In case you missed it, there’s a new California law, Assembly Bill 2530, that addresses striking employees and health insurance. Here’s what you need to know as a business owner.

Change Effective July 1, 2023

First off, the law takes effect in July. It allows employees to acquire health insurance through Covered California if a labor dispute ends employer-sponsored health insurance. For some context, historically, employers could suspend health insurance for their employers if they went on strike to help drive negotiations.

Sponsored by Jim Wood (D – Healdsburg), Assembly Bill 2530 passed in 2022. It came in response to a union/employer dispute. At the time, union leaders were told a walkout would put health insurance benefits at risk for striking workers.

Access to Subsidized Coverage

Starting next month, striking workers have access to alternative health coverage. Covered California says employees that work for a private employer can have premiums covered if their incomes are just above the Medicaid eligibility level. For example, a single person earning $54,360 annually pays 8.5% of his/her/their income – about $385 per month.

Under the new law, striking employees selecting the same middle-tier plan will pay nothing – as though they make only $20,385 annually. Any subsidy will apply for the duration of the work stoppage.

Expense Could Exceed Current Costs

While the availability of alternative coverage is good for employees, it is not ideal. The cost of comparable coverage may be more than what the employee pays through their jobs.

The Kaiser Family Foundation (KFF) employer survey said last year that about 159 million Americans rely on employer-sponsored health insurance. For all plans, the average employer and worker contributions were 83% and 17%, respectively, for single coverage. For family coverage, the employer contribution was 73%, while employees paid 27%.

Total HMO cost was about $8,000 for single coverage and nearly $23,000 for family coverage. PPO cost was $8,272 for single coverage and $23,426 for family coverage. High Deductible Health Plan (HDHP) premiums were lower, averaging $7,288 for single coverage and $21,136 for family coverage.

Costs to the State

Covered California will spend about $1.4 million to launch this new benefit for striking, private employer workers. The state public exchange is adding application questions to screen eligible applicants.

Public employers cannot end employees’ health coverage during an authorized strike. That’s because California Gov. Gavin Newsom signed the Public Employee Health Protection Act in 2021.

For a full summary of AB 2530, visit the California Legislative Information web page.