What’s San Francisco’s Health Care Security Ordinance (HCSO)?

San Francisco’s Health Care Security Ordinance (HCSO) ensures all workers in the city have access to health care benefits. It was enacted after the 2006 formation of San Francisco’s Universal Healthcare Council. Under this ordinance, employers with at least 20 employees must contribute toward those benefits for eligible employees, but employers can choose exactly how to direct the funds. 

In 2026, the HCSO requires San Franciscan business owners with between 20 and 99 workers to contribute at least $2.74 per payable hour to eligible employees, regardless of whether they’re part-time or full-time. In 2026, SF business owners with 100 or more workers are required to contribute $4.11 per payable hour. (Keep in mind that the minimum number of workers increases to 50 for nonprofit employers.)

This is the minimum amount (i.e., Employer Spending Requirement) employers must spend on health care for each employee. To be covered, employees need to have worked 90 days or more and at least eight hours per week, and the minimum contribution can’t be taken out of an employee's wages—the employer must pay it.

This article explains what the Health Care Security Ordinance is all about, the HCSO requirements for covered employers, and where Healthy SF comes into play.

Does this mean I have to provide health insurance to my employees?

Sort of. San Francisco employers need to contribute a minimum amount toward health benefits for each covered employee on their team on a quarterly basis. Not making the contribution amounts—aka health care expenditures (HCEs)—within five business days of the quarterly due date will also result in up to a $100 penalty per employee for every quarter the violation occurs. The amount depends on employer size. 

For 2026, those expenditure requirements are: 

• Large businesses (all businesses with 100+ employees): $4.11 per hour paid

• Midsized businesses (for-profit businesses: 20–99 employees; nonprofit organizations: 50–99 employees): $2.74 per hour paid

• Small businesses (for-profits: 0–19 employees; nonprofits: 0–49 employees): does not apply

In 2027, those minimum contribution amounts will likely increase. This chart shows the difference in expenditure rates between 2025 and 2026, for example.

Note: Have managerial, supervisory, or confidential employees who earn more than $61.95 per hour or $128,861 per year? They are exempt as of January 1, 2026.

The payments must be made 30 days following the end of the preceding quarter, and the HCSO defines quarters as:

Employers can use those funds to cover health care costs for employees and their spouses, domestic partners, children, or other dependents.

Specifically, you can:

• Pay for medical, dental, or vision insurance. 

• Contribute to employees’ health savings accounts (HSAs), medical savings accounts, or other types of reimbursement programs. 

• Reimburse your employees for costs related to their medical services. 

• Pay directly for your team’s health coverage.

• Enroll in the “City Option,” which allows employees to use one of three benefits, including the Healthy San Francisco (HSF) program (which provides health care services to uninsured residents) and medical reimbursement accounts (MRAs). For the latter, your employer contribution will be deposited once the employee completes the SF Medical Reimbursement Account enrollment form.

Who is considered a “covered employee?”

A “covered employee” is someone who’s entitled to the minimum wage, has received compensation from your company for at least 90 days, and regularly works at least eight hours per week in the city and county of San Francisco. 

Managers, supervisors, and confidential employees who make more than $128,861 per year ($61.95 per hour) are exempt from this requirement. (According to the HCSO, confidential employees work with confidential information related to labor relations. Most small businesses don’t have these types of employees.)

What does Healthy San Francisco do?

Healthy San Francisco and the Health Care Security Ordinance are not the same thing.

The City Option is just one way employers can contribute funds toward employee health care costs, and Healthy San Francisco is one of the benefits offered through the City Option. 

Healthy San Francisco, also called Healthy SF, is not a health plan, but it provides a safety net of affordable health care services for eligible uninsured San Francisco residents, regardless of the uninsured adult’s employment or immigration status or whether there are pre-existing medical conditions. Participants can access the program’s services like primary care and preventive care, specialty care, and prescription coverage. The health care system is managed by the San Francisco Department of Public Health.

How do I use the City Option as an employer?

To join the City Option, employers will need to register and create an account, provide employee rosters, and start depositing funds on behalf of their employees. The City Option will help employees enroll in the right program. 

Depending on their eligibility, employees can use one of three benefits: 

• Healthy San Francisco: Eligible employees who are San Francisco residents will have their funds deposited directly into the Healthy San Francisco program, where they can receive a discount on health program participation fees and choose a medical home, which are typically clinics or health centers providing access to primary care providers, referrals to specialists, and urgent care at hospitals, such as San Francisco General Hospital, that are in the medical home network.

• SF covered MRAs: Employees who enroll in a Covered California health care plan can use these MRA funds to cover health insurance premiums, medical care, and other out-of-pocket eligible expenses like dental services, mental health services, vision services, prescription drugs, and over-the-counter medicines. Some expenses for enrollees may require health care providers to complete a statement.

• SF medical reimbursement accounts: Eligible employees who don’t live in San Francisco or otherwise might not qualify for the other benefits can use the MRA funds for eligible medical expenses. These can include things like health insurance premiums, doctor’s office co-pays, dental services, vision services, and prescription and over-the-counter medicines. 

Is there anything else I have to do to comply with the HCSO? 

For HCSO compliance, you need to do the following:

1. Put up the HCSO poster in any San Francisco-based workplace

The poster is two pages long and translates this portion into five languages. If you don’t post it, the penalty is $25 per day for each day and every workplace and job site where it isn’t posted.

2. Keep records that prove you’re complying with the ordinance

Make sure you’re storing all of your HCSO waivers and forms in a safe spot so you can easily access them. The fine for not keeping accurate and complete records is $500 per quarter. And the penalty for not providing the Office of Labor Standards Enforcement (OLSE) access to those records is $25 per employee whose records aren’t shared.

3. Submit an annual reporting form to the OLSE

As part of the OLSE’s reporting requirements, you need to submit an annual reporting form (ARF) by April 30 (for 2026, the date is May 1). If not, the fine is up to $500 for each quarter.

Once you begin the form, you won’t be able to save and return to it later, so the OLSE recommends reviewing the instructions and previewing the online form before you begin.

You’ll need the following items on hand when filling out the form:

• Your seven-digit San Francisco Business Account Number

• The number of employees who qualify

• Details about how you spent the contributions

• Details about your business, including name and address, business type, and size 

4. Offer a waiver to employees

Although you’re required to spend money on health care services for your employees, they may waive this right by signing a form each year. You can ask your team to waive their right if they receive health care services from another employer, but your employees don’t have to comply. Keep any copies of signed waivers for your records, although employees who sign the waiver can revoke or cancel it at any time.

FAQs

What is the SF Health Care Accountability Ordinance?

San Francisco’s Health Care Accountability Ordinance (HCAO) applies to city contractors and tenants (usually at the San Francisco International Airport and Port) who need to provide health care plans or coverage to eligible employees. 

What happens if an employer does not comply with the SF Health Care Security Ordinance?

If you don’t make the required health care expenditures within five calendar days of the quarterly due date, you’ll have to pay up to $100 for each employee for each quarter. If you forget to submit the annual reporting form (due every spring) or don’t maintain accurate records, you’ll have to pay a fee of $500 for each quarter the violation occurs. If you don’t post the official HSCO notice in your workplace, you’ll have to pay a fee of $25 per day for each workplace or job site where the poster is missing. 

What reporting or recordkeeping requirements do employers have under the SF HCSO?

Employers need to keep the following records for at least four years: itemized pay statements, employee contact information and their employment start date, records of your health care expenditures made, and documents that prove an employee’s exemption status (if applicable). As for reporting, employers have to submit an annual reporting form to the OLSE by April 30th every year. 

Can employers satisfy SF HCSO requirements through different benefit options or reimbursements?

Yes, if you’re an SF employer, you have a few options for satisfying your HCSO requirements. You can contribute to employees’ health care coverage through regular health insurance, health savings accounts, health reimbursements, or payments to the SF City Option program. 

What documentation must employers provide to employees regarding SF HCSO benefits?

You have to give your employees a formal written explanation of their rights, display the HCSO poster in your workplace, and provide copies to employees of your contributions to their health care expenditures (whether it’s in the form of HSA accounts, SF City Option plans, or another insurance plan). You also have to give your employees a waiver form if they decline to receive health care expenditure contributions.