Landmark Health Insurance Legislation Adds Financial Burden to all CA Employers

With the recent passage of The Health Insurance Act of 2003, expected to be signed by Governor Davis, California will be among the most progressive states in the nation in health care. However, it is the California employers that will have to burden the expense of this legislation.

Under this legislation (SB-2), employers with 21 or more workers (“medium employers”) will be required to either purchase private health care policies for their employees or pay into a statewide pool that would buy insurance coverage on their behalf. Employers with 200 (“large employers”) or more workers will have to extend the coverage to an employee's dependents. In addition, the employer is generally required to pay for no less than 80% of the cost of the employees’ coverage.

Although smaller businesses are likely to feel the biggest pinch (because more of them don't currently provide any health benefits now) larger employers, especially in low-wage industries, face significant expenses as well. This is will be particularly true for the manufacturing, construction, service and agricultural sectors where there are low-wage workers who are often transient. Now, anyone who works more than 100 hours a month (25 hours a week) would qualify for insurance.

This legislation, if signed by the Governor, is expected to take effect over the period of 2006 (for large employers) and 2007 (for medium employers). For additional information regarding this workmen’s compensation legislation, you can go to www.leginfo.ca.gov.