S.F. to Offer Subsidies for Health Insurance

San Francisco will begin offering subsidies to thousands of city residents who are struggling to purchase health insurance, Mayor Ed Lee announced Friday.

The new program, which will be rolled out next year, will immediately benefit roughly 3,000 low-to-moderate income residents, city officials estimate. Eligible participants are legal residents who make $58,000 a year or less working for a company that takes part in the City Option program.

Under that program, a company that employs at least 20 people may pay the city a fee instead of providing health insurance, and the city then provides its workers reimbursements for medical expenses. Roughly 900 companies participate in the program.

The new initiative expands the scope of the City Option program by providing subsidies — instead of the reimbursements — for the workers to purchase insurance through Covered California, the state’s health insurance exchange. Workers can still choose the reimbursements, but the goal and hope is that they will switch to subsidies. A major incentive is that individuals who don’t purchase insurance are subject to fines under the Affordable Care Act.

“In San Francisco, no one will be left out of the promise of health reform and access to quality health care,” Lee said in a statement. “These improvements will help more low-income San Franciscans afford Obamacare health insurance plans, while leaving the safety net in place for those who need it.”

The amount of money in subsidies workers will receive depends on several factors, including their age and how much money they earn. For example, a 40-year-old who makes $41,000 a year would receive a subsidy of $2,500 — on top of a federal subsidy of $1,400 a year. That would leave them with a balance of roughly $3,000 a year to purchase health insurance.

The San Francisco Department of Public Health will administer the program, which is cost-neutral.

The new subsidies will not benefit immigrants living in San Francisco who are in the U.S. illegally. They are still eligible to receive health care services through the city’s Healthy San Francisco program. Legal residents who live outside of San Francisco but work in the city are also ineligible for the subsidies.

San Francisco has experienced a surge in the number of insured residents with the implementation of the Affordable Care Act. More than 97,000 residents have enrolled in Medi-Cal or Covered California, according to the mayor’s office, resulting in a 54 percent drop in the number of uninsured.

Emily Green is a San Francisco Chronicle staff writer. E-mail: egreen@sfchronicle.com Twitter: @emilytgreen