Anaya Nolan
San Francisco has its own set of laws and ordinances that govern various aspects of life in the city, including healthcare and labour rules. One notable example is the San Francisco Health Care Security Ordinance (HCSO), which requires qualifying employers to make healthcare expenditures on behalf of their employees working within the city limits. This ordinance operates separately from federal laws like the Affordable Care Act (ACA), and employers must comply with both sets of regulations. The HCSO sets specific thresholds, spending requirements, and documentation rules that employers must adhere to. Additionally, San Francisco contractors and lessees may have to provide covered employees with health coverage that meets the minimum standards of the Health Care Accountability Ordinance (HCAO) or make alternative payments. These laws aim to protect workers and ensure access to healthcare coverage, but they also present complex compliance challenges for businesses operating in the city.
| Characteristics | Values |
|---|---|
| San Francisco Health Care Security Ordinance (HCSO) | Requires employers with 20 or more workers worldwide to spend a set dollar amount on health care for each hour an employee works within city boundaries |
| Employers must track hours worked within city limits and apply the correct rate accordingly | |
| Employers must comply with both HCSO and federal laws like the Affordable Care Act (ACA) | |
| HCSO has its own thresholds, spending requirements, and documentation rules | |
| Employees with other group health coverage (e.g. Medicare, Medi-Cal) can complete the San Francisco Employee Voluntary Waiver Form | |
| HCSO requires employers to make health care expenditures on behalf of employees working in San Francisco | |
| HCSO applies to for-profit businesses with 20+ employees worldwide and nonprofits with 50+ employees when at least one employee works in the city for at least 8 hours per week | |
| HCSO requires employers to calculate expenditures based on hours worked, provide acceptable health care benefits or contributions, and maintain proper documentation | |
| Non-compliance can lead to back payments and financial penalties | |
| Health Care Accountability Ordinance (HCAO) | Requires employers to provide covered employees with health coverage meeting minimum standards or make an alternative payment |
| Employers must make payments directly to employees who live or work outside San Francisco | |
| Employers must provide health plan coverage where the employer pays 100% of the employee-only portion of medical coverage | |
| The plan option should be actuarially equivalent to a platinum-level plan on HealthCare.gov | |
| Employers may offer other health plan options but must make at least one option that meets HCAO standards available at no cost to covered employees | |
| Healthy Airport Ordinance (HAO) | Amended the HCAO in 2020 to include employers and employees covered by SFO's Quality Standards Program |
| Covered service contractors and airport tenants are subject to minimum compensation rates and time-off requirements under the city's Minimum Compensation Ordinance (MCO) |
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What You'll Learn
San Francisco Health Care Security Ordinance (HCSO)
The San Francisco Health Care Security Ordinance (HCSO) is a city law that requires qualifying employers to make healthcare expenditures on behalf of employees working in San Francisco. This ordinance is designed to improve access to medical care for employees. It applies to for-profit businesses with 20 or more employees worldwide and nonprofit organizations with 50 or more employees. Even if just one employee works inside the city for at least eight hours per week, the ordinance applies.
The HCSO requires employers to spend a minimum amount on healthcare for employees working in San Francisco and to report these expenditures to the Office of Labor Standards Enforcement (OLSE) annually. This includes employers with headquarters outside San Francisco but with employees working in the city, including remote workers. The required hourly expenditure rate is set by the City of San Francisco and is adjusted annually. The rates vary depending on business size, with employers needing to track hours worked within city limits and apply the correct rate accordingly.
Covered employees are those who have been employed for at least 90 days and regularly work at least eight hours per week in San Francisco. Employers are only required to make healthcare expenditures for covered employees. Required healthcare expenditures must be made each quarter, within 30 days of the end of the preceding quarter. The required healthcare expenditure, or minimum spending amount, is based on hours payable and the applicable HCSO expenditure rate, which is updated annually.
The HCSO operates separately from federal laws like the Affordable Care Act (ACA). Employers must comply with both, even if they meet ACA standards. HCSO has its own thresholds, spending requirements, and documentation rules.
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Compliance with ACA and HCSO
The San Francisco Health Care Security Ordinance (HCSO) is a city law that operates separately from federal laws like the Affordable Care Act (ACA). However, employers must comply with both the HCSO and ACA, even if they meet ACA standards.
The HCSO requires employers with 20 or more workers worldwide to spend a set dollar amount on health care for each hour an employee works within San Francisco city boundaries. This includes remote, part-time, and temporary staff who meet the hourly criteria. The required hourly expenditure rate is set by the City of San Francisco and adjusted annually, with rates varying depending on business size. For example, in 2020, the health care expenditure rate was $3.08 per hour for large employers (100+ worldwide employees) and $2.05 per hour for mid-sized employers (20-99 employees worldwide).
To remain compliant with the HCSO, employers must meet several ongoing requirements, including posting HCSO notices, tracking health care expenditures, maintaining detailed records, and ensuring that spending meets or exceeds the city's minimum contribution rate. Failing to comply can result in audits, penalties, and repayment obligations.
On the other hand, the ACA requires employers with 50 or more full-time employees to offer minimum essential coverage (MEC) to all employees. The individual mandate for Californians states that every resident must enrol in and maintain minimum essential coverage, with penalties for those without health insurance.
Compliance with both the HCSO and ACA is crucial, and businesses should stay updated on the latest regulations and requirements to avoid financial consequences and ensure they are supporting their employees' health needs.
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Health plan options for employers
San Francisco has its own set of laws and ordinances, including the San Francisco Health Care Security Ordinance (HCSO), which regulates health plan options for employers. The HCSO requires qualifying employers to make healthcare expenditures on behalf of employees working in San Francisco. This applies to for-profit businesses with 20 or more employees worldwide and nonprofit organizations with 50 or more employees. If even one employee performs work inside the city limits for at least 8 hours per week, the ordinance applies.
The HCSO mandates that employers must calculate expenditures based on hours worked, provide acceptable healthcare benefits or contributions, and maintain proper documentation. Employers must track the hours worked by their employees within San Francisco city limits and apply the correct hourly expenditure rate, which is set by the city and adjusted annually. This rate varies depending on business size.
Employers can choose to use the City Option, the Medical Reimbursement Account (MRA) to comply with the HCSO. This allows employees to use the funds to pay for qualified medical expenses, including copays, prescriptions, dental and vision expenses, and medical devices. It is important to note that the HCSO operates separately from federal laws like the Affordable Care Act (ACA), and employers must comply with both sets of regulations.
In addition to the HCSO requirements, employers in San Francisco have several health plan options to offer their employees. The San Francisco Health Service System (SFHSS) offers four Health Maintenance Organization (HMO) plans and one Preferred Provider Organization (PPO) plan. An HMO offers benefits through a network of participating physicians, hospitals, and other healthcare providers, while a PPO provides access to a network of preferred providers, but also allows employees to see non-preferred providers at a higher cost.
SFHSS also offers three dental plans: Delta Dental PPO, DeltaCare USA DHMO, and UnitedHealthcare Dental DHMO. Additionally, employees can take advantage of benefits such as Life and Disability insurance, Flexible Spending Accounts (FSAs), the Employee Assistance Program (EAP) for mental health services, and a Surrogacy and Adoption Assistance Plan.
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Healthcare coverage for employees
San Francisco has its own healthcare laws for employees, which are separate from federal laws like the Affordable Care Act (ACA). The San Francisco Health Care Security Ordinance (HCSO) is a city law that requires qualifying employers to make healthcare expenditures on behalf of employees working in San Francisco. This ordinance is designed to improve access to medical care for employees.
The HCSO applies to for-profit businesses with 20 or more employees worldwide, and nonprofit organisations with 50 or more employees. It also applies if even one employee works inside the city for at least 8 hours per week. The ordinance applies to employees working within San Francisco city boundaries, whether on-site or from home.
Employers must calculate expenditures based on hours worked, provide acceptable healthcare benefits or contributions, and maintain proper documentation. The required hourly expenditure rate is set by the City of San Francisco and adjusted annually. Rates vary depending on business size, and employers must track hours worked within city limits and apply the correct rate accordingly.
If an employer chooses to use the City Option, the Medical Reimbursement Account (SF MRA) to comply, employees can use those funds to pay for qualified medical expenses. This includes copays, prescriptions, dental and vision expenses, and medical devices. The SF MRA is 100% funded by the employer and allows employees to access money for health insurance and other health-related expenses.
The City and County of San Francisco also offer eligible employees the opportunity to enrol themselves and eligible family members in medical, dental, vision, and Flexible Spending Account (FSA) benefits. Employees can choose from a variety of medical plan options, including Health Maintenance Organization (HMO) plans and a Preferred Provider Organization (PPO) plan.
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Healthcare expenditure per hour
San Francisco has its own healthcare laws, separate from federal laws like the Affordable Care Act (ACA). The San Francisco Health Care Security Ordinance (HCSO) requires employers with 20 or more workers worldwide (or 50 or more for non-profits) to spend a set dollar amount on healthcare for each hour an employee works within city boundaries. This applies to any employee working within San Francisco city limits, whether on-site or from home.
The HCE (Health Care Expenditure) is the minimum amount covered employers must spend on healthcare for each hour worked by a covered employee. Covered employees are those who have been employed for more than 90 days and regularly work at least eight hours a week in San Francisco. The HCE rate is set by the City of San Francisco and adjusted annually. The rate varies depending on business size, and employers must track hours worked within city limits and apply the correct rate accordingly.
The average hourly HCE is calculated by dividing the total required HCEs for employees in the uniform health plan by the total hours paid to each of those employees during that quarter. Rules prohibit employers from using continuation coverage rates under the federal Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) to determine quarterly expenditures for employees enrolled in self-funded plans. Instead, these plans must use one of two options to determine expenditures: fixed expenditures or paid healthcare claims.
Under the paid healthcare claims option, the employer pays claims when incurred, and the prior year's average hourly expenditures must meet or exceed that year's HCE rate. This option is limited to uniform health plans. Employers using this option do not need to reconcile expenditures every quarter for employees covered under the plan. If actual paid claims during the calendar year are less than the required HCE, employers can make additional contributions (known as "top-off payments") through the end of February of the next year.
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Frequently asked questions
San Francisco has its own healthcare laws in addition to the ACA. The San Francisco Health Care Security Ordinance (HCSO) is a city law that requires employers with 20 or more workers worldwide to spend a set dollar amount on healthcare for each hour an employee works within city boundaries.
The hourly expenditure rate is set by the City of San Francisco and adjusted annually. The current rate is $6.35 per hour with a weekly maximum of $254.
Employers must track hours worked within city limits and apply the correct rate. Employers must also provide health plan coverage that meets specific standards.
