City administrators across the nation are watching as the Health Care Security Ordinance (HCSO) transforms doing business and health care in San Francisco. With opinions rampant, here are some facts and history regarding the HCSO:
- February 2006 San Francisco Mayor Gavin Newsom created a Universal Healthcare Council to develop a plan to provide access to health care for San Francisco’s estimated 73,000 uninsured adults.
- July 2006 The Board of Supervisors unanimously passed the Health Care Security Ordinance. This ordinance calls for covered employers to make a health care expenditure for their covered employees and for the Department of Health to create a Health Access Program, now called Healthy San Francisco
- January 9, 2008 the Health Care Security Ordinance goes into effect
- October 2011 Supervisor Campos submits Ordinance revisions causing an outbreak of dissent between SF employers and the Board. Mayor Lee invites leaders from all sectors of the City to come together to reach a consensus.
With the Ordinance once again under scrutiny and pending revisions, many issues have come to light.
Many employers feel the HCSO places an unfair burden on their business by mandating an expense whether employees use the benefits or not.
Employers can choose to pay the mandatory amounts into Healthy San Francisco and in turn the employees receive basic health care at City sponsored clinics, or receive a Medical Reimbursement Account. Some Employers choose to make the funds that they would have paid into the City available to their employees via a Medical Reimbursement Account that the employer or a TPA (Third Party Administrator) administers. Employer and TPA administered reimbursement accounts do not restrict the care provider only the type of expense. The advantage is that the employer cost is only the amount of employees’ claims and the employee advantage is a wide range of possible eligible expenses that are not dependent on point of service (as with the City’s clinics).
Neither the Healthy San Francisco nor a Medical/Health Reimbursement Arrangement are health insurance. They are a means of receiving a non taxable benefit that can only be spent on health costs.
Do the math (Contributing to the SFHCSO):
A restaurant with 80 employees working 80 hours per month (part time employees)
80 hours x fund rate of 1.37/hr = $109.60 per employee
80 employees x $109.60 = $8,768.00month or $105,216 per year
Each employee can either visit a City clinic for a health care concern (the clinics are only for SF Residents) or can spend that amount on medical/dental/vision expenses via a HRA/MRA
If the employer pays into Healthy San Francisco the employee must apply for Healthy San Francisco, be interviewed, prove identity and city residency, pay quarterly fees and point of service fees (on a sliding scale), and renew his/her application each year.
Alternatively, if the employer or TPA implements a Health Reimbursement Arrangement account the employee uses a debit card at point of sale or submits receipts for reimbursements.
As a TPA and Bay Area business, our President, Tony Bowden, says it best “We are committed to being part of the solution for SF employers and employees.” With an HRA the $105,216 from our example, is retained by the employer. The employer makes funds available as the employees submit claims. We provide the service of managing the HRA plan, reimbursements, debit cards, claim questions. An added benefit for our payroll clients is they do not have to submit long lists of employees and hours worked as this is integrated with payroll processing. Currently an HRA satisfies the HCSO requirement and provides employees with readily accessible funds for health care costs.
This is not the first amendment proposed by the Board of Supervisors and it will most likely not be the last. However the proposed changes have some serious consequences for employers. Supervisor Campos’ proposed amendments mandate an availability of funds to employees, even after termination. The funds would have to be available for a minimum of 18month, but could go on indefinitely depending on usage. Employers must fund the accounts immediately, no accrual of the funds will be allowed. Mayor Lee called for a consensus and brought representatives from diverse sectors to comment. Again the Board of Supervisors will vote this week and then it will pass to Mayor Lee’s desk, where although he hasn’t said he will support or veto the amendment, the Mayoral election is looming and will be bound to influence the decision.
Contact Mayor Lee to voice your opinion on the HCSO: (415) 554-6141 – Email: firstname.lastname@example.org
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