Workers laid off by California's smallest businesses have a shot at subsidized healthcare under a bill moving quickly through the Legislature.
As part of February's stimulus package, some laid-off employees can get the government to temporarily cover 65% of the cost of continuing their health insurance under the federal COBRA law, which allows workers to keep their healthcare coverage but requires them to pay the premiums.
California's AB 23 would extend the subsidy to those who worked for companies smaller than the COBRA minimum of 20 employees. The bill also would require health insurers to send notices about the subsidy to previously insured employees laid off from businesses with two to 19 workers.
The subsidy provided under the federal stimulus bill would last up to nine months. And it applies only to previously insured people who lose their jobs because of involuntary terminations from Sept. 1, 2008, through the end of 2009. There are also income restrictions.
Despite the limitations, the subsidy is expected to be a boon to laid-off workers, said Nathan Fletcher (R-San Diego), who co-wrote the bill with Dave Jones (D-Sacramento).
"People are really hurting," said Fletcher, who is also vice chairman of the Assembly health committee.
The deadline to send notices to people eligible for the subsidy is April 18. But first, the state would have to pass the bipartisan measure amending current law governing the Cal-COBRA program. Cal-COBRA allows laid-off employees at very small businesses to continue their group health insurance as long as they pay the full premium.
"More than 116,000 Californians lost their jobs in February, and with that, many of them lost their health insurance," Insurance Commissioner Steve Poizner said in a statement last week supporting the bill.
Laid-off employees of businesses with 20 or more workers don't need the state law changed to access the subsidy: Businesses of that size fall under the federal COBRA program. Those businesses will have to handle the notification process themselves, track down laid-off employees and front the 65% subsidy to their insurance companies until they are repaid through quarterly payroll tax credits.
"This whole notification thing -- putting out the multiple forms and having to select the right one to send to employees -- for a small business, that is going to drive them crazy," said Scott Hauge, owner of CAL Insurance & Associates in San Francisco and president of the Small Business California trade group.
