March 30, 2009
Contact: Gordon Hickey
(804) 225-4260
www.governor.virginia.gov
GOVERNOR KAINE UNVEILS KEY LEGISLATIVE AMENDMENTS TO INCREASE ASSISTANCE FOR DISPLACED WORKERS, EASE IMPACT OF ECONOMIC DOWNTURN
~ Proposed bill revisions would protect health benefits for laid off workers, ensure state receives additional $125 million for unemployment from stimulus ~
Governor Timothy M. Kaine today proposed a series of amendments to legislation on unemployment and health benefits passed last month by the General Assembly. Governor Kaine is specifically calling for a number of key provision changes that would expand unemployment benefits for workers and protect health care coverage for laid off workers while easing the strain of COBRA health benefits on small businesses statewide.
“As we work to get our economy back on track, it’s critical we provide Virginians with the temporary assistance they need to weather the storm,” said Governor Kaine. “The Commonwealth has the power—and the obligation—to make necessary changes to our laws that support displaced workers facing serious economic challenges.”
While Virginia has already received approximately $62.5 million as part of the unemployment modernization program regulated by the American Recovery and Reinvestment Act (ARRA), current Virginia law does not allow the Commonwealth to accept all of the recovery plan funding dedicated to unemployment benefits. In particular, Virginia is required to expand eligibility to at least two of four groups specified by ARRA to ensure the state receives more than $125 million in additional recovery plan funding. The four groups in question include part time workers, individuals enrolled in job retraining programs, workers with dependent children, and workers with “extraordinary circumstances” such as individuals who left their own jobs to accompany a spouse relocating to accept another job.
The governor’s amendments make Virginia eligible for millions in badly-needed financial assistance from the federal recovery plan. In accordance with ARRA, Governor Kaine is proposing bill amendments that would:
Expand unemployment eligibility to workers in training and workers seeking part time work to qualify Virginia for federal stimulus funding. Governor Kaine’s amendment to SB 1495 (Locke) allows 26 additional weeks of benefits for persons who lost jobs in declining industries and are enrolled in training. The amendment also permits workers laid off from part time jobs to seek part time work. These changes ensure Virginia’s eligibility for $125 million in federal stimulus funding—an amount roughly equivalent to the increased cost of the changes for 7-10 years.
Extend unemployment benefits by an additional 13 weeks. Governor Kaine’s amendment to HB 1889 (Nixon) makes Virginia eligible to extend unemployment benefits for workers by 13 weeks on top of the regular 26 weeks and 20 week extension already in effect. The extension is based on a trigger unemployment rate of 6.5% for three successive months and is fully funded by the federal stimulus package. The extension expires upon the expiration of the stimulus.
At $98 per employee, Virginia’s current average tax rate for unemployment compensation is far lower than the rates of other states in the region—including North Carolina, South Carolina, Washington, DC, Maryland, and West Virginia—and is well below the national average of $285 per employee. Overall, Virginia ranks 49th nationally in terms of average annual tax rate per employee. Even if the General Assembly chose to maintain the proposed eligibility adjustments beyond the period that the additional federal funds will pay for, Virginia’s average annual tax rate per employee for unemployment insurance would remain one of the ten lowest in the nation.
In addition, Governor Kaine is urging action on legislation that would protect health care benefits for laid off workers and mitigate the impact of the economic downturn on small businesses in particular. Governor Kaine’s amendments would:
· Require basic health care coverage in the insurance policies provided by small businesses. The governor’s amendment to SB 1411 (Watkins) eliminates the bill’s six-month ineligibility period and adds some basic health care items to the “mandate free” version that passed the General Assembly, including:
1. Childhood immunizations
2. Mammograms
3. Child health supervision services
4. Mental health and substance abuse services
5. Pap smears
6. PSA testing
7. Colorectal cancer screening
8. Diabetes
The amendment also strengthens disclosure requirements so employees know what their health insurance covers.
Extend COBRA benefits for workers laid off from small businesses. ARRA provides a 65% subsidy of health insurance premiums under COBRA for 9 months. Without the subsidy, displaced workers would be required to pay 102% of the cost of COBRA insurance—a cost that can easily exceed $1,000 per month and is well beyond the reach of most displaced workers. Recognizing the short term burden on small businesses in extending COBRA health benefits to laid off workers, Governor Kaine is also amending HB 2024 (Marshall) to extend COBRA eligibility from three months to nine months for workers of businesses with fewer than 20 employees. This provision allows employees of small businesses to take advantage of the same federal subsidy that is offered to large businesses, and expires upon the expiration of stimulus money. ARRA shifts up front costs of the premiums to insurers to help small businesses avoid cash flow concerns. The Governor's amendment eliminates the original bill’s six month ineligibility period, and strengthens Virginia's eligibility for possible federal grants to help former employees with their portion of the premium.
“This is a win-win scenario for all Virginians,” said Governor Kaine. “Hard working families get the support they need to survive the economic downturn, while cash strapped small businesses get flexibility to do the right thing for workers without putting themselves at further risk of faltering during these tough times.”
For more information on Virginia’s recovery efforts, please, visit stimulus.virginia.gov.
