Updated 6/18/20: San Francisco Mayor Breed signed a Mayoral Proclamation on 6/2/20 that takes a different approach than the one outlined below. In other words, individuals cannot use funds from their SF City Option Medical Reimbursement Account (MRA) for “necessary expenses” as previously announced. Instead, the Proclamation establishes a program that would make grants of up to $500 to qualified individuals to assist them with COVID-19 related expenses that are not otherwise covered by insurance. This grant will not impact individuals’ existing MRA balance, which can still be used for qualified healthcare expenses. Qualified individuals are those who have an active MRA with a remaining balance of $100 as of 6/2/20. For more on the program, visit the SF City Option Cash Grant Program webpage

San Francisco Mayor London Breed recently announced a plan that would allow individuals to use funds from their SF City Option Medical Reimbursement Accounts (MRAs) for “necessary expenses,” including food, rent, mortgage payments, and utilities, in addition to eligible healthcare expenses that were already permitted. Employees with MRAs can also request a one-time disbursement of their available funds.

Covered employers may have contributed funds to the SF City Option on behalf of covered employees in order to comply with the expenditure requirement under the San Francisco Health Care Security Ordinance (HCSO). This announcement only applies to covered employees who enrolled into a City Option MRA account.


When would a covered employer make payments to the SF City Option?

HCSO requires covered employers to spend a minimum amount on covered employees’ healthcare (based on the number of hours a covered employee works and the covered employer’s expenditure rate). To meet this expenditure requirement, covered employers must make irrevocable healthcare expenditures on behalf of covered employees.

If a covered employer falls short of the required expenditure for a covered employee, they can pay the shortfall to the City Option. For more on making payments to the City Option, see our blog article.


What is a City Option Medical Reimbursement Account (MRA)?

Covered employees can enroll into City Option MRAs to use the amounts that their employer contributed on their behalf.

After the first payment to the City Option was made on behalf of a covered employee, the City Option would have sent the covered employee a welcome letter within 1-3 weeks. The letter would have included instructions on how the covered employee could determine which City Option program they were eligible for (SF Covered MRA, SF MRA, or Healthy San Francisco) and how to enroll the program.

Mayor Breed’s announcement likely applies to both SF Covered MRAs and SF MRAs:

  • SF MRA: Individuals are eligible if their employer made contributions on their behalf and they meet one or more of the following: they live outside of SF, they have health insurance through an employer, spouse, parent, Medi-Cal or Medicare, and/or they are under the age of 18.
  • SF Covered MRAs: Individuals are eligible if their employer made at least two contributions on their behalf within the last 6 months, they are a SF resident, they are aged 18 or older, they have income at or below 500% of the Federal Poverty Level, they are required by law to have health insurance, they are ineligible for Medi-Cal or Medicare, and they purchased health insurance through Covered California.

It is important to note that an employee must enroll into one of the City Option programs to access the funds made on their behalf. Employer funds are held in an “employer pool” until a covered employee enrolls in one of the City Option programs.


How does Mayor Breed’s announcement differ from the established law?

Prior to Mayor Breed’s announcement, MRAs could only be used for eligible health care expenses for the covered employee, their spouse or domestic partner, or their children or dependents. With Mayor Breed’s announcement, employees can now use these funds for “necessary expenses,” which include food, rent, mortgage payments and utilities, in addition to eligible health expenses. Employees with MRAs can also request a one-time disbursement of their available funds.


Which covered employees are affected by the announcement?

The announcement only affects covered employees who have, or who are eligible for, City Option MRA accounts. The City Option will contact eligible employees with MRAs about how to withdraw their funds. Employees who wish to verify if they have an MRA can also call City Option Customer Service at (877)772-0415. Covered employees can also find additional information at the SF City Option COVID-19 Response webpage.


Additional Resources

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.

Emerald Law – Emerald is a Client Compliance Consultant for Sequoia, where she works with our clients to optimize and streamline benefits compliance. In her free time, Emerald enjoys stand-up comedy, live music and writing non-fiction.