Benefit News
2020 San Francisco Health Care Security Ordinance Expenditure Rate Announced
August 16, 2019
The San Francisco Office of Labor Standards Enforcement (OLSE) recently announced the 2020 expenditure rates to comply with the city's Health Care Security Ordinance (HCSO):
| Employer Size | Number of Workers | 2019 Expenditure Rate | 2020 Expenditure Rate |
|---|---|---|---|
| Large | All employers w/ 100+ workers | $2.93 per hour payable | $3.08 per hour payable |
| Medium | Businesses w/ 20-99 workers Nonprofits w/ 50-99 workers |
$1.95 per hour payable | $2.05 per hour payable |
| Small | Businesses w/ 0-19 workers Nonprofits w/ 0-49 workers |
Exempt | Exempt |
Depending on the number of hours worked by an employee not exempt from the HCSO (covered employee), a large employer subject to the HCSO (covered employer) could be required to spend up to $1,589.28 per quarter ($529.76 per month) on behalf of each covered employee to satisfy the HCSO requirements during 2020. In general, health care expenditures include employer contributions toward medical, dental and vision coverage.
HCSO Overview
The HCSO requires "covered employers" to make quarterly "health care expenditures" on behalf of its "covered employees" based on the number of hours worked during that quarter. These terms are briefly described below.
Covered Employers
Employers are covered by the HCSO for any calendar quarter, and thus subject to the Ordinance's requirements for that quarter, if they satisfy all of the following three requirements:
- They employed one or more workers who performed work within the geographic boundaries of the City and County of San Francisco; and
- They are a for-profit business with 20 or more persons performing work, or a non-profit business with 50 or more persons permforming work, regardless of location; and
- They are required to obtain a valid San Francisco business registration certificate pursuant to Article 12 of the Business and Tax Regulations Code.
The following employers are not covered by the HCSO:
- A private employer that employs fewer than 20 persons (including those employed outside of San Francisco) and who does not have a contract with the City and County of San Francisco; or
- A non-profit corporation that employs fewer than 50 persons (including those employed outside of the City); or
- Employers that have no covered employees in San Francisco.
Covered Employees
A covered employer is required to make a minimum health care expenditure on or behalf its covered employees, which are those employees:
- Entitled to be paid the minimum wage;
- Employed by his or her employer for at least 90 calendar days;
- Who perform at least 8 hours of work per week within the geographic boundaries of San Francisco; and
- Who are not exempt employees.
The following categories of employees are exempt from the HCSO:
- Employees who voluntarily waive their right to have their employers make health care expenditures for their benefit;
- Employees who qualify as managers, supervisors, or confidential employees AND earn more than the applicable salary exemption amount, which will be $104,761, or $50.37 per hour in 2020;
- Employees who are eligible for Medicare or TRICARE (the health care program serving Uniformed Service members, retirees and their families). In order to claim these exemptions, an employer must be able to document employee eligibility;
- Employees who are employed by a non-profit corporation for up to one year as trainees in a bona fide training program consistent with federal law; or
- Employees who receive health care benefits pursuant to the San Francisco Health Care Accountability Ordinance.
Health Care Expenditures
A health care expenditure is an amount of money paid by a covered employer to provide a covered employee with access to health care services. Examples include making payments to enroll a covered employee in a health insurance program sponsored by the employer, or making payments on an employee's behalf to the City Option program (MRA or Healthy San Francisco).
Specific information regarding the HCSO, as well as other laws applicable to the City and County of San Francisco can be found on the OLSE website at www.sfgov.org/olse.
For additional information, please contact your Burnham Benefits Consultant or Burnham Benefits at 949-833-2983 or inquiries@burnhambenefits.com.
Burnham Benefits does not engage in the practice of law and this publication should not be construed as the providing of legal advice or a legal opinion of any kind. The consulting advice we provide is intended solely to assist in assessing its compliance with the Patient Protection and Affordable Care Act and other applicable federal and state law requirements, and is based on Burnham Benefit’s interpretation of federal guidance in effect as of the date of this publication. To the best of our knowledge, the information provided herein, and assumptions relied on, are reasonable and accurate as of the date of this publication. Furthermore, to ensure compliance with IRS Circular 230, any tax advice contained in this publication is not intended to be used, and cannot be used, for purposes of (i) avoiding penalties imposed under the United States Internal Revenue Code or (ii) promoting, marketing or recommending to another person any tax-related matter.