In 2006 the state of San Francisco passed a plan on health coverage of employees of organizations that was supposed to be effective from January 2, 2008. According to the new law it was to be made mandatory for all employers or firms employing more than twenty employees to provide minimum health care benefits to its employees or pay a fee to the city. But on December 27th, 2007 an U.S. District court Judge in San Francisco ruled against this new Health Coverage.
U.S. District Court Judge Jeffrey Wright stated that the new Health Coverage Rule by the city violated the Employee Retirement Income Security Act (ERISA) and it would be posing major threat to the state Health Insurance reform plan that was passed this December 17 by the California Assembly with support from Governor Mr. Arnold Schwarzenegger. According to the new rulings a company is required to provide HealthCare Insurance to all its employees up to an age of 65. Once they turn 65 they automatically qualify for Medicare Insurance and then companies can scrap the Health Insurance plans for them and provide only Medicare to its employees.
Younger retirees are poised to benefit from this new Health Coverage Rule as now it will be less likely that employers would drop health-care coverage for them while at the same time they are also being provided with Medicare benefits once they turn 65. It is quite a sway from the older traditions that prevailed twenty years ago when employees loyal longtime employees expected companies to provide Health Care till the time they died. The new rule ensures at least Medicare to the employees as in 2006 only 35 percent of employers with more than 200 employees offered health coverage as compared to the 66 percent of employers who provided Health Care benefits to its older employees in 1988.
The primary reasons for companies to that contributed to employers not providing Health care benefits to the retirees was the soaring costs and changes in the way that firms were supposed to report their health care liabilities to the government. Federal law does not require employers to provide their active or retired workers with health care and hence companies took this loophole in law as an escape from providing its employees with benefits. Under the new Health Coverage Rule employers with 20 to 99 employees were to pay $1.17 an hour per employee on health benefits or pay the same amount to the city. For companies with more than 100 employees the charge was $1.76. Judge Wright ruled that this was against and interfered with ERISA.
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