Analysis of Rhode Island’s TDI and TCI Program

PROVIDENCE – On Saturday, June 6, the Rhode Island Public Expenditure Council (RIPEC) released an analysis of Rhode Island’s Temporary Disability Insurance (TDI) and Temporary Caregiver Insurance (TCI) program. The TDI program is a publicly-administered disability insurance program that provides partial wage replacement to individuals that temporarily cannot work as a result of a non-work-related illness or injury. The TCI program, sometimes referred to as paid family leave, allows individuals to receive a maximum of four weeks paid time off to care for a seriously ill family member or bond with a child. 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.

Rhode Island’s TDI/TCI program is funded entirely through a payroll tax deduction paid by all covered workers. At the present time, 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. The benefit level received by an eligible individual is calculated by multiplying 4.62 percent times the highest quarterly earnings in the Base Period (defined as the first four of the last five completed calendar quarters). The minimum weekly benefit, which is determined by the state’s minimum wage, is currently $84.00 per week while the maximum weekly benefit, which is required by law to equal 85.0 percent of the average weekly wage of all workers eligible for the program, is currently $770.00 per week. To be eligible to receive benefits, an individual generally must have earned at least $10,800 during the Base Period. Benefit levels are the same for recipients in the TDI or TCI program.

In addition to Rhode Island, four other states (California, Hawaii, New Jersey and New York) and Puerto Rico require most workers to be covered by a disability insurance program. However, Rhode Island is the only state that requires workers to participate in a publicly-administered program. By contrast, California and New Jersey offer a public insurance plan but allow employees to elect to instead purchase coverage through the private market. In each of the two states, private plans must meet minimum provision levels of coverage, benefit and cost established by the public plan. In further contrast, Hawaii and New York each require most workers to be covered by disability insurance but do not offer public plans. Both states regulate insurance plans available on the private market to ensure that they meet specified standards for costs, benefits and eligibility.

A total of three states, including Rhode Island, also administer mandatory paid family leave programs similar to the TCI program. In each of the three states, which also include California and New Jersey, workers are entitled to receive paid time out of work to care for an ill family member or bond with a new child. In Rhode Island, 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. California and New Jersey allow workers to receive a maximum of six weeks of paid family leave each year. In the Ocean State, individuals out of work on TCI leave receive full job protection that requires their employer to return them to their position, or offer them a similar position, upon returning to work.

To reduce Rhode Island’s status as a national outlier on this policy issue, RIPEC recommends that the General Assembly explore potential reforms of the TDI/TCI program. One possible reform would allow employees to opt out of the public TDI/TCI program by adopting a model similar to the one used by California and New Jersey (and proposed in H. 5341/S. 183). This 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. The federal Family Medical Leave Act, as well as Rhode Island’s Parental and Family Medical Leave Act, each exempt businesses with fewer than 50 employees from compliance to reduce the burden that work absences can have on these businesses. A final reform would eliminate the job protection provision that requires employers to “protect” the position of an individual that takes TCI leave. This would reduce the burden facing businesses, particularly those with a small number of employees, when workers take TCI leave.

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