The San Francisco Health Care Security Ordinance (SFHCSO) ensures that all workers in the city of San Francisco are able to access healthcare benefits. Employers must contribute to those benefits, but they have options available to them. Read on to learn more about the ordinance.
What is the SFHCSO?
In summary, SFHCSO requires covered employers to satisfy a spending requirement by making certain healthcare expenditures for their covered employees. The ordinance also requires that covered employers maintain sufficient records to show their compliance with the employer spending requirement and post the official HCSO Notice at sites where their covered employees work. Also, the SFHCSO requires that employers submit an annual reporting form to the Office of Labor Standards Enforcement.
Who Does the SFHCSO Apply To?
Per the ordinance, a “covered employee” is any employee that is entitled to a minimum wage, has received compensation from a given employer for at least 90 days, and regularly works for at least 8 hours a week within San Francisco.
Employers must make their required healthcare expenditures on a quarterly basis. The rates for employers are as follows:
- All large employers (100 or more workers) must pay at a rate of $3.08 per hour
- Medium businesses with 20 to 99 employees must pay at a rate of $2.05 per hour
- Medium nonprofits with 50 to 99 workers must also pay at the rate of $2.05 per hour
Small business of 19 or fewer workers or nonprofits of 49 or less workers are exempt.
An employer is considered covered under the SFHCSO if it employs 20 or more employees as a for-profit business, or employs 50 or more employees in the nonprofit sector.
Changes to the SFHCSO for 2020
In addition to the across the board increases in the required expenditure amount, the SFHCSO has made some exemption updates for 2020. The new exemption threshold of 2020 sits at annual earnings of more than $104,761, or $50.37 an hour) for managerial, supervisory, and confidential employees. This figure does not include earnings in the form of overtime wages, gifts, or bonuses. Employees whose annual base earnings are at or above the threshold will be exempt from the HCSO.
For more information on the different types of covered employees, click here.
Bonus: California’s Individual Mandate 2020
Beginning on January 1, 2020, the state of California is implementing a new state individual mandate. This mandate will require all California residents to maintain Minimum Essential Coverage for themselves and their dependents. Those that fail to comply will be subject to a tax penalty. California residents that fails to secure coverage will incur a $695 minimum penalty when filing a 2020 state income tax return. The penalty charges will fluctuate based on income and number of people in the household.
There will be certain exemptions that Californians can claim so as not to be subject to the California Individual Mandate and its penalties. These exemptions can include, but are not limited to:
- Income is below the tax filing threshold
- The cost of health coverage exceeds 8.24% of the household income
- The cost of health coverage is seen as unaffordable, per the above percentage
- Being a member of federally recognized Indian tribes
- Enrollment in Medi-Cal or other coverage from California’s Department of Health Care Services
The Options Available to You
Employers have some flexibility on how they can approach the SFHCSO and its requirements. The required expenditure can be put towards a variety of healthcare costs for employees and their families. Some of these options include:
- Medical, dental, or vision insurance
- Contributions to Health Savings Accounts and other types of reimbursement programs
- Employer reimbursement of their employees’ healthcare related costs
At Boon, we proudly offer a range of alternative benefit plan solutions! These solutions satisfy both the State of California Minimum Essential Coverage mandate and the requirements of the SFHCSO.
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