Many employers operating within the City of San Francisco may be familiar with the Healthy San Francisco Security Ordinance which mandates remitting a specific dollar amount to the City fund or towards employer-sponsored health coverage. But that is not all. Additionally, the Health Care Accountability Ordinance (HCAO) may apply to most City contractors and tenants (including those at the San Francisco International Airport and the Port of San Francisco). For full details, see the HCAO webpage here.
The HCAO requires employers to:
- Offer health plan benefits to their covered employees,
- Make payments to the City for use by the Department of Public Health, or
- Under limited circumstances, make payments directly to their covered employees
- Display posters at each worksite and distribute Employee Know Your Rights notice
Effective July 1, 2023, covered employers who make payments to San Francisco General Hospital to satisfy the requirements of the HCAO must pay:
- $6.35 per hour, per employee, capped at $254.00 per work week
This rate is adjusted for inflation annually on July 1. The minimum standard for the 2024 plan year provides the specifics required to meet the Ordinance and can be found here.
Employers operating or having remote employees within the City, especially if contracting with the City, must become familiar with the HCAO. FAQs are available from the San Diego Department of Public Health. FAQs include:
1) Does the HCAO require that coverage be offered for the individual employee and their dependent(s)?
No, the HCAO only requires that medical insurance be offered to the individual worker.
2) Since an employer only has to offer one (1) compliant plan, do other additional plans have to be HCAO compliant?
A covered employer is only required to offer one (1) compliant plan at no charge to the employee. If they choose to offer additional plans, these plans do not have to meet all the minimum standards, and they can be administered as the employer so chooses.
For example, after offering the compliant plan at no charge, the employer can also:
- Offer a plan with different benefits that do not meet the minimum standards; or
- Offer a plan that requires an employee premium contribution
Although all gold- and platinum-tier health plans are considered automatically compliant under the HCAO Minimum Standards, they must still offer coverage for the full set of covered benefits as defined by the California EHB Benchmark plan. Health plans offered by out-of-state contractors doing business with or in the City and County of San Francisco must provide coverage for the services covered by the California EHB Benchmark plan.
3) If an employer pays the HCAO fee instead of offering a compliant plan, does that count as insurance or does the employee benefit directly from those payments?
Paying the HCAO fee does not count as insurance and is not a direct benefit to employees.
4) Does it matter if our plan is self-funded vs fully-funded as it relates to the HCAO minimum standards?
No, it does not.
5) How do I calculate the actuarial value of a plan?
Employers can request that your broker provide the actuarial value of the plan in question, or you can also use the CMS Actuarial Value Calculator (AV Calculator), which is designed to give an estimate of the actuarial value for a given plan design. Please ensure you use the calculator of the corresponding year you’re seeking compliance for (i.e., 2023 AV Calculator is used to calculate the AV of a 2023 health plan).
Employers should work with their Trusted Advisor to ensure compliance with the local employee benefits ordinances, where applicable. Need help? Reach out to your local Leavitt Group representative. We can help!