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February 11, 2020

HCSO Updates and Reminders for San Francisco Employers

The City and County of San Francisco passed a Health Care Security Ordinance (“HCSO”) several years ago that requires covered employers to contribute to the health care costs of its covered employees, either through private means, or through “Healthy San Francisco”.  An employer is subject to the HCSO it employs one or more workers within the geographic boundaries of the City and County of San Francisco, is required to obtain a valid San Francisco business registration certificate, and Is a for-profit business with 20 or more workers, or a nonprofit organization with 50 or more workers.  Following are updates and reminders relating to a covered employer’s obligations under the HCSO.

Annual Reporting Obligation

Employers subject to the HCSO are required to annually report their health care expenditures to the Office of Labor Standards Enforcement (OLSE).  The 2019 Employer Annual Reporting Form is scheduled to be made available on the OLSE’s website by April, 2020 and is due by April 30, 2020. Employers who fail to submit an annual report on time may be subject to penalties of $500 for each quarter the violation occurs.

2020 Expenditure Rates

For 2020, the applicable health care expenditure rate for large businesses employing 100-plus employees is $3.08 per hour; the expenditure rate for businesses with 20-99 employees and nonprofits employing 50-99 employees is $2.05 per hour.  An employee who is a manager, supervisor, or confidential employee, and who earns more than $104,761 in 2020 (or $50.37 per hour) are exempt from coverage under the HCSO.

Updated HCSO Calculation Instructions for Employers with Self-funded health plans

OLSE recently released guidance relating to calculating expenditures for employers with self-funded health plans to clarify rules issued in 2017 (see Updates: San Francisco’s Health Care Security Ordinance, Benefit Beat, 10/9/17).  Specifically, an FAQ addresses how employers with self-funded plans can determine whether its expenditures meet or exceed the required health care expenditure rate. According to OLSE, when an employer pays claims as they are incurred, and that calendar year’s average hourly expenditures meet or exceed that calendar year’s expenditure rate for that employer, then the required expenditure rate is deemed to be satisfied.  For example, in early 2020, if an employer is assessing the cost of its 2019 health plan, the employer must determine whether the 2019 average hourly expenditures meet or exceed the 2019 expenditure rate.  OLSE provides instructions to assist employer in their calculations for making this determination, as well as a sample letter to provide to their employees to explain how the calculation is made.

Employee Worksite Poster

The OLSE provides a new 2020 HCSO poster for employers to download or request by mail.  This workplace posting is made current as of January 1, 2020, and must be placed at each job site or workplace in a location where employees can easily read it. 

The information contained in this article is provided as general guidance and may be affected by changes in law or regulation. This article is not intended to replace or substitute for accounting or other professional advice. Please consult a CBIZ professional. This information is provided as-is with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein.

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