states – California, Hawaii, New Jersey and New York, as well as Puerto Rico – require most workers to be covered by a disability insurance program. Rhode Island is the only state, however, that requires workers to participate in a publicly-administered program.

California and New Jersey offer a public insurance plan, but employees can elect to purchase coverage through the private market, RIPEC said. Hawaii and New York require most workers to be covered by disability insurance, but do not offer public plans; those states regulate insurance plans on the private market to ensure they meet specified standards for costs, benefits and eligibility.

Rhode Island’s TDI/TCI program is funded entirely through a payroll tax deduction paid by all covered workers. Workers are taxed at a rate of 1.2 percent on the first $64,200 in wages earned for a maximum annual contribution of $770.40, according to the report.

The minimum weekly benefit is $84 per week, while the maximum weekly benefit, required by law to equal 85 percent of the average weekly wage of all workers eligible for the program, is $770 per week. To be eligible for benefits, an individual must have earned at least $10,800 during the base period – defined as the first four of the last five completed quarters. Benefit levels are the same for recipients in the TDI or TCI program, according to RIPEC.

In addition to Rhode Island, California and New Jersey administer mandatory paid family leave programs that allow workers to receive paid time out of work to care for an ill family member or bond with a new child. Workers may take a maximum of four weeks during each 52-week period to care for a seriously ill child, spouse, domestic partner, parent, parent-in-law or grandparent, or to bond with a newborn or newly adopted child.

In Rhode Island, workers on TCI leave receive full job protection requiring employers to offer them their position upon their return, or a similar one, according to the report.

The report outlines several concerns regarding the TCI program, ranging from the impact on young workers, which it says “are unlikely to utilize the TDI/TCI program,” meaning the payroll tax deduction represents “lost wages with little direct benefit,” to employers worried about the potential for abuse as there is no way to ensure the individual on leave is “actually furnishing care” for an ill family member.

State and federal versions of the Family Medical Leave Act offer similar worker protections as the TCI program, but exempt businesses with fewer than 50
employees from compliance.
“By contrast, Rhode Island’s TCI program does not include an exemption for small businesses. For a business with a small number of employees, protecting even one job for an employee on TCI leave can prove to be a large burden,” the report said.

Of the 3,870 total TCI claims approved by the state Department of Labor and Training last year, 2,847 (73.6 percent) were to bond with a child while 1,023 (26.4 percent) were to care for a seriously ill family member, RIPEC said.

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