Updated – Changes to the San Francisco Health Care Security Ordinance in 2017

 

2017 Expenditure Rate Increase

Effective 1/1/2017, the San Francisco Health Care Security Ordinance (HCSO) Expenditure Rates will be increased to the following:

 Employer SizeNumber of Employees 2016 Expenditure Rate 2017 Expenditure Rate
 LargeAll employers w/100+ employees $2.53 per hour payable

For full-time employees,
maximum of $435.16 per month

 $2.64 per hour payable

For full-time employees,
maximum of $454.08 per month

 MediumBusinesses w/20-99 employees
Nonprofits w/50-99 employees
 $1.68 per hour payable

For full-time employees,
maximum of $288.96 per month

 $1.76 per hour payable

For full-time employees,
maximum of $302.72 per month

 SmallBusinesses w/0-19 employees
Nonprofits w/0-49 employees
 Exempt Exempt

 

Revocable Expenditures will No Longer be Permitted

Additionally, as of 1/1/2017, only money actually spent on employee health care can be counted toward compliance with the HCSO.  Revocable expenditures will no longer be acceptable.  Please note that Health Reimbursement Accounts (HRAs), including excepted benefit HRAs and integrated HRAs, are considered revocable expenditures because the employer has the option to recover any unused funds at some point; therefore, such contributions will no longer count toward compliance with the HCSO.  For more information on what constitutes a revocable expenditure, please refer to Section F of the HCSO Administrative Guidance.

 


 

What is the San Francisco Health Care Security Ordinance?

The San Francisco Health Care Security Ordinance (HCSO) is a local ordinance that established employer health care related obligations. It requires Covered Employers to meet certain obligations including, but not limited to, satisfying the Employer Spending Requirement (ESR) by making requisite health care expenditures on behalf of their Covered Employees. For more information on what constitutes Covered Employers/Covered Employees, please visit the San Francisco HCSO website.

The health care expenditure rate varies depending on the size of the employer and increases slightly each year. As of 1/1/2016, the health care expenditure rate for large employers with 100+ employees will be $2.53 per hour payable (up from $2.48 per hour payable in 2015). For small employers with 20 to 99 employees, the expenditure rate will increase to $1.68 per hour payable (up from $1.65 per hour payable in 2015).

 

New 2016 HCSO Required Notice

All Covered Employers are required by the HCSO to post an official Notice regarding the HCSO in a conspicuous place at any workplace or job site where any Covered Employee works. The HCSO has released a new 2016 Official OLSE Notice (note: the Notice is 8.5” x 14”). Covered Employers should ensure the new version of the Notice is displayed at applicable job sites.

 

Increase in the HCSO Irrevocable Spending Requirement

As a reminder, as of 2016, at least eighty percent (80%) of the required amount of Health Care Expenditures for each Covered Employee must be made as Irrevocable Expenditures. For more information on revocable and irrevocable expenditures, please visit the HCSO website.

 

The information and materials on this blog are provided for informational purposes only and are not intended to constitute legal or tax advice. Information provided in this blog may not reflect the most current legal developments and may vary by jurisdiction. The content on this blog is for general informational purposes only and does not apply to any particular facts or circumstances. The use of this blog does not in any way establish an attorney-client relationship, nor should any such relationship be implied, and the contents do not constitute legal or tax advice. If you require legal or tax advice, please consult with a licensed attorney or tax professional in your jurisdiction. The contributing authors expressly disclaim all liability to any persons or entities with respect to any action or inaction based on the contents of this blog.

Bonnie Mangels – Bonnie is the Corporate Counsel and Senior Compliance Manager for Sequoia. When not inundated in paperwork and legal briefs, her interests include arts and crafts, bunnies, and the Bay Area.