Download January 2007 Update as a PDF

Legislative Update   

by Linda S. Lulli, SPHR, Government Relations Director, RI State Council of SHRM, and
Cynthia J. Butler, SPHR, Butler & Associates

RI News Update

Minimum Wage

On January 12, 2007 Senators Raptakis, DaPonte, Connors, Ciccone and Ruggerio introduced S. 0052, which seeks to revise the RI Minimum Wage law to annually adjust the minimum wage, as of January 1, 2008, and on each January 1 thereafter, by increasing the current year’s minimum wage by the rate of inflation up to but not more than 3%. The adjusted minimum wage would be calculated using the consumer price index for urban wage earners and clerical workers (CPI-W), or a successor index, for the previous year for the northeast region of the United States . This bill has been referred to the Senate Labor Committee for further consideration.

SHRM-RI believes that an increase in the minimum wage would adversely affect potential job opportunities for the very groups proponents argue they intend to assist. In addition, SHRM opposes any legislation that would place the minimum wage rate on “automatic pilot” by indexing future increases.

Health Care

First Mandated Health Benefit Proposal Introduced in the House on January 16th

H. 5061 was introduced by Representatives Gemma, Ginaitt, Naughton, Serpa, and Williams that would mandate coverage for the administration of a recent U.S. Food and Drug Administration (FDA) approved cervical cancer vaccine. This is the first mandated health benefit proposal to be introduced this session.

Rhode Island already has about 40 mandated benefits and several additional mandated benefit proposals are introduced every legislative session. Because insurers are required to pay for care that consumers previously paid for out of pocket or that wasn’t purchased at all, insurers generally raise premiums to cover the cost of these mandated benefits.

Expansion of Family and Medical Leave

As was the case in the last legislative session, a bill (S. 0050) was introduced on January 9, 2007 by Senators Tassoni, Moura, Maselli and Lanzi to require employers covered by the Family and Medical Leave Act to provide employees with at least twelve months of service up to 14 hours of leave during a twelve-month period to accompany their minor child to routine medical or dental appointments and to accompany an elderly relative to routine medical or dental appointments or appointments for other professional services related to elder care, such as interviews at nursing or group homes. An eligible employer would be able to elect or require an employee to substitute any accrued sick, personal or vacation leave for any of the 14 hours provided under this proposal. The bill also would allow for such leave to be taken intermittently or on a reduced leave schedule.

Universal Health Care

After Massachusetts enacted legislation in 2006 to create a universal health care plan, there was speculation that the Rhode Island legislature would rush to enact a similar version here. Fortunately that does not appear to be an approach under consideration by the RI General Assembly, based on statements from Lt. Governor Elizabeth Roberts (former Co-Chair of the RI General Assembly’s Joint Committee on Health Care) and RI Health Insurance Commissioner Chris Koller, at a RIBGH meeting in Fall 2006. Legislative leaders will likely be taking a more pragmatic approach and plan to gather information this legislation session on the effectiveness of the Massachusetts plan and those under consideration in other states .

One of the steps taken in the 2006 RI legislative session was the enactment of the “Health Care Affordability Act” that attempts to address a number of issues relating to the high cost of insurance and included a bill to study the Massachusetts universal health insurance initiative to see if such a plan could work in RI as well as legislation to provide consumers with information on the quality and prices charged by health care providers.

On January 9, 2007 , California Governor Arnold Schwarzenegger outlined a plan for providing universal health care to all Californians. The proposed plan requires health insurers to offer coverage and individuals to carry it - with the state's doctors, hospitals, insurers, taxpayers and employers all helping pay for it. The proposal is already generating significant debate and if his proposal wins approval, it would make California the second state to require health insurance. Provisions of this proposal include:

• Individuals would have to buy insurance, with government subsidies for people earning up to 250% of the federal poverty level, about $24,500 for an individual and $50,000 for a family of four.

• State programs for children would expand to include families earning up to 300% of poverty, about $60,000 for a family of four.

• Employers with 10 or more workers would have to offer coverage or pay a tax equal to 4% of payroll (Employers with under 10 employees are exempt.).

• Insurers could not turn away prospective policyholders with health problems.

Health Insurance Mandate for Smoking Cessation Treatment

The Rhode Island law, signed by Gov. Donald Carcieri on July 6, 2006, mandates that every individual or group health insurance contract, plan or policy issued or renewed in
the state on or after Jan. 1 that provides medical coverage for physician services in a physician’s office, and every individual or group contract, plan or policy that provides major medical or similar comprehensive-type coverage, must include coverage for smoking cessation treatment.

This is a small investment for a health insurer to make in a subscriber, but it would be a win for each person who gets help quitting, a win for insurers who have fewer expenses to cover, and a win for all health insurance subscribers, whose premiums could go down if
the insurers' costs are reduced, said Sen. Rhoda E. Perry, one of the sponsors of the bill, in a release.

Under the new law, covered treatment includes the use of an over-the-counter or pre-
scription nicotine replacement therapy that has been approved by the U.S. Food and Drug Administration, when used in combination with outpatient smoking cessation counseling sessions. Covered smoking cessation treatment may be further defined through regulation promulgated by the state health insurance commissioner.

Plans may impose co-payments and/or deductibles for covered smoking cessation benefits, consistent with the plans’ terms. If an insurance plan does not include prescrip-
tion drug coverage, the plan is not required to include coverage for prescription nicotine replacement therapy. However, the plan must still cover other smoking cessation treat-
ments, such as doctor's visits or counseling.

Bi-weekly or Semi-Monthly Payment of Wages Proposed for
Certain Employers

S. 0051 was introduced by Senators Badeau, Cote and Bates that would allow certain employers (exceptions would be the state and its political subdivisions, religious, literary or charitable corporations) to pay wages to employees on a weekly, bi-weekly or semi-monthly basis. This bill would not apply to employers covered by a collective bargaining agreement that provides for a different frequent for payments or to employees whose compensation is fixed at a bi-weekly, semi-monthly, monthly, or yearly rate.

School-to-Career Program Tax Credit

On January 9, 2007 Senators Tassoni, Doyle and McBurney introduced S 0014 – the “School-to-Career Program Tax Credit,” which would provide a tax credit of up to 10% of the expenses (or up to $200) to private employers that participate in a “qualified school-to-career program” (a program that integrates school curriculum with industry skill training, that encourages placement of students or teachers in job apprenticeships, internships, externships or post secondary training that will teach them new skills and techniques to improve their performance and have been approved by the applicable school committee and the RI Department of Education or Department of Labor and Training or Department of Higher Education).

Federal News Update

Minimum Wage Increase Proposed by U.S. House of Representatives

On January 10, 2007 , the House of Representatives approved a measure (H.R. 2) that would increase the federal minimum wage rate from $5.15 to $7.25 in three phases over a 25 month period. Democrats, who now control the House, fulfilled their pledge to pass a minimum wage bill in the first 100 hours of the 110 th Congress.

The Senate has not yet introduced a minimum wage proposal, but is expected since it is one of the top priorities of Sen. Edward Kennedy (D-MA) who chairs the Senate Health, Education, Labor and Pensions Committee. Senate Democrats have indicated they would likely proposal a minimum wage bill that would include some tax breaks for smaller businesses.

Potential for a Universal Health Care Campaign in Congress

Since the Democrat gained control of Congress, many public policy watchers are predicting that health care will be a high priority in 2007. Some have predicted that a the Democrats will be launching an aggressive campaign for universal health care. Those predictions appear to be valid since in December 2006, Oregon Senator Ron Wyden introduced the "Healthy Americans Act, " an aggressive effort to move forward on universal health care.

Health Care Transparency Initiative Continues to Gain Support

According to the Society for Human Resource Management (SHRM), more than 100 employers have signed statements of support for Health and Human Services (HHS) Secretary Leavitt’s Value-Driven Healthcare Initiative. The Value-Driven Health Care Initiative embraces the cornerstones of better health care, including health information technology, access to both price and quality information, and incentives to those who provide and purchase efficient, high quality care. To demonstrate his commitment to this initiative, Secretary Leavitt is traveling the country meeting with employers, encouraging them to commit to the four cornerstones of better health care.

SHRM fully supports this effort to promote a high quality health care system, and encourages HR professionals and their organizations to embrace this initiative by signing the statement of support.

Congress Passes “Tax Relief and Health Care Act of 2006”

In December 2006, Congress passed and the President signed into law H.R. 6111, a tax extenders package that included a number of provisions that would make significant changes to the rules governing Health Savings Accounts (HSA’s). These provisions include a set of extensions of expired or expiring tax breaks important to employers related to the Work Opportunity Tax Credit, Health Savings Accounts (HSAs) Mental Health Parity Act, Archer Medical Savings Accounts (MSAs), and Physician Payment and Quality Improvement. The specifics of H.R. 6111 include:

Work Opportunity Tax Credit -- H.R. 6111 extends and expands the Work Opportunity Tax Credit (WOTC) program, which provides for tax credits to employers that hire individuals who face barriers to employment.  The provision retroactively (back to January 1, 2006 ) extends the current WOTC without modification through 2006.  Beginning in 2007, the provision combines the WOTC with the Welfare-to-Work (WTW) credit and extends the combined provision through December 31, 2007 .  Key modifications of the combined credit include expanded eligibility for WOTC (raised age ceiling for food stamp recipients from 25 to 40), revised eligibility requirement for ex-felons (without regard to family income) and a modification of the filing deadline for WOTC claimants from 21 to 28 days.

Health Savings Accounts (HSA’s) -- To provide for greater flexibility in the design of health care plans, the following HSA improvement provisions were included in H.R. 6111:

• Allows penalty-free transfers from Flexible Spending Accounts (FSAs) and Health Reimbursement Accounts into HSAs until 2012

• Repeals the annual plan deductible limitation on HSA contributions, allowing for $2,700 in annual HSA contributions ($5,450 for families) even if the deductible is lower

• Allows for a one-time distribution from an individual retirement plan to fund an HSA

• Allows for larger contributions to non-highly compensated employees (for purposes of retirement plans, a “highly compensation employee is defined by the IRS as an employee who owns 5% or more of a company or receives compensation in excess of $100,000)

• Eliminates the contribution limitation for part-year coverage as long as the individual maintains a High Deductible Health Plan for at least 12 months

• Requires the Secretary of Treasury to complete the indexing of the applicable limits by June 1, to provide for earlier calculation of cost-of-living adjustments

• Provides that an employee with a “zero balance” in the FSA is not disqualified from HSA contributions during the 2 ½ month FSA grace period

Mental Health Parity Act -- H.R. 6111 extends the 1996 Mental Health Parity Act (P.L. 104-204) for another year for all insured, self-insured and public health plans. The MHPA prohibits health plans from setting annual or lifetime limits on the amount of coverage for mental health care unless similar caps are also imposed on medical and surgical benefits.

Archer Medical Savings Accounts (MSAs) -- H.R. 6111 extends Archer MSAs through December 31, 2007 .

Physician Payment and Quality Improvement -- H.R. 6111 also included SHRM supported language to link Medicare physician payment with quality improvement.  Under the bill, physicians who report on quality measures will receive a 1.5 percent bonus incentive payment in 2007.  In November 2006, SHRM joined the Pacific Business Group on Health and other organizations in sending a letter to the leaders of the committees with jurisdiction over Medicare urging them to include performance-sensitive physician payment reform language in any Medicare reimbursement legislation. 

RI State Council - SHRM Governmental Affairs '06 Election Overview

Election Day 2006 yielded significant victories for the Democratic Party, which gained majority status in the House of Representatives and the U.S. Senate. At the state level, Democrats wrestled six governorships away from the GOP and made significant gains in state legislatures across the country. The November 7, 2006 election is certain to usher in change in Washington when the 110th Congress convenes in early January 2007. Democrats will control all standing committees in the House and possibly the Senate, guaranteeing complete control of the legislative agenda on Capitol Hill.

The election results mean HR professionals are likely to face a range of old and new public policy issues in 2007. To help you prepare for the change, SHRM's Government Affairs staff prepared a quick assessment on what to expect from the state legislatures, the U.S. Congress and the White House. http://www.shrm.org/government/06elections/default.asp

We anticipate a more ambitious and aggressive public policy agenda for HR in areas
such as an increase in the federal minimum wage, targeted mandated employee benefits, an expansion of the Family and Medical Leave Act and immigration reform. The prospects for new laws remain uncertain, and if the administration cannot find ways to work together, the new 110th Congress may have difficulty enacting legislation. If this occurs, individual states may continue their recent trend of crafting their own solutions to problems, particularly those dealing with employment and workplace priorities.

Click here to download a report (PDF) providing guidance to HR professionals on the likely agenda and direction of the 110th Congress and the overall trends on issues in state legislatures.

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