Several years ago, the City and County of San Francisco passed the Health Care Security Ordinance (“HCSO”) requiring 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 if 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. A covered employee is one who has been employed for more than 90 days and who regularly works at least 8 hours per week in San Francisco.
Each year these health care expenditure amounts are adjusted. These expenditure rates do not apply to businesses with 19 or fewer employees, or to nonprofits with 49 or fewer employees. In determining employer size, all individuals performing work for compensation both in and outside of San Francisco should be counted, regardless of whether the individual is full-time, part-time, temporary, or seasonal.
The required minimum health care expenditure is calculated by multiplying the total number of “hours paid” to that employee by the applicable expenditure rates, which for 2025 and 2024 are as follows:
An employee who is a manager, supervisor, or confidential employee and who earns at or above an annual salary of $121,372 (or $58.35 per hour) in 2024 is exempt from coverage under the HCSO. For 2025, the new threshold will be $125,045 per year (or $60.29 per hour).
Employers who have self-funded health plans (medical, dental, or vision) must calculate the actual value of their plans (using either premium amounts or claims paid) to determine if the expenditures meet or exceed the required health care expenditure rate. If the employer’s annual spend fell short of the HCSO expenditure rate, the employer must make top-off payments for employees enrolled in these plans by the end of February of the following year.
Employers are required to annually report their health care expenditures to the Office of Labor Standards Enforcement (OLSE) by April 30, each year. Employers who fail to timely submit the annual report could be subject to penalties for each quarter the violation occurs.
The information contained in this Benefit Beat is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations. This information is provided as general guidance and may be affected by changes in law or regulation. This information is not intended to replace or substitute for accounting or other professional advice. You must consult your own attorney or tax advisor for assistance in specific situations. 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.