Booncast Episode 9: A San Francisco MEC Plan with a National PPO Network
When it comes to healthcare, it helps to have options. Boon’s San Francisco MEC plan provides an alternative, competitive benefit to the city option. This alternative grants employers and employees the option of choice. Employees will have the freedom to choose providers – both in and out of network – using a national PPO network.
Brad Billik, one of Boon’s top experts specializing in the San Francisco market, joins Booncast to offer an in-depth education on the San Francisco Health Care Security Ordinance as well as the impact that the Ordinance has on businesses. Within this discussion of the ordinance itself, Brad sheds light on Boon’s alternative MEC plan solution to the city option and why businesses may consider Boon.
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Hello and welcome to Booncast, a podcast where we discuss evolving healthcare needs and flexible employee benefit solutions. Join our experts for unique insight into the niche market of fringe administration, solutions to address the needs of the American employer and the hourly worker, compliance concerns, and updates on developing topics in the industry.
Caitlin Kennedy with Booncast: Welcome back to Booncast, our first Booncast episode of 2023. Today we’re joined by Brad Billik, one of our most senior benefit experts here at Boon and a specialist on the San Francisco market. Brad, can you introduce yourself and fill us in on your role as a subject matter expert in employee benefits, especially as it pertains to the city of San Francisco?
Brad Billik: Yes, thank you for setting this up. I appreciate it. Again, my name is Brad Billik. I’ve been with Boon over 21 years. Been working with companies affected by the San Francisco Health Care Security Ordinance for the better part of nine years. Have been working with Boon to develop solutions that provide alternatives to companies sending money to the city of San Francisco.
Because a lot of businesses that are affected by this ordinance would like to look at an alternative that maybe provides more value for their employees. And so that’s something we’ve worked very closely with north of 100 companies across the country. From very, very large national firms, down to small businesses, and everything in between.
Caitlin Kennedy: So, as you began to touch on in your answer. Today, we are focusing on the San Francisco Health Care Security Ordinance — also known as the SFHCSO. Can you provide a quick summary of what the SFHCSO is?
Brad Billik: Yeah, so the San Francisco Health Care Security Ordinance is a spend requirement. As opposed to what the Affordable Care Act is, which is an offer requirement. It affects businesses anywhere in the country that have employees working in the city and county of San Francisco. The city and county of San Francisco has the exact same footprint unlike other places across the country.
So if you’re based in Nevada, and you’ve got employees in San Francisco, they are subject to the San Francisco Health Care Security Ordinance. If you’re based in San Francisco and your employees are in San Francisco, they are also subject to the San Francisco Health Care Security Ordinance. And what it basically says is, is you have to spend a certain amount per hour, and the amount is determined by the size of the company. And the amount you have to spend goes up every January 1 and this is an hourly spend requirement. So the more hours your employees work, the more you have to spend on that individual employee.
The money has to be spent, basically, on medical, dental, vision, or it can be sent to the city and go into a medical reimbursement account with the city of San Francisco. But again, the offer of benefits to your employees may satisfy the Affordable Care Act, but it does not satisfy the spend requirement for the San Francisco Health Care Security Ordinance.
Caitlin Kennedy: So how do the requirements of the San Francisco Health Care Security Ordinance impact San Francisco employers and their employees?
Brad Billik: Well, it’s a good question. Employers that have employees in San Francisco have to spend this hourly spend amount that is determined by the city of San Francisco, on a per hour basis. If they have employees not working in San Francisco, they only have to offer the full-timers coverage in order to satisfy the Affordable Care Act. And they don’t have to do anything for their part-timers. So this money that they’re spending on these employees greatly impacts the bottom line of these employers. Because it’s increasing their labor costs. Because they’re having to spend money on anybody that works eight hours or more per week, all the way up to 172 hours per month.
Now, obviously, it’s great for the employees. Because unlike other places, where if you’re a low paid employee, you’re gonna get offered coverage where you may have to contribute to the cost of that coverage and you can’t afford it so you pass. In San Francisco, the employer has to spend this money on some form of benefit package. So therefore, if you work in the city of San Francisco, whether you’re getting a medical reimbursement account from the city, or a major medical plan, or one of the plans that Boon provides its clients, you’re getting some form of benefit, at no cost to you.
Caitlin Kennedy: Here at Boon, we provide an alternative benefit to the city option, as you said. Why should employers choose our solution over the offering from the city of San Francisco?
Brad Billik: That’s another really good question. So, you know, if they send money to the city of San Francisco, the employees get a medical reimbursement account. And one of the issues with the employee getting a medical reimbursement account is that it’s not insurance. So therefore, when you want to make an appointment — at a doctor, for an x-ray, for a lab — when they ask you, “Do you have insurance?”, and you say, “No, I have a medical reimbursement account.” They’re going to want to be paid full retail (in other words, no PPO network discounts) at the point of service, because the provider cannot take a lien on the city’s medical reimbursement account.
So therefore, they know that if an employee gets reimbursed, they may choose to not send the money to the provider. They might use that money for the rent, their cell phone bill, hey, a weekend getaway. So the providers want to be paid at the time that they provide the service. And then the employee has to wait around for the city to reimburse them for the amount they laid out. And when you don’t have PPO or a PPO network, should I say, the amount you have to lay out is really, really expensive, and very impactful to low paid employees.
The other issue is that in the state of California, we have an individual mandate penalty. And it basically states that if you do not have the wellness benefits that are part of the Affordable Care Act — it’s called minimum essential coverage — that you will be fined $850, in 2023, on your state of California tax return. This is for individuals. Now, if you’re talking about an employee that makes $15, $16, $18, $20 an hour and lives paycheck to paycheck, that $850 in extra state taxes is very, very impactful. It’ll affect the amount they get refunded. If they owe, they’ll owe more. And so one of the problems is the medical reimbursement account does not meet minimum essential coverage. And so that’s one of the challenges that the employees will face if the money is sent to the city of San Francisco.
So our alternative includes a PPO network. Our alternative includes telemedicine, it includes medical, it includes dental, it can also include vision. So when you pick up the phone and call a provider, and they say “Do you have insurance?” The answer is yes. And they say “When would you like to come in and make an appointment?” Also, when you file your state of California tax return, our plan includes minimum essential coverage. So we are getting the employees out of that $850 State of California penalty. So you’re essentially putting an extra $850 In your employees pocket without spending any money above what the city is forcing you to spend.
Caitlin Kennedy: In the current moment and market in this country, especially in light of inflation, those are dollars that really matter.
Brad Billik: Absolutely! That’s a great point that, you know, things have gotten more expensive. Food, gas, clothing — everything is more expensive. And so you know that $850 can be really impactful on somebody’s life, and their wellbeing.
Caitlin Kennedy: Absolutely. Boon has built its reputation on 40+ years of competitive benefits and expertise. As a benefits consultant and expert yourself, what is the most important thing for employers to know about the benefits they offer to their employees based in San Francisco?
Brad Billik: Well, you know, look, as we’ve stated before this is a spend requirement. And none of the employers that I’ve ever run into, in my nine years of doing this, like spending this money. They feel like it’s, you know, it’s only because they’re in San Francisco are they impacted by this. And if they weren’t, they wouldn’t be. And so if they’re having to spend the money, why not spend it on something that provides the most value for your employees?
You know, in this time, as you mentioned before about inflation, unemployment is very low. It’s very difficult for employers to fill the jobs that they have posted. So why not provide something that can help you as a recruitment tool? By saying “Hey, if you come to work for us, not only are we going to pay you X, but you’re going to get X benefit plan at no cost to you.” That includes a PPO network. That includes medical, dental, even vision, telemedicine, etc.
And so again, you’re having to spend this money. So why not spend it on something that provides the greatest value to your employees? And that puts this extra money in their pocket, in the sense, because you’re reducing their tax burden. Which means there’s extra dollars at the end of the year, for those employees to pay for things that they need to in their lives.
Caitlin Kennedy: We like to end every episode with this essential question. In your own words, what value does Boon provide to its clients?
Brad Billik: Well, the most important thing is we provide an alternative that keeps them in compliance. Okay? Our plans are compliant with the city of San Francisco Health Care Security Ordinance. So we are keeping you in compliance. We follow all the eligibility rules, the waiting period rules. There are no fees to do business with Boon, we are paid by our carrier partners. So when the rate is the rate, whatever it is, determined by the city, that’s the amount you pay for our alternative.
We can do quarterly based plans, because this is a quarterly obligation. So you’re not having to do anything different with us than you’re doing with the city of San Francisco. And so again, you know, if you’re looking for an alternative, because you’d rather not send money to the city. If you’re looking for an alternative, because you think there must be something better out there than the medical reimbursement account. If you would like your employees to have a PPO network, so their ease of obtaining healthcare is increased because when they call to make an appointment, and they’re asked if they have insurance, they can say yes. You know, we’re here for you.
We’ve been doing business for, like I said, for over nine years. We’ve done business with north of 100 companies probably closer to 140 or 150, over the nine years. And we’d love the opportunity to work with your company if you’re on the other end of this listening to this recording.
Caitlin Kennedy: I think that’s a fabulous place to end it. Brad, thank you so, so much for joining us and kicking off Booncast 2023.
Brad Billik: Well, thank you very much for setting this up. I greatly appreciate it and I hope it provides some good information to those that are listening.
That’s all for this episode of Booncast! Thank you for listening! Visit us on www.boongroup.com for more podcasts, blog posts, and information on Boon’s benefit offerings.