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 Size | Number of Employees | 2016 Expenditure Rate | 2017 Expenditure Rate |
| Large | All employers w/100+ employees | $2.53 per hour payable
For full-time employees, |
$2.64 per hour payable
For full-time employees, |
| Medium | Businesses w/20-99 employees Nonprofits w/50-99 employees |
$1.68 per hour payable
For full-time employees, |
$1.76 per hour payable
For full-time employees, |
| Small | Businesses 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.
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