BALTIMORE -- State health officials have announced a program that will continue to pay the health insurance premiums of people with AIDS who can no longer work.

"We're very pleased. It's exactly what happens to people: They get sick and can't work and get caught with all these medical expenses and no insurance," said Jeffrey Grabelle, office manager at the AIDS Coalition of Baltimore, a fund-raising organization for AIDS patient services.

The Maryland AIDS Insurance Assistance Pilot Program unveiled Monday will allow people disabled by AIDS to keep their employer group insurance.

The program, which will take effect Sunday, will save the state $2.2 million the first year because the state will not be forced to pick up the entire cost of medical care for AIDS patients who maintain their insurance.

The program is expected to cost the state about $450,000 over two years, said Michael Golden, Maryland Department of Health and Mental Hygiene spokesman.

The AIDS insurance assistance program is limited to 150 people, but state officials don't expect that many applicants.

"This new program assures a person with AIDS that needed health services are obtained, continuity of care is maintained, uncompensated care is reduced, and dependency on Medical Assistance and other public assistance programs is reduced," said Adele Wilzack, department secretary.

Nelson Sabatini, deputy secretary for health care, policy, finance and regulation, said the limit on the number of program participants should not deny its benefits to anyone who needs them.

Studies showed that the number of people who lose their insurance coverage after they are forced to leave work because of AIDS-related illnesses should not be more than 125 annually during the two years of the pilot program, Sabatini said.

"We don't see the cap being a barrier," Sabatini said.

In Maryland, 2,597 AIDS cases have been reported and 1,559 people have died from the disease since January 1981, the health department said.

To qualify for the program, a person with AIDS must have a doctor's certification that he or she is unable to work, be a Maryland resident, have an income less than 200 percent of the federal poverty level, have cash assets of less than $10,000 and be unable to receive insurance under an insurance policy carried by his or her family.

The program was made possible by the Consolidated Omnibus Budget Reconciliation Act of 1989, a federal law that requires employers to extend insurance coverage for workers up to 29 months after the workers have been forced to stop working.

The law applies not only to Maryland insurance contracts, but to out-of-state contracts and self-insurance plans. It does not apply to church plans, federal plans or plans that cover fewer than 20 employees.