Small-business group seeks review of state’s TDI

A group of small-business leaders armed with a fresh list of recommendations to boost economic development in Rhode Island said the state’s mandatory Temporary Disability Insurance could be one element among many making the state’s business climate unattractive.
But Laura Hart, spokeswoman for the R.I. Department of Labor and Training, says Temporary Disability Insurance, or TDI, paid by employees means companies don’t have to cover the expense, so it can viewed as a plus for business owners. Rhode Island was the first state in the nation to launch a TDI program in 1942, Hart said.
Even though the mandatory insurance for off-the-job illnesses or injuries has a long history, it’s time to re-examine the value of the state-run program, said Ken Block, president of Warwick-based Simpatico Software Systems and a member of the Smaller Business Association of New England, or SBANE.
“We’re looking at all the major Department of Labor and Training programs and in our initial research, we determined Rhode Island is one of only a few states that mandate Temporary Disability Insurance,” said Block, who wants to see the program’s costs to workers compared to what other states offer.
A working group of SBANE members developed an economic-recovery plan for Rhode Island and has been making the rounds to present it to state leaders. The “low-hanging fruit” to improve the state’s business climate, including regulations often under the radar such as TDI, is among initial suggestions in a five-year plan, Block said.
“We need systemwide changes if we want businesses to come set up shop here,” he said.
Even though TDI may be a small factor hampering the state’s ability to attract business, Block said the mandate hits hard on middle-class employees who have it deducted from their paychecks.
“Many states leave it to the employee to choose and they have a marketplace to choose from,” said Block about disability insurance for injuries outside the workplace. Workers’ compensation covers on-the-job injuries.
Other states that have TDI programs include New York, New Jersey, California and Hawaii, as well as the Commonwealth of Puerto Rico, Hart said.
“One of the reasons so few states have it is the initial cost of implementing the program,” said Raymond Filippone, assistant director of income support for the Department of Labor and Training. When Rhode Island began the program seven decades ago, the federal government allowed states to use unemployment funds as seed money. It’s difficult now for states to find funding to launch a TDI program, Filippone said.
In Rhode Island, TDI is mandatory for employees of private companies, while cities and towns have the option of buying into the TDI program for their employees, Filippone said. State employees have the option to buy into a separate short-term disability insurance program.
The SBANE report said a middle-class worker earning $60,000 pays $720 per year for TDI.
That figure of approximately $700 is the maximum an employee would pay in a year, Hart said, but the average cost per worker was $427 in 2011 and $408 in 2012.
Hart’s view is that cost isn’t substantial enough to be detrimental to the state’s business climate or to discourage qualified workers.
“If you have to pay about $40 a month, would that stop you from taking a job in Rhode Island? Would you go to Massachusetts or Connecticut to take a job?” asked Hart.
Jim Borah, senior benefits adviser for the Cornerstone Group in Warwick, said it can’t hurt to re-evaluate Rhode Island’s TDI program.
“It’s been my experience that the cost of obtaining private TDI, which is short-term disability insurance, is generally less in Massachusetts than the cost in Rhode Island,” said Borah. The Cornerstone Group works with companies to provide employee-benefits programs.
“In Massachusetts it’s not a set rate like we have in Rhode Island,” Borah said. “The cost is based on employee demographics and the type of industry.”
Companies in Massachusetts generally get short-term disability from one provider, Borah said.
The Department of Labor and Training continually monitors and reviews the TDI program, said Filippone.
“We did a focus group with employers several years back and made changes since then,” Filippone said. “The state passed legislation for partial TDI so an individual could return to work sooner on a part-time basis, for instance, during treatments like chemo or physical therapy.”
Some of the reasons individuals qualify for TDI also include pregnancy, pneumonia developed during flu season, injuries and terminal illnesses, Filippone said. •