The San Francisco Health Care Security Ordinance (HCSO) requires “covered employers” to make certain health care expenditures for their “covered employees.” If a covered employer does not meet the expenditure requirement, they may need to make quarterly expenditures to the SF City Option. Covered employees must make the quarterly expenditures by the following due dates:
| Quarter | Due Date |
| First Quarter (January 1-March 31) | April 30th |
| Second Quarter (April 1-June 30) | July 30th |
| Third Quarter (July 1-September 30) | October 30th |
| Fourth Quarter (October 1-December 31) | January 30th |
Compliance Snapshot:
- Covered employers must make quarterly expenditures to the SF City Option if they fall short of the required health care expenditures for their covered employees under SF HCSO;
- Covered employers can make their quarterly expenditures by mail or through the SF City Option Employer Portal by the quarterly due date (April 30th, July 30th, October 30th, and January 30th);
- Covered employers must notify covered employees if they made expenditures to the SF City Option on their behalf.
Do I need to make payments to the City Option?
Covered employers must spend a certain amount of irrevocable expenditures on covered employees. Irrevocable expenditures include payments for health, dental, and/or vision insurance and payments into health savings accounts. If covered employees fall short of the required expenditures on behalf of covered employees (as calculated by the number of hours a covered employee works, as explained below), they can pay any shortfall to the SF City Option.
For more on covered employers, covered employees, and exemptions, see our blog article.
How much are Covered Employers required to spend on Covered Employees?
The amount that is required to be spent on each covered employee is dependent on the size of the covered employer and the number of hours a covered employee works.
Small employers: Employers with less than 20 employees are not subject to HCSO.
Medium employers: For 2019, employers with 20-99 employees were required to spend $1.95 per hour payable (up to $335.40 a month) on health care for Covered Employees. For 2020, medium employers are required to spend $2.05 per hour payable (up to $352.60 a month).
Large employers: For 2019, employers with 100+ employees were required to spend $2.93 per hour payable (up to $503.96 a month) on health care for Covered Employees. For 2020, large employers are required to spend $3.08 per hour payable (up to $529.76 a month).
For more on calculating required health care expenditures, see the SF HCSO website.
When must Covered Employers make quarterly expenditures to the SF City Option?
If a covered employer determines that they are not currently spending enough on their covered employees’ healthcare (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), they would need to make any shortfall payments to the SF City Option on a quarterly basis.
This means that employers must determine expenditure shortfalls on a quarterly basis and make any necessary payments by April 30th, July 30th, October 30th, and January 30th of each year.
How can I make payments through the City Option?
Employers can make a payment and submit their employee roster by mail or through the SF City Option Employer Portal. An employee roster consists of the covered employees that the covered employer is making expenditures on behalf of.
Refer to the Employer Portal User Guide for instructions on how to create a SF City Option employer account and how to prepare and submit employee rosters.
What do I need to do after I made a payment to the SF City Option on behalf of my covered employees?
A covered employer that makes a payment to the SF City option must provide covered employees with an Employee Health Care Payment Confirmation, which is available in English, Chinese, Spanish and Tagalog.
Employer Action Items:
Employers covered under SF HSCO should:
- At the end of each quarter determine whether they fell short of the required expenditures for their covered employees;
- If they fell short of the required expenditures, determine the amount they need to contribute to the SF City Option;
- Make a payment and submit their employee roster by mail or through the SF City Option Employer Portal by the applicable deadline; and
- Provide an Employee Health Care Payment Confirmation to any covered employee that the employer contributed to the SF City Option on behalf of.
Employer Resources:
Calculating Employer Required Health Care Expenditures
SF OLSE: Contributing to the SF City Option
San Francisco City Option Website
SF City Option Employer Portal
SF City Option Employer Portal Instructions
SF City Option Employer Webinars
Employee Health Care Payment Confirmation
Employers can contact SF City Option Program Management at employerservices@sfcityoption.org or (415)625-4492
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.
