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San Francisco HEALTH CARE
SECURITY ORDINANCE UPDATE (5)
Employer Spending Requirement under Security Ordinance upheld by 9th Circuit Court
On September 30, 2008 the US 9th Circuit Court ruled against the Golden Gate Restaurant Association’s challenge and upheld San Francisco’s employer health care spending requirement. The San Francisco Health Care Security Ordinance (HCSO) is a “play or pay” regulation that requires employers meet minimum health care spending thresholds for employees working in San Francisco. The employer spending requirements became effective for most employers with more than 50 employees on January 9, 2008 (the date of the 9th Circuit Court’s initial decision supporting the Ordinance).
The 9th Circuit Court’s ruling confirms that employers must continue to make required expenditures on a quarterly basis and report required information to the city annually.
Throughout 2008 many employers have elected to pay any required healthcare spending shortfall into a city fund while waiting for the results of this hearing. This “pay the city” strategy will continue to be an option for employers, but the 9th Circuit Court’s ruling affords employers the opportunity to rethink their longer term compliance strategy. In particular, compliance strategies that include the use of employer funded health reimbursement accounts (HRAs) or Flexible Spending Accounts (FSAs) will make even more sense to consider.
Prior Communications regarding the Health Care
Security Ordinance
This document is not intended to provide any legal advice or analysis. Please
consult your own legal counsel for further information on the topics discussed in this
issue of Insight.
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