Summary:
The San Francisco Health Care Security Ordinance (HCSO) requires “covered employers” to make certain health care expenditures for their “covered employees.” The law also requires employers to submit an annual reporting form to the San Francisco Office of Labor Standards Enforcement (OLSE) by April 30th of each year. This form will become available every April 1st. Employers can sign up for the HCSO email list here to receive an annual reporting reminder from OLSE. The Reporting Instructions and a Webinar on how to complete the reporting were recently released by the OLSE.
Who is a Covered Employer?
Employers are subject to the HCSO if they:
- employ one or more workers within the geographic boundaries of the City and County of San Francisco;
- are a for-profit business with 20 or more employees worldwide or a nonprofit with 50 or more employees worldwide; and
- are required to obtain a San Francisco Business Registration Certificate.
Who is a Covered Employee?
An employee is covered by the HCSO if they:
- are entitled to be paid the minimum wage;
- have been employed for at least 90 calendar days;
- perform at least 8 hours of work per week in San Francisco; and
- do not meet an exemption.
The following employees are exempt from HCSO requirements:
- Employees who voluntarily waive their right to all health care benefits (medical, dental, and vision) because they have other employer health coverage;
- Employees who qualify as managers or supervisors if they earn more than $97,722 ($46.98/hour) in 2018 (see earnings requirements for other years here);
- Employees who are covered by Medicare or TRICARE; or
- Employees who receive health care benefits pursuant to the San Francisco Health Care Accountability Ordinance (HCAO).
Waivers:
- Employees can only waive the HCSO benefit if they are waiving all health coverage (medical, dental, and vision) and if they are also enrolled in another group health plan.
- The latest waiver form can be found here.
- The waiver form will alleviate the need for an employer to make an expenditure for that particular employee for a one-year period or until the employee revokes the waiver.
- Waivers must be re-signed annually and kept for a period of four years.
- Employees that are exempt from HCSO due to the manager/supervisor and salary exemption do not need to sign waivers, though the employer should keep proof that those employees meet the exemption requirements.
- If an employee is not eligible for an employer’s benefit plan, a waiver cannot be requested and the expenditure must be made on behalf of the employee.
Calculations/Rates:
The amount that is required to be spent on each employee is dependent on the size of the company and the number of hours an employee works.
- For large employers (with 100+ employees), the 2018 expenditure rate is $2.83 per hour payable.
- For medium employers (with 20-99 employees), the 2018 expenditure rate is $1.89 per hour payable.
- This amounts to $486.76/month or $1,460.28/quarter for full-time employees at a large company or $325.08/month or $975.24/quarter for medium sized employers.
Timing:
Quarterly expenditures are due on April 30, October 30, July 30, and January 30 of each year. An employer would only need to make additional expenditures in the event they are not currently spending enough for their San Francisco employees on health care (this would include premiums paid for medical, dental, and vision insurance, amounts spent on dependents, as well as any HSA contributions made on the employee’s behalf). Additional needed expenditures should be made to the SF City Option.
Record-keeping:
Employers must keep pertinent HCSO records (pay statements, employee information, records to support the employer has met the expenditure requirement, proof that expenditures were made, employee terminations, employee voluntary waiver forms, copies of notices given to employees, calculation records, etc.) for a period of four years.
Additional Resources/Important Links:
2017 Reporting Instructions
2017 HCSO Reporting Form
PDF Preview of the 2017 Reporting Form
HCSO Reporting Webinar
HCSO Website
HCSO Webinar
HCSO Hotline: (415) 554-7892
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.
