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Q: 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. 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 2020, the HCSO requires San Francisco business owners to contribute at least $2.05 per payable hour to eligible employees. To be covered, employees need to have worked 90 days or more and at least eight hours per week.

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

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

Sort of. 

Every quarter, San Francisco employers need to contribute a minimum amount toward health benefits for each covered employee on their team.

For 2020, those minimum contribution amounts are: 

  • Large businesses (all businesses with 100+ employees): $3.08 per hour paid
  • Midsized businesses (for-profits: 20–99 employees; nonprofits: 50–99 employees): $2.05 per hour paid
  • Small businesses (for-profits: 0–19 employees; nonprofits: 0–49 employees): does not apply

The HCSO defines quarters as:

  • First quarter: January 1 – March 31
  • Second quarter: April 1 – June 30
  • Third quarter: July 1 – September 30
  • Fourth quarter: October 1 – December 31

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 health care services 
  • Pay directly for your team’s health care services
  • Enroll in the “City Option,” which allows employees to use one of three benefits, including the Healthy San Francisco program and medical reimbursement accounts

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 of San Francisco. 

Managers, supervisors, and confidential employees who make more than $100,796 per year ($48.46 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 insurance plan, but it provides affordable health care services to eligible uninsured San Francisco residents. Participants can access services like primary and preventive care, specialty care, and prescription coverage. The program 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 program participation fees. Some of the covered services include emergency care, primary and preventive care, and hospital visits.
  • SF Covered medical reimbursement accounts (MRAs): Employees who enroll in a Covered California health care plan can use these MRA funds to cover health insurance premiums and out-of-pocket expenses like dental services, vision services, and prescription and over-the-counter medicines. 
  • 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? 

Yes. The HCSO also requires employers to:  

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.


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.

3. Submit an annual reporting form to the Office of Labor Standards Enforcement by April 30 each year

Otherwise, you may be fined 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.

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