Wednesday, December 30, 2009

Cobra Subsidy/CEA Weekly Update

The California Employers Association is a member of SB Cal. I thought this information may be useful to you.

On December 21, 2009 the President signed the Department of Defense Appropriations Act for Fiscal Year 2010 (“Defense Act”) extending the COBRA subsidy.

The legislation extends both the period of eligibility and the length of the subsidy. The amount of the subsidy remains at 65%. It also provides for a retroactive application of the subsidy extension and includes additional notice requirements that employers must grapple with early in the new year.

Maximum Length of Subsidy:

ARRA COBRA Subsidy: 9 months
Defense Act COBRA Subsidy Extension: 15 months

Period During Which Involuntary Termination of Employmnet Must Occur:
ARRA COBRA Subsidy: Sept. 1, 2008 to Dec. 21, 2009
Defense Act COBRA Subsidy Extension: Sept. 1, 2008 to Feb. 28, 2010

Subsidy Percentage:
ARRA COBRA Subsidy: 65%
Defense Act COBRA Subsidy Extension: 65%

Eligibility Period Extended

The current COBRA subsidy program under the American Recovery and Reinvestment Act (ARRA) provides a nine-month subsidy for COBRA continuation coverage to individuals who are involuntarily terminated from employment AND lose coverage as a result of that termination on or after September 1, 2008 through December 31, 2009. Under the Defense Act, a 15-month subsidy for COBRA continuation coverage will be available to individuals who are involuntarily terminated from employment on or after September 1, 2008 through February 28, 2010 and are eligible for COBRA coverage related to the involuntary termination.

Thus, under the Defense Act, only the termination from employment, not the loss of coverage, must occur on or before February 28, 2010. For example, an individual who is involuntarily terminated on February 2, 2010 and has employer-provided coverage through the end of February will be eligible for the subsidy even though the loss of coverage does not occur until March 2010—after the expiration of the eligibility period. This nuanced change is meant to take care of a concern that we had addressed in the last One Minute Memo that employees who would have lost coverage on January 1, 2010 due to a December involuntary termination would not have been eligible for the ARRA COBRA subsidy.

Subsidy Extension is Retroactive

The Defense Act provides for the retroactive application of the subsidy extension. Any individual who previously had the federal COBRA subsidy but exhausted it after nine months will have an opportunity to have COBRA coverage at the subsidized rate for an additional six months. (The law does not extend the maximum period of COBRA continuation coverage that is otherwise required by COBRA.) If an individual continued on COBRA by paying the full COBRA premium after exhausting the nine-month subsidy, the excess premium amount paid must be refunded or credited to the individual. If the individual terminated his or her COBRA coverage after the nine-month subsidy period was exhausted, the individual will have the chance to restart COBRA at the subsidized rate retroactive to when he or she stopped paying for COBRA. To continue their coverage they must pay 35% of premium costs by February 19, 2010 or, if later, 30 days after notice of the extension is provided by their plan administrator.

New Notice Requirements

Under the notice provisions included in the Defense Act, any individual who was eligible for the ARRA COBRA subsidy on or after October 31, 2009, or who is voluntarily or involuntarily terminated on or after that date, must be provided a notice with information regarding the subsidy extension. This notice must be provided no later than February 19, 2010. (Notices to those who become eligible for the COBRA subsidy after December 21, 2009 must be given in accordance with the timing under general notification rules of COBRA.)

In addition, any individual who was eligible for the ARRA COBRA subsidy, but either was dropped from coverage for failure to pay a COBRA premium or who paid the full COBRA premium after they exhausted their ARRA COBRA subsidy, must be provided with information regarding the Defense Act extension and the right to make retroactive premium payments at the federally subsidized rate. This notice must also be provided by February 19, 2010.

In order to avoid issuing a refund or applying a credit, employers may want to promptly notify those individuals whose subsidy expired but who still have the chance to pay their COBRA premiums for November and/or December of the extension so that they may continue COBRA on the reduced premium basis. The government is expected to develop model notices for use by employers as it did for the ARRA COBRA subsidy earlier in 2009.

Finally, COBRA may be extended yet again in 2010. An extension to June 30, 2010 has been proposed in the Jobs for Main Street Act, 2010, which is currently being debated in Congress.

Scott Hauge
Small Business California
2311 Taraval Street
San Francisco, CA 94116

Cobra Subsidy/CEA Weekly Update

The California Employers Association is a member of SB Cal. I thought this information may be useful to you.

Please use this link to view the California Employers Association (CEA) Employer's Update article on Cobra Subsidy:

Scott Hauge
Small Business California
2311 Taraval Street
San Francisco, CA 94116
Marty Keller, the Governors Small Business Advocate, has called a meeting of small business leaders January 5th. The purpose of the meeting is to discuss “specific ways that the state of California can support our small businesses”.

He has asked that we provide him any thoughts we might have prior to the meeting. Please give me your thoughts.

Also I would be interested in how your business is doing. Please let me know the industry you are in and whether you are optimistic or pessimistic for 2010? Will you be hiring in 2010 or reducing your staff?

Small Business California will be sending out its annual survey next month. Please let me know if you would be willing to help us circulate this. To see our past surveys go to our website

Scott Hauge
Small Business California
2311 Taraval Street
San Francisco, CA 94116

Health Reform - The Action Moves to Conference

I hope you are enjoying the Holidays.

I am on the Board of the Pacific Business Group on Health. While the organization is made up of larger companies they do some terrific work around trying to reduce health care cost and impacting the recently passed House and Senate bills. I believe that on these issues big business and small business are aligned.

This is clearly much longer than most emails I send but I think small businesses must understand these important issues and as we talk to Congress members reinforce the importance of these reforms.

Small Business California has joined PBGH in their efforts. I welcome your comments.

Have a wonderful New Year. 2010 is the year I will see my 11 year dream come true that being a Volunteer in Medicine Clinic in SF.The clinic will be called Clinic By the Bay and will open in the summer of 2010. Thank you to all that have contributed to the Clinic.Small Business California has been an important part in making this happen and it is an example of small business looking to find solutions to helping the working uninsured get health care.

Small Business California looks forward to working with all of you in 2010 in getting the voice of small business heard in Sacramento and Washington.

PBGH Board & Colleagues:

With the passage today of the Senate health reform bill, the action now moves to forthcoming conference committee effort to merge the House and Senate provisions. As you know, the “devil’s in the details” – but the details also have the prospect of including many “angel” concepts that are crucial to building a platform for creating a more effective delivery system in the years to come. In the coming weeks, you will be seeing mountains of analysis and reviews of the major issues. What follow is a quick list of two types of issues: first major delivery reform issues (where PBGH has been focusing its efforts on your behalf), and second the major issues relating to the “big ticket” employer and coverage issues.

Delivery Reform: after lots of work in the House and the Senate the prospects of “bending the curve” (for both the federal government and the private sector) and promoting better quality are real. However, there are two big “ifs.”

First, the Senate and the House have different elements, with different “strengths.” Of note, many of the Senate delivery reform provisions were added directly in response to the efforts of PBGH and others to make proposals more robust. If, however, we end up with the lowest common denominator – we will be in VERY bad shape. PBGH has organized other employer groups along with labor and consumers, to push for the strongest final reform package. We have already provided our recommendations to the White House, Senate and the House (see Recommendations sent December 21, 2009 at

ACTION OPPORTUNITY: We will be updating this document and resending to policy-makers the first week of January. PBGH members are invited to join as endorsers and to encourage other state or national groups to which you belong to also join this effort. If interested, contact Peter Lee at

Second, if legislation passes – the “devil” will be in how a huge array of programs is implemented. PBGH and other groups will need to be engaged, vigilant and dogged in assuring that the myriad programs enacted are actually implemented with an eye to meeting the needs of patients and purchasers.

There are many delivery reform issues in play (see the Recommendations noted above for details), but the big issues – many of which are already garnering huge pushback from providers – include:

Establishing an Independent Payment Advisory Board. Originally framed as the “Independent Medicare Advisory Board,” this entity proposed in the Senate would be empowered to make recommendations regarding both Medicare AND actions that could reduce costs and improve quality in the private sector. As proposed, some of its recommendations would be required to receive “fast-track” consideration by Congress – though these fast-tracked recommendations could not affect hospitals and hospices until 2020 (which have other cost cutting provisions in the bill). Through our work, the Board is called on to issue annual reports on quality and cost trends in Medicare and the private sector.

Speeding Up and Improving Payment Reforms. Many steps are geared to speed up payment reforms by Medicare and encourage those efforts to align with private payers.

Robust Comparative Effectiveness Research Enterprise. It is critical that there be a well funded and truly independent process to assess what treatments and interventions work. Just as important, the results of that research need to be used to improve care.

Effective Measurement and Public Reporting. A broad coalition of groups, Stand for Quality, that PBGH helped organize is pushing for priority setting, developing measures and data collection. There continues to be substantial pushback by providers in the area of public reporting.

Release of Medicare Data. One of the big last-minute successes on the Senate process was to add a provision to release Medicare data for use in developing performance reports on providers. This is HUGE and is the focus of huge pushback from providers.

Reform Issues In Play: There are major issues in play that could have dramatic impacts on employers, consumers and providers. While the conventional wisdom is that on average Senate provisions will “win-out” is likely correct…it is also correct, that you can easily drown in a lake that is “on average” only 2 inches deep. There will definitely be some “wins” for the House. While PBGH has and will continue to focus its attention on the delivery reform issues discussed above, what follows – building on the request at the PBGH Board meeting – is a quick reference grid of some of the big issues. I’m NOT, however, giving any predictions on how these issues will pan out.
For a good detailed side-by-side of the major elements of reform see Kaiser Family Foundation,
For a good review of major issues specific to employers see some good work done by the HR Policy Association.

ACTION OPPORTUNITY: PBGH members are encouraged to advocate on these issues – the White House and Congress needs to hear from those who pay for and receive care (they’ll be hearing loud and clear from the providers and suppliers whose incomes are at stake).

The House and Senate have in common broad provisions that will dramatically change how health care is covered and paid for. Without going in the details, those provisions include:

Individual Mandate – require individuals to have “acceptable” coverage (ISSUE: if the penalty is small, there could be risk selection as healthy individuals opt-out until they need coverage)

Employer Mandate – require employers to provide coverage or pay a penalty (ISSUES: what constitutes acceptable coverage could raise big issues for employers, dependent coverage requirements, part-time and seasonal employees)

Expansion of Public Programs – there will be large expansions of Medicaid (ISSUE: since states pay a portion of Medicaid, the size of the expansion will have big implications for state budgets over time)

Subsidies for Individuals and Employers – there will be subsidies for individuals through “Exchange” and to small businesses in the form of tax credits; for large employers through a temporary reinsurance program (ISSUE: for large employers there is the potential of some employees “opting in” to get coverage through the Exchange – which could have major risk selection implications)

Insurance Underwriting and Coverage Rules – guaranteed issue (no screening for pre-existing conditions), no lifetime caps; many consumer protections; maybe caps on non-health care spending

Exchanges to Offer Coverage – State (and in the House version a National) Exchanges will offer plans for individuals and employees of small business (ISSUES: there are many issues regarding how plans in Exchanges operate, plan designs and aligning with other efforts to promote delivery reform)
Defined “Essential Benefits” – all plans must offer “essential benefits,” including coverage of preventive services (House defines as 70% of actuarial value of covered benefits; Senate 60%) (ISSUE: what is on the list and what the actuarial value are have huge implications for all employers and consumers)

Cafeteria Plans – Caps FSA contributions at $2,500 and excludes OTC medications without a doctor’s prescription under FSAs, HRAs and HSAs. Penalties on non-medical HSA distributions increased to 20%

Paying for Expansion – both House and Senate reduce Medicare Advantage payments significantly

Promoting Wellness – national strategies to promote health and wellness

Fair Share from Pharma – there is lots of pressure on pharma to “kick in” more to reform than hand-shake deal of $80 billion over ten years (this SHOULD happen – with closing of donut hole and coverage expansion, pharma has plenty of room to support lowering costs)

What follow are some of the provisions in the House or Senate provisions that are particularly important from an employer perspective AND are very much in-play.

Paying for Expansion:

Tax on high income individuals
Limits contributions to FSAs and scope of HSAs

Tax on "Cadillac Plans" (BIG employer issue - depending on how structured could affect many benefit offerings in out years)
Fees on RX, medical devices, health insurance - will all be passed on to employers and employees

Employer Mandate:

"Pure" pay-or-play mandate with minimum contribution for full and part-time (OR pay 8% of payroll penalty)

Penalty only when coverage for full-time employee does not hit 60% actuarial value

Exchange & Employee "Opt Out" of Employer Coverage


Provision requires some employers (where the ee's contributions to the plan is very high) to be given voucher to buy in Exchange. Few employees likely affected, but sets precedent and has potential of adverse selection.

Wellness Provisions:

Grant program for small and mid-sized employers, BUT participating employers must offer the programs to all employers and cannot mandate participation or use participation as a condition to receive any financial incentive.

Increase incentive limit to 30% of total premium
Secretary of HHS would have the authority to issue regulations allowing financial incentives up to 50%

Retiree Lock-In:

Prohibits any post-retirement reductions in benefits for retirees unless same reduction done for actives

PBGH continues to “keep our eyes on the prize” of delivery system re-engineering and payment reform that truly moderate health cost trends.

Feel free to contact me if you have questions or comments. AND…best wishes for the holidays.

Peter V. Lee
Executive Director,
National Health Policy
Pacific Business Group on Health
221 Main Street, Suite 1500
San Francisco, CA 94105
Phone: 415-615-6368

Scott Hauge
Small Business California
2311 Taraval Street
San Francisco, CA 94116

7a and 504 Loans

The President has sign the Department of Defense bill that allocates $125 million to continue the increased guarantees on 7a and 504 loans and waives the fees.

For anyone that had a loan funded after the stimulus money ran out but before this additional stimulus you will not have your fees reimbursed. This will start December 28th so if any of you have funding that may come before December 28 I suggest you wait.

As I have indicated we have more work to do to pass HR 4302 which will extend funding for the fiscal year.

I have 20 associations ready to sign a letter to California House members but I need your help. If you know a House member and work with them please let me know. I can help you approach them to see if we can get them to cosponsor as we did with Senators Boxer and Feinstein.

Scott Hauge
Small Business California
2311 Taraval Street
San Francisco, CA 94116

Energy Grant/Volunteers in Medicine

Small Business California has received a grant from the Energy Foundation to develop a newsletter called Building Stronger Chambers. This newsletter identifies Chambers around the state that have identified funds and assistance for members from utilities, water agencies and air districts.

If you are part of a local Chamber that has also been working on this please let me know. Could you also let me know if your local Chamber would like to receive this newsletter. See newsletter below.

I am pleased to report that the National Association of Government Guaranteed Lenders is celebrating its 25th anniversary and in honor of this and in recognition of the efforts of Biff Bernhard, one of the Founders on NAGGL and myself as a small business advocate has donated $2500 to my Volunteers In Medicine clinic in SF Clinic By the Bay. NAGGL has been a great advocate for small business over these 25 years and I am honored that they chose to recognize Clinic By the Bay in celebrating their success.

C of C GreenSheet

Building Stronger Chambers One Sustainable Step At A Time

What is this ?

"Building Stronger Chambers" means chambers of commerce inCalifornia successfully identifying funds and assistance for members from utilities, water agencies and air districts so members can save money on energy and water use and take advantage of financial incentives for transportation alternatives. "Stronger Chambers" attract new chamber members successfully making money as green entrepreneurs.The C of C GreenSheet is about and written by local California chamber of commerce organizations and members. The aim, with your help if you are willing to forward this to your colleagues, is to distribute the C of C GreenSheet to all CA chambers of commerce sharing these success stories and attracting stronger members for all chamber organizations.

The GreenSheet is edited by Hank Ryan serving on behalf of Small Business California. Please email or call (510-459-9683) with stories and suggestions.

Scott Hauge
Small Business California
2311 Taraval Street
San Francisco, CA 94116
It now appears with Senator Nelsons supporting the Senate bill that we will have a health bill passed and signed by the President.

What is not being discussed is that SF has a Healthy SF Ordinance in place where employers with 20 or more employees have to either provide insurance or buy into the City plan or set up something else to meet the City requirements.

SF government has been very clear that their City plan is not insurance so if it is not are employers who pay into the City plan also subject to the Senates requirement to pay $750 to the Federal government and meet the Citys requirements.

Scott Hauge
Small Business California
2311 Taraval Street
San Franisco, CA 94116

Money for SBA Loans

See story below.

This bill includes money to continue the 90% guarantee on 7a and 504 SBA loans and the waiver of fees on these loans. The Senate passed the bill earlier so we just need the Presidents signature.

As you will recall the stimulus money ran out in November and SBA loans immediately dropped like a rock.The additional money should be enough to cover SBA small business loans until February and between now and then we hope to pass S2869 in the Senate and 4203 in the House for funding through the fiscal year.

Senators Feinstein and Boxer are coauthoring the Senate bill due in large part to SB Cal efforts and 13 Associations including the National Association of Government Guaranteed Lenders, the National Small Business Association and our affiliate members CALTEL,Plumbing Heating and Cooling Contractors of California and our soon to be affiliate member the Northern California Retail Booksellers Association. We also received significant help from Jim Baird owner of Bay Area Development.

We will start looking for cosponsors in the House and have 20 associations that will be signing the letter we will be writing. If you have a relationship with a House member please let me know and I will forward to you our letter.

Saturday, December 19, 2009

Senate Approves Defense Bill, Moves Ahead on Health Care

December 19, 2009, 8:33 A.M.

The Senate voted 88-10 in favor of a $636 billion Defense appropriations bill early Saturday morning, clearing the way for consideration of a final health care measure that Democratic sources say is on pace to pass before Christmas Day. Full Story

Scott Hauge
Small Business California
2311 Taraval Street
San Francisco, CA 94116

San Francisco Budget Deficit

You all have read about the SF budget deficit projected for next year. Here are some revenue raisers being considered for the November 2010 ballot.

$616 million Earthquake Safety Bond
Gross Receipts Tax (straight or hybrid)
Utility Users Tax (both increase to commercial and new residential)
Sales Tax increase
Hotel Tax increase
Parcel Taxes (with higher rates for commercial properties)
“Congestion Charge” for vehicles
Local Vehicle License fee
Condo Conversion expedition fee
Taxi-Cab medallion fee
Alcohol Fee/Tax
Soda Fee/Tax
Medical Marijuana Tax
Income Tax

Scott Hauge
President Small Business California
2311 Taraval Street San Francisco, CA 94116


S2869 is the bill we have been working so hard to get passed. Note it passed today and Senators Feinstein and Boxer were coauthors. See below

House representative Abercrombie has a similar bill in the house and we are very hopeful this gets passed this year.

For those of you involved in the International market note the passage of S2862.

December 17, 2009
Contact Information:
Vicki Ekstrom (Landrieu)
Matther Berger (Snowe)


Bills to increase loan limits and improve international trade head to the Senate floor.

WASHINGTON – The United States Senate Committee on Small Business and Entrepreneurship today passed two bills to increase access to capital for small businesses and enhance small business trade opportunities.

S. 2869, the “Small Business Job Creation and Access to Capital Act of 2009,” includes provisions to increase Small Business Administration (SBA) loan limits and extend government guarantees and fee eliminations enacted in the American Recovery and Reinvestment Act earlier this year. S. 2862, the “Small Business Export Enhancement and International Trade Act” will ensure small businesses have access to the resources and tools needed to explore new export opportunities in emerging markets or expand their current export business.

“By increasing the loan limits, small businesses across the country have greater access to credit. The SBA estimates that these limits will increase small business lending by $5 billion next year and will be budget neutral over time,” Chair Landrieu said. “America’s 29 million small businesses are really struggling with skyrocketing health insurance premiums and a tight credit market. Now that we have stabilized Wall Street, it is time to jump-start Main Street, and these bills will do just that.”

“Our most fundamental domestic challenge is to swiftly turn the economic tide and spur employment opportunities for the millions of unemployed and underemployed Americans. And the fastest route to doing just that runs straight through Main Street small businesses in cities and towns all across this nation,” said Ranking Member Snowe. “The bills this Committee passed today will augment credit availability and assist small businesses to market their products overseas, both of which will pay tremendous dividends on the job creation front. I thank Chair Landrieu for her efforts to pass these bipartisan bills in a timely manner, and I look forward to their swift passage by the full Senate.”

S. 2869 contains several critical provisions to bolster SBA assistance to America’s nearly 30 million small businesses and aspiring entrepreneurs. Specifically, the bill would:

Increase the loan limit on 7(a) loans from $2 million to $5 million;
Increase the loan limit on 504 loans from $1.5 million to $5.5 million;
Increase the loan limit on microloans from $35,000 to $50,000 and increase the maximum loan made to a microloan intermediary from $3.5 million to $5 million;
Allow the 504 loan program to refinance short-term commercial real estate debt into, long-term, fixed rate loans;
Extend the authorization to provide 90 percent guarantees on 7(a) loans and fee elimination for borrowers on 7(a) and 504 loans through December 31, 2010; and
Direct the SBA to create a website where small businesses can identify lenders in their communities.

S. 2862 would strengthen and improve support for American entrepreneurs seeking opportunities to expand their business, create new jobs and compete in the international market. The bill would also:

Establish an SBA Associate Administrator for International Trade to carry out the Agency’s international trade programs and formulate its trade and export policy;
Bolster the number of SBA export finance specialists assigned to Export Assistance Centers;
Raise, from $2 million to $5 million, the maximum amount of an International Trade Loan or Export Working Capital Program loan;
Establish in statute an Export Express program and expand the maximum loan size from $250,000 to $500,000; and
Create a State Trade and Export Promotion (STEP) Grant Program to increase the number of small businesses that export and increase the value of the exports by small businesses.

Scott Hauge
Small Business California
2311 Taraval Street
San Francisco, CA 94116

SBA Loans and Jobs Bill

Great news. The House will be passing 2 bills this week. Department of Defense appropriations will include $125 million for SBA loan programs to continue the stimulus thru February 2010.

They will also pass a Jobs bill that has $354 million to continue stimulus for the balance of the fiscal year.

It appears the Senate will pass the Defense bill by Dec 23 and then the SBA can continue making stimulus loans. The Senate will then pass the Jobs bill when they come back in January.
Small Business California, the National Small Business Association along with the 504 lenders association[NADCO] and the National Association of Government Guaranteed Lenders have been very instrumental in getting this done. We will continue to push the passage of S 2869 which also deals with SBA and would increase the 7a loan size to $5 million.

Speaking of S2869 SB Cal has been working hard to get Senators Boxer and Feinstein to coauthor. We received word yesterday that Senator Boxer has filed the papers to add her to the bill. We have been told by Senator Feinstein’s office that she is looking at this and we anxiously await her response.

Thank you Senator Boxer.

Senator Feinstein has been added as a co-sponsor of S. 2869 (12/16/09)

Yesterday at the request of Small Business California the SF Board of Supervisors passed a resolution asking the Senate and the House to support increased funding for SBA loans. I want to thank the President of the Board David Chiu for introducing this and Regina Dick Endrissi the Executive Director of the Small Business Commission for making this happen.

(December 16, 2009)

Scott Hauge
Small Business California
2311 Taraval Street
San Francisco, CA 94116

Healthcare Issues

After a tense meeting December 14, it appears the Dems will drop the Medicare buy in [ 55 to 64 year olds] from the Senate health bill. As you will recall they previously dropped the public plan. This according to the Washington Post and NY Times. If this true it would appear to me that the Senate will have the 60 votes they need to move the bill forward to conference committee. What I don’t know is if the abortion issue is resolved in the Senate and if there will be any resistance from the liberals in the Senate for dropping the public plan and the Medicare buy in.

We continue to push hard for the passage of 2869. See below outline of the bill. I confirmed yesterday that Senator Boxer will become a cosponsor on the bill. SB California will be sending a letter of support on this and will be joined by a coalition of about 10 California small business associations. We are also working with NADCO and the National Association of Government Guaranteed Lenders.

Last night Congressman Abercromie from Hawaii introduced in the House the House version of S 2869 - H.R. 4302.

December 14, 2009
Legislative Update on New Senate Bill S. 2869
Late last week, the leadership of the Senate Small Business Committee, Senator Mary Landrieu (D-La), Chairperson, and Senator Olympia Snowe (R-Me), Ranking Member, introduced the “Small Business Job Creation and Access to Capital Act of 2009”. Committee mark-up for this bill, S. 2869, is scheduled for December 17th. I am writing to ask that you immediately contact your Senate offices asking your Senators to cosponsor this bill. Time is critical and you should make this effort before the close of business on this Wednesday, November 23rd.

As of now, the following Senators have already signed on as co-sponsors:
Senator Byron Dorgan (D-ND)
Senator John Kerry (D-Ma)
Senator Joe Lieberman (I-Ct)
Senator Jeanne Shaheen (D-NH)

Our thanks to these Senators and the Committee leadership for introducing and co-sponsoring this legislation so critical to helping small business borrowers get back to a growth mode by enabling us to provide more long term capital to them. Additionally, our thanks go out to the CDCs that have worked so well in educating both Senators and staff about 504 and its benefits in their states. These efforts will certainly pay off for your borrowers if this bill moves quickly.

The bill addresses several requests made recently by President Obama (including authorizing the extension of the 504 stimulus provisions through calendar 2010) to substantially expand access to capital for small businesses. NADCO Leadership strongly supports the bill.

To further explain, as many of you know, funds for offset of the bank and CDC processing fees that were provided by the February stimulus bill have been exhausted. This bill authorizes extension of these fee offsets if Congress APPROPRIATES funds for the programs. NADCO continues to support all efforts to get Congress to provide new funds for these fees, but this is still being discussed by the key Congressional leadership and is not assured at this time. We encourage you to discuss the need for additional funding to offset these fees with your Members of Congress, and ask them to request this from the Appropriations Committees.

The many benefits for the loan programs and for small businesses of S. 2869 include:


l. Loan size increases - - - permanent 504 loan maximum increases were provided as follows:

Regular and public policy goal loans would be increased to $5 million;

Small manufacturer loans would be increased to $5.5 million; and

Energy loans would be increased to $5.5 million.

2. Fee reductions - - - both 504 and 7(a) fee reductions would be authorized through December 31, 2010 (current authorizations are sunset September 30, 2010).

3. Alternative size standard - - - an interim size standard of $15 million net worth and $5 million net income would be provided for both 504 and 7(a) loan applicants until such time as SBA establishes a size standard for both programs based on maximum tangible net worth and average net income.

4. Temporary refinancing - - - authorizes additional financing under 504 for debt refinancing and payment of business expenses. It would be sunset two years after date of enactment and differs from the permanent debt refinancing program created by the stimulus bill this year:

Program cap - - - although part of the regular 504 program and subject to use of its annual program level authorization, it would be limited to a maximum aggregate approval level of $4 billion per year.

Fees - - - in addition to the regular fees, SBA would impose an additional fee if it determines there will be additional cost attributable to refinancing.

Use of proceeds for debt refinancing - - - requires that the debt - - -

1. has been incurred to acquire a fixed asset that is eligible for 504 financing not less than two years before the loan refinancing application
2. is a commercial loan and not subject to a Federal guarantee.

As with the permanent debt refinancing program,

1. the new debt must be collateralized by the fixed assets acquired
2. the borrower must have been current on all payments for at least the past year
3. the existing debt must have been incurred for the benefit of the borrower.

Alternative to jobs test - - - in lieu of the otherwise required jobs test, the eligibility of the borrower may be based on the current jobs in the business times $65,000, with pro-rata credit for part-time jobs.

Loan to value ratio - - - the loan must have a loan to value ratio not exceeding 80%; however, if the collateral appraisal does not satisfy this requirement, the borrower may inject additional cash or other collateral to correct the deficiency.

Use of proceeds for business expenses - - - if there will be debt refinancing, the proceeds may also be used solely for the payment of business expenses, which must be specifically described and the amount itemized.

Additional limitation - - - no part of the loan may be used for non-business purposes.

Use of PCLP - - - the loan may not be approved under PCLP authority.

Borrower loan size - - - the maximum amount of a micro-loan is increased to $50,000.

Intermediary loan size - - - the maximum loan to an intermediary is increased to $5 million.


1. Loan size increase - - - the maximum amount of a 7(a) loan would be increased to $5 million gross; the maximum net guarantee would be increased to $4.5 million until 1-1-2011 when it would be reduced to $3.75 million (in accord with the guarantee %).

2. Loan guarantee percentage - - - the authorization for a maximum loan guarantee would be increased to 90% on loans of all sizes until 1-1-2011 and which time it would revert to the customary 90% on loans up to $150,000 and 75% on larger loans.

(Chris Crawford President/CEO , 703-748-2575,

Scott Hauge
Small Business California
2311 Taraval Street
San Francisco, CA 94116

Additional Stimulus Money for SBA Loans

You all know SB Cal is working very hard along with the National Association of Government Guaranteed Lenders to get additional stimulus money for SBA loans.

See below what has happened since money ran out in November.

Loan Volume has fallen back to pre-recovery act levels the last 2 weeks.

Doing a quick chart using the SBA numbers, here is where we are:

Scott Hauge
Small Business California
2311 Taraval Street San Francisco, CA 94116

Wednesday, August 26, 2009

In previous emails I have talked about the sales tax inequity for contractors bidding on jobs where a large manufacture/ contractor also compete for work.
This inequity not only hurts small business but cost the state close to $1 billion.
Yesterday we met with Betty Yee the Chair of the Board of Equalization and she confirmed this can only be fixed by legislation.
We then went across the street to the Capitol and met with Daryl Steinberg’s budget person and briefly with the Senator. We are hoping that the Senator will send a letter of inquiry to the Board of Equalization on this issue.

As I have told you one of the benefits SB Cal provides its members is that if you send us something you would like the government to take action on or have a question of government we will send your letter to our contacts in state government if we agree your issue.
The first request we had was from Skip Brown from Delta Construction who sent us on August 4 his letter to the governor. He has been working on this issue for 20 years with no success. Yesterday he was in the conversation with Betty Yee and Senator Steinberg.
I don’t think any business organization provides this kind of service to its members.
Also if you are meeting with government people and they ask how the state can get more revenue in these difficult economic times cite this example.

It is going to be a busy week for SB Cal. Today we are meeting with Speaker Pelosi’s office on Healthy Families. On Monday we will be meeting with Assemblywoman Jackie Speier and presenting the small business agenda and the concerns we have on the health debate. A week from today I will be part of a program at the SF Chamber speaking further on the health issue. Attending the event will be Speaker Pelosi and Mayor Gavin Newsom.
We are out there constantly getting the voice of small business heard.

Scott Hauge
Small Business California
2311 Taraval Street
San Francisco, CA 94116

Tuesday, August 18, 2009

Health Insurance Cooperatives/ Small Business California Fundraiser

The new buzz words in the health debate is Health Insurance Cooperatives. It appears that a public health plan is facing serious political problems and President Obama seems to be backing away from requiring a public health plan to be part of any major health reform.
What is a Cooperative- A health insurance cooperative is a member owned nonprofit group. It would provide its members with health insurance options. Cooperatives could be formed at a National, State or local level.
Senator Kent Conrad has proposed this to compete with private insurers.
Broadly Senator Conrad’s plan would create a system in which government would offer seed money[$6 billion] to doctors, businesses and hospitals to form cooperatives. Eventually these coops would become self supporting. A temporary government board would help set up the coop which Conrad has suggested might be a national entity with state-level affiliates.
What do you think about? Is it good or bad for small business.
I get a lot of calls from the media on the health issue and I want to put together a list of small business owners around the state that will speak to this issue. Please let me know if you are interested. Be sure to include contact information and location

On Thursday Small Business California will be doing a fund raiser recognizing 25 years of small business leaders in SF. I have mentioned this before but it is really coming together with about 80 small business leaders attending. I believe SF is the only place in the country that has a Small Business Commission pat by the voters.

A couple of weeks ago I wrote about the sales tax inequity for one of our member. I said as a benefit to our members we will use Small Business California contacts in state government and with associations to get their issue addressed. I heard a couple of days ago that Betty Yee head of the Board of Equalization will be contacting me in the next couple of weeks to discuss this issue.
We have also garnered letters of support from the SF Chamber and the SF Chapter of the Building Owners and Managers Association. I also want to recognize Barbara Kaufman who represents the governor in the Bay Area for delivering the letter to Betty Yee. I would appreciate your thanking her. You can just hi the reply all as her email is above.
We believe this could increase revenues to the state in the area of $1 billion and close an inequity for small business.
We are also in contact with the LA Times on this issue.. If you want a copy of the letter we have sent on this issue please contact me. When the governor and legislators or any government people ask you where they can get more revenues you can cite this.
Also this is a great example of what Small Business California can do for its members.

Scott Hauge
Small Business Califortnia

Thursday, August 06, 2009

Small Business Tax Inequity/ Scam on California Businesses

A few weeks ago I indicated that Small Business California was offering a new benefit to our members that being where appropriate sending their concerns and comments to state lawmakers. One of our new members took advantage of this and sent me a letter to the Governor requesting that he look into a tax inequity whereby large material suppliers/contractor pay a different tax on projects to the state than small construction contractors like his. On one job alone where he was the successful bidder his taxes on the project was $21525 and the taxes on the same project by a large material supplier/ contactor was $10700.
It is estimated that if this loophole was closed the state would save hundreds of millions of dollars and small businesses like his would have a level playing field
Small Business California sent a copy of the letter to two representatives of the Governor, Senator Steinberg’s office and Speaker Bass’s office. Barbara Kaufman in the Governor’s office in SF hand delivered the letter to Betty Yee the Chairwoman of the State Board of Equalization.
We of course are going to pursue this. While we may not be as successful with other letters we receive we offer to our members this benefit. If you are not a member please consider joining You can do so by going to our website at
.The author of the letter Skip Brown of Delta Construction has authorized us to send this letter to others so if you would like a copy please let me know

See below information sent by Senator Benoit about a scam on California small businesses

Benoit Special Alert: New Scam Targeting California Businesses
Example Of A Scam Letter Sent
I have just become aware of a new scam directed at corporations and limited liability companies in California. This scheme, which has also been reported in Nebraska and Colorado, purports that certain documents must be filed with the Secretary of State’s office and only through the third party sending the solicitation.
I sought verification of this new pattern of criminal activity and found that, just last Friday, the Attorney General won a $1.2 million ruling against these rip-off artists – this is a massive scam that everybody should keep an eye out for.
The rip-off revolves around a deceptive letter sent by that third party, encouraging these businesses to comply with their California Corporations Code filing obligations by submitting substantial fees and documents to that third party.
The letter is often characterized by the following:
· Appears similar to a Secretary of State form (generally the Statement of Information form), containing an official-looking seal
· Implies that failing to return the form and pay the requested fee may place the business in legal jeopardy, or might cause the business’ filings with the California Secretary of State to be in default or noncompliant status
· Contains a reference to a “file number,” “Corp Number,” “Corporation Number,” or “Control Number” that does not match the number assigned to the entity by the California Secretary of State
· References or quotes Corporations Code sections inapplicable to the type of entity being solicited, such as Code sections applicable to corporations when soliciting a limited liability company
· References an “annual fee” or “annual payment” rather than a filing fee and that is far in excess of the filing fee for a Statement of Information
· Indicates the submitted information will be treated as private and confidential
Businesses are working around the clock to keep customers satisfied and their doors open. With intimidating official-looking letters, it’s not hard to see why many businesses have fallen prey to this type of ruse.

Here is some official information for any business receiving one of these letters: Statement of Information forms and instructions are available through the Secretary of State’s website here, and the fee required to file the statement is $25 for California stock and foreign corporations, and $20 for California nonprofit corporations and all limited liability companies.
If you receive one of these suspicious solicitations, you are encouraged to contact the Attorney General at the California Department of Justice, Public Inquiry Unit, P.O. Box 944255 (Sacramento 94244) or through the website here. You can also reach the Public Inquiry Unit, toll-free, at (800) 952-5225 or (916) 322-3360.
In this time of economic despair, it’s essential to be vigilant against the latest efforts of swindlers to make a quick dishonest buck. I hope this information will help avoid creating additional victims of this scam.
JOHN J. BENOITSenator, 37th Senate District
Capitol Office:State Capitol, Room 4066Sacramento, CA 95814Phone: (916) 651-4037Fax: (916) 327-2187
Riverside Office: 5225 Canyon Crest Dr., Ste 360Riverside, CA 92507Phone: (951) 680-6750Fax: (951) 680-6757
Palm Desert Office: 73-710 Fred Waring Dr., Ste 108Palm Desert, CA 92260Phone: (760) 568-0408Fax: (760) 568-1501

Scott Hauge
Small Business California
2311 Taraval Street
San Francisco, CA 94116

Wednesday, August 05, 2009

Launch of Small Business Outreach on AB 32

Small Business California has been asked to sign onto the Business Alliance for a Green Economy. My first reaction when I saw the word Green in the title was that this was an environmental group who really doesn’t care about small business.. I have however looked into the goals of this organization and talked extensively with Susan and find that this really is a business group and in fact at one point Susan worked for a Chamber of Commerce.
While I might have hoped for a more neutral name that would have provided a broader umbrella for all of us, I am convinced it’s in our interest to make our voices known in this critical debate. I urge you to check out the website and statement of principles.
I will be the first to say that AB 32 is not perfect and Small Business California will speak out as it gets implemented putting forth the small business perspective. We have already done this as Hank Ryan and I have served on the committee formed to implement AB32.
Small Business California will be signing onto this and I hope you will consider doing so also. Please note that the Green Business Alliance is linked to the Green Chamber of Commerce and you can click on through the link Support California’s Clean Energy & Climate Security Plan below.
I am in close contact with Susan and I encourage you to contact her if you have any questions. I have copied this email to Susan and her phone number is 650-400-0423. Please let me know your thoughts on this.
Scott Hauge
Small Business California
2311 Taraval Street
San Francisco, CA 94116

Support California’s Clean Energy & Climate Security Plan
We all know that climate change is real and its impacts are being felt now. The good news is that solutions to climate change will keep more money in our local economy and drive economic growth.

-By cutting back on energy use, businesses will save hundreds of dollars annually on energy bills. -By driving more fuel-efficient cars and trucks, Californians will save billions at the pump.
-By reducing air pollution and greening our workplaces, businesses will experience increased worker productivity and fewer employee sick days.
-By diversifying our energy supplies and improving energy efficiency, the state’s economy will be protected from the volatility of fossil fuel markets.
-And by shifting to a clean energy economy, more than 100,000 jobs will be added over the next decade.

Shouldn’t all California businesses support this clean energy vision? Yes, but unfortunately oil companies and dirty industries that are the biggest sources of carbon pollution are more concerned with protecting the status quo than with looking out for what is best for California’s small businesses. That’s why we need your help! The Business Alliance for a Green Economy is reaching out to businesses across the state to build support a clean energy future in California.

If you are a California business owner/operator, please sign the Statement of Principles today. Learn the Facts about California’s clean energy & climate security plan and its impact on business. Join the growing chorus of businesses who support the state’s climate plan!

Questions? Email Susan Frank at

Thursday, July 30, 2009

Increased Workers Compensation Assessments/ Health Bill/CoolCalifornia Small Business Awards

In the budget signed by the Governor on Tuesday there was a provision that said all the operational cost for the Department of Occupational Safety and Health and the Division of Labor Standards will be fully paid for by employers by increased assessments on their workers compensation policies. The increased assessments will raise $67 million and be on top of the $311 million already assessed on businesses workers compensation policies.

Yesterday House Democrats came to an agreement on the health legislation pending. The significance for small business is that businesses with payrolls of $500000 or more will be required to provide health insurance to their employees or pay a charge of 8% of payroll. The bill previously had a $250000 threshold and sliding scale charges up to 8%. The House and Senate will go on recess in August and it is pretty much agreed that this issue will come back for a vote later in the year. I think it is safe to say this is a big step forward but there remains a lot of details that need to be worked out before legislation goes to the President.

CoolCalifornia Small Business Award
Who is Eligible?All California small businesses (under 100 employees) that candemonstrate climate leadership through a commitment toimplementing and promoting climate–friendly practices areeligible to apply for a CoolCalifornia Small Business Award. How are Winners Selected?This new award program will recognize multiple California smallbusinesses from across the state that demonstrate climateleadership. Each business will be scored according to theirclimate change management practices and related communicationstrategies. Applicants will be eligible for one of two awards –up to 20 CoolCalifornia awards will be presented, andapproximately five ‘Small Business of the Year’ awards will beawarded to businesses that demonstrate exceptional achievement. All award recipients’ businesses will be featured on website with links to the business’s webpage.The awards will be presented in November 2009 at the CaliforniaAir Resources Board Headquarters in Sacramento. The closing datefor applications is September 3, 2009.How Do I Apply?The application form and more information on the CoolCaliforniaSmall Business Awards can be found at:
For more information, please contact Heather Choi at916-322-3893 or

Scott Hauge
Small Business California
2311 Taraval Street
San Francisco, CA 94116

Wednesday, July 29, 2009

Treasury finalizing $15 billion to help small business Lending/ SBIR Continuing Resolution

Small Business California has been asked by the Department of Industrial Relations to advise you about a program that is available to small employers to help you help you bring employees back to work. Please see information about this.

Very small employers, can you use up to $2,500?

Then you need to know about the state’s “Bring ‘em Back” campaign. There is no need to lose a valued employee to a workplace injury because, through the end of this year, you can be reimbursed for purchases you make to bring that employee back, or keep them on the job, following an injury! That’s because the state’s Division of Workers’ Compensation will reimburse you up to $2,500 for workplace modifications that bring an injured employee back to work.
Getting reimbursed is as easy as filling out a few short forms and providing receipts. In addition to providing reimbursement for purchases that bring an employee back to work or keeping them on the job, the state’s return to work experts are available to provide consultations and presentations for employers, employer organizations or claims administrators on the subject.
Interested in learning more? Follow this link to the state’s
campaign page, or go to and click on the “Bring ‘em Back” link in the right navigation pane.
Questions? Contact a representative of the Return to Work Reimbursement Program at (510) 286-6990 or

The Washington Post reports that the Treasury Department is finalizing a $15 billion initiative to stimulate lending by the SBA by using Federal Funds from the Federal bailout program to buy up SBA loans. Hopefully if put in place this will help small businesses access capital. The Post says “While SBA credit markets are healthier than several months ago, they remain vulnerable to a relapse if,for instance, the wider financial industry suffers another crisis of investor confidence”
On the Small Business Innovative Research front the Senate on Friday passed a continuing resolution that would extend the SBIR program for another two months to September 30. As I have mentioned previously the SBIR funding will end July31st without this continuing resolution.
It is expected to pass the House today. According to people I am working with in Washington both the House and the Senate are negotiating in good faith to find a resolution to the venture capital problem.
I continue to get calls from the media on the health issue. I welcome any of your thoughts and letting me know if you will talk to the media.

Scott Hauge
Small Business California
2311 Taraval Street
San Francisco, CA 94116

Monday, July 27, 2009

Health Debate

I am sure you are following the health debate in Washington. It is Small Business California’s position that there needs to be more cost containment in both the House and the Senate bills[one in the House and two in the Senate]. Having said that, I think it is important when we talk about cost containment, we do it in the context that quality of care can also be improved with cost containment
I believe when people hear the term cost containment without the quality discussion, it is thought of as just reducing cost and quality of care goes down. I contend this is not necessarily the case. For example reducing hospital cost by eliminating staph infections is a cost reduction and improves the quality of care. In Pennsylvania they have drastically reduced staph infections by monitoring the hospitals and reducing payments when staph infections occur. These are preventable.
Disease management, Electronic medical records and pay for performance just to name a few also reduce cost and improve quality of care .
I think it is important when you are speaking to people on this issue that you keep this in mind and try not to use the term cost control without the quality of care discussion being included.
For those of you that are advocates for small business this is really critical in your discussions.

Scott Hauge
Small Business California
2311 Taraval Street
San Francisco, CA 94116

Tuesday, July 21, 2009

FLASH: SCIF Sale Still There

While all the details are not in it appears the budget includes the sale of State Fund raising $1 billion. Small Business California has opposed this as we feel it could have a severe impact on small businesses that remain in State Fund. These small businesses include businesses that have no other options because they are in a high hazard industry.
The details of the sale have not been explained but it seems to us if the better business in State Fund is sold off that would mean that the remaining businesses would have their rates increase.
I really would appreciate your comments and letting me know if you are currently covered by State Fund.
See link below.

Scott Hauge
Small Business California
2311 Taraval Street
San Francisco, CA 94116

Monday, July 20, 2009

CIT $3 Billion Rescue

In a last minute deal CIT will receive $3 billion from major bondholders to keep the company out of bankruptcy. This gives the company time so that it can put together a debt exchange offer to meet its debt of $7.4 billion which comes due in the first quarter of next year.
Besides loans through the SBA CIT is a major short term financier to about 2000 vendors that supply 300000 stores. According to the NY Times ,analyst say 60% of the apparel industry depends on CIT for financing.

On August 20 Small Business California will be hosting a fund raiser for San Francisco small business leaders over the last 25 years. San Francisco has a rich history of small business leadership over that time and as such has gotten passed by the voters the creation of a Charter Small Business Commission. I believe it is the only Charter Commission in the United States. Attending the event will be at least one past Mayor, members past and present from the SF Board of Supervisors and state legislators past and present. The proceeds of the event will go to Small Business California and Clinic By the Bay a Volunteers In Medicine clinic in SF.

Small Business California is always looking for ways to benefit our members. For our members only we will selectively send your emails to lawmakers, media and others where you have an opinion or problem. We have a lot of contacts and we believe your voice can be strengthened by our knowledge of where to send your thoughts. We focus on state issues so this is limited to state people. We also cannot guarantee results and will not send inflammatory comments.
Let me cite examples of where we have done this. A member contacted us on a problem they were having with EDD. We contacted Fiona Ma’s people in SF and the problem was resolved. Another member contacted us on a problem they were having with the state contractor’s license bureau and we referred them to a Governors representative and resolved the problem.
Again we cannot guarantee results but we think this is a major benefit to our members. If you are not a member we hope you will consider joining and taking advantage of this new benefit.

Scott Hauge
Small Business California
2311 Taraval Street
San Francisco, CA 94116

Friday, July 17, 2009

SB-Cal Letter to Timothy F. Geithner regarding CIT

Small Business California is sending a letter today to Timothy Geithner asking him to take the lead in saving CIT. While CIT is the immediate need we are also stressing that small business needs to have more access to capital.
I am getting calls from the media asking if I know small businesses that are impacted by the CIT situation. If you are one of their customers I would like to hear from you. I would also like to know if you would talk to the media.
Please tell me your story.

Scott Hauge
Small Business California
2311 Taraval Street
San Francisco, CA 94116

Tuesday, July 07, 2009

SOS: Stop VC bailout at expense of small business

Scott Hauge, founder and president of Small Business California, and Christopher White, of the Bay Area Innovative Alliiance, are sounding the alarm on behalf of small business.
Next week, Congress is scheduled to vote on reauthorization of the Small Business Innovation Research (SBIR) program, which directs $2.2 billion annually in federal grants to small technology businesses across the country.
The problem, according to Hauge and White, is that the House bill contains a provision which changes the definition of small business to include subsidiaries of multinational corporations and companies that are majority-owned by multi-billion venture capital funds and other large financial institutions, including foreign financial institutions.
Click here to read their statement. They recommend that people call Rep. Nancy Pelosi's office and Rep. Jackie Speie's office to oppose the changes and keep the original SBIR small business eligibility criteria in place.

Bruce B. Brugmann

Tuesday, April 28, 2009

SB 356 / Cal Cobra

SB 356 passed on a 6 to2 vote yesterday. This is the bill to give small business more input on regulations being put forth by state agencies. Supporting the bill was Aanestad,Correa,Negrete McLeod, Walters Wyland and Yee. Opposed was Florez and Romero. Senators Corbett and Oropeza did not vote.

This bill has a long way to go as it will go to Senate Appropriations and will most likely go to the Suspense File. It must come to the floor of the Senate by May 29th. The goal will be to get it out of Suspense and passed before that date. Thank you to all that wrote letters.
This was a major victory for small business and the small business coalition that has been formed. Small Business California through our lobbyist Lori Kammerer testified in support of the bill yesterday and her and I worked many of the members of the Committee. This bill is sponsored by the National Federation of Business and the California Small Business Association.
AB 23 passed yesterday in Senate Appropriations yesterday and will go to the Senate Floor. It will then go back to the Assembly for concurrence and then to the Governor.

This is the bill that will implement Cal COBRA’s ability to comply with provisions of the economic stimulus package. As most of you know Cal COBRA applies to businesses with 2 to 19 employees and this bill will allow the 65% subsidy for employees on their COBRA health insurance who have been involuntarily laid off from September 2008.

The notices should be going out to those employees shortly after the Governor’s signature. These notices and the subsidy will be handled by insurance carriers.

Scott HaugePresident
Small Business California
2311 Taraval StreetSan Francisco, CA 94116

Tuesday, March 31, 2009

Business Survey/ COBRA/Obama Budget

If you haven’t done so already please complete the business survey we have put together along with the California Workforce Investment Board, NoRTEC, the Assembly Committee on Jobs,Economic Development and the California Workforce Association.

Data is being collected to determine possible gaps and overlaps in workforce services available to businesses throughout the State. Information will be used to help improve the design and delivery of program services.

As you know education and workforce development came up as the second most important issue for small businesses in California.The survey is available here:
Thank you for taking a few minutes to help us make a difference

Last week I indicated that the forms are out for employers who have 20 or more employees to notify employees of their COBRA options. This must be sent to employees
By April 18. If you do not send there is a fine of $110 a day and you could have civil liabilities. If you need the forms please let me know and I will send them to you.

There is a lot of discussion about President Obama’s budget. Do you support it as a budget that will get us out of the recession or do you think it is putting too much debt on the country?

Scott HaugePresidentSmall Business California2311 Taraval StreetSan Francisco, CA 94116shauge@cal-insure.com415-680-2188

Workers' Comp Increase/ PG&E Victory/COBRA

I sent to all of you the Workers Compensation Insurance Rating Bureau Actuarial Committee recommendation of 27% effective July 1 for all new and renewal workers compensation policies. Yesterday the Board of Governors of the Bureau recommended 24.4%.It now goes to the Insurance Commissioner.

Hank Ryan representing Small Business California spoke at a CPUC hearing a few weeks ago against a rate increase by PG&E for small businesses. Last week the CPUC ruled against the PG&E increase. I believe we were the only business organization that spoke against the rate increase. TURN represented residential users and that increase was denied also.
Hank Ryan representing Small Business California is an intervener at the CPUC and he speaks out frequently at the CPUC on behalf of California small businesses.

It is expected that the Federal government will produce the notification form today for employers that are subject to notifying their employees of their COBRA options. For employers with 20 or more employees you will need to send this form to all employees who have been involuntarily terminated September 1,2008 or after.This applies only to those employees that had health insurance through your company. You will be required to pay 65% of your employees premium and will receive a refund from the Federal government
For those employers with 2 to 19 employees your insurance carrier will be sending notice and you will not be required to advance the 65%.

One interesting note is that if you are subject to Federal COBRA[20 or more employees] you are allowed to add 2% for administrative cost. If however you are under state COBRA[ 2 to 19 employees] the insurance company send the notice and bills the employee and can charge 10%.
If you would like a copy of the notification form please look on our homepage at

Scott HaugePresidentSmall Business California2311 Taraval StreetSan Francisco, CA 94116shauge@cal-insure.com415-680-2188

Small Business Survey Results / NSBA

The results of our survey are in. 616 of you completed the survey and we received at least one survey from every county in the state.

Some of the findings are:
85% say the state is generally heading in the wrong direction
81% say the economy for small business is poor or very poor
61% of you said your revenues were declining
52% said you are reducing employees or reducing employee hours.

As for issues:
Health Insurance-80% said this was the top or high priority
Quality of Public Education- 70% said this was the top or high priority
Regulations- 61% said this was the top or high priority
Repairing State Infrastructure- 61% said this was the top or high priority
Access to Capitol-57% said this was the top or high priority
Awarding State Contracts to Small Business- 57% said this was the top or high priority.
See complete survey results by going to our website

I would like to thank Jim Ross and Jim Ross Consulting in SF for all the help he has provided us in making this survey possible.

Our partner the National Small Business Association is asking for help in developing a website on how small business owners are dealing with the increasing cost of health insurance.NSBA would appreciate any help you can provide and maybe you would be willing to provide a profile. See below. If I can provide any additional information please give me a call.

Scott HaugePresidentSmall Business California2311 Taraval StreetSan Francisco, CA 94116shauge@cal-insure.com415-680-2188

NSBA is in the process of developing a Web site which will focus on how small-business owners are dealing with the increasing cost of health insurance. The site will include information about NSBA's health care policy, resources and other policy statements that are in-line with NSBA's (including documents from NSBA CORE members), links to relevant legislation, data and statistics from both outside sources and the NSBA health care survey (see below), and profiles of small-business owners on the challenges they're facing.

I'd greatly appreciate any input you might be able to provide--reports, studies, statements from your organizations, etc... I'd also like to ask for your help in getting out two requests to some of your folks.

1) We're in the process of getting small-business profiles and, ideally, would like to get a high-resolution picture of the business. We're only looking for a brief description of the challenges their business is facing in coping with the costs of health care - anything from 3 sentences to 2 paragraphs will be perfect and we don't have to have a picture. These profiles can be e-mailed directly to me at I've attached the e-mail request I used here for you.

2) The survey link below is active until middle-to-late next week. If you can send this survey along to any of your members, I'd greatly appreciate it.

Please feel free to contact me with questions or suggestions. Thank you in advance for your help on this!


COBRA and Stimulus Package

I mentioned that under the COBRA provisions in the stimulus bill small business will have some additional obligations for employees that have been involuntarily terminated. I have received additional information since that email and would like to pass it on to you.
First this will not only apply to Federal COBRA but state COBRA so if you had two or more employees from September 2008 and have laid off employees you will need to notify those employees that they are eligible for a 65% subsidy on their insurance. This notification provision will be required until Jan 1 2010.
If you have 20 or more employees and your employees have opted for COBRA you will be required to advance 65% of the premium and then submit to the Government for reimbursement. When you submit your request to the Government you will need to file a report that includes and attestation of the involuntary termination of the covered employee, the calculation of the offset, a report of estimated offsets for the next reporting period, the TINs of covered employees, the amount of the subsidy to each individual and information as to whether the subsidy provided was for individual or family coverage.
If you have 2 to 19 employees your insurance company is probably billing the exemployee. Needless to say insurance companies are scrambling right now to figure out how they will do this especially given the required information that they must provide to receive reimbursement.
Another provision you should be aware of is that exemployees will have a second chance to take up this COBRA option so in effect it seems to me that if you have laid off employees you will need to advise them of this option.
If you want more detailed information please look on our homepage at

Scott HaugePresidentSmall Business California2311 Taraval StreetSan Francisco, CA 94116shauge@cal-insure.com415-680-2188

Wednesday, January 28, 2009

2009 Small Business California Survey!

Last week I sent out our annual survey and the response has been a bit slow as we have just under 100 responses. Please take a few moments to complete the survey and forward to other small business owners. This is our chance to tell legislators and the Governor what small business is thinking and what are our concerns.
The results of the survey will be sent to every legislators and the governors office. It also sets the agenda for Small Business California.
Please help us help you.

Scott Hauge
PresidentSmall Business California
2311 Taraval StreetSan Francisco, CA 94116