SAN FRANCISCO HEALTH CARE SECURITY ORDINANCE UPDATE (6)
2009 Updates to San Francisco’s Security Ordinance
The San Francisco Health Care Security Ordinance requires that employers meet minimum spending requirements in providing health care to employees working in San Francisco. Two updates to the
Ordinance became effective on January 1, 2009:
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The health care spending requirement increased.
Employers with 100 or more employees will now be required to spend $1.85 per hour per covered employee for health care coverage, up from $1.76 in 2008. Employers with between 20 and 99 employees will be required to spend $1.23 per hour per covered
employee, up from $1.17 per hour. Employers with less than 20 employees remain exempt from the Ordinance.
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The spending requirement will now apply to employees working at least 8 hours per week in San Francisco, down from 10 hours per week in 2008.
These two changes mean that employers will now have to pay more to comply with the city’s Ordinance. The per hour spending requirement remains indexed to increases in the City’s health care inflation rates and will continue to increase annually.
When the Ordinance was first passed, many employers elected the short term strategy of paying any required healthcare spending shortfall into a city fund while waiting for the results of whether the Ordinance would be overturned in the court system. On September 30, 2008 the US 9th Circuit Court of Appeals upheld the spending requirement, giving employers reason to rethink their longer term compliance strategy. While the case has been further appealed to the US Supreme Court by the Golden Gate Restaurant Association, there has been no indication as to whether or when the Supreme Court will review the case. Given the current state of the court case, longer term compliance strategies that include the use of employer funded health reimbursement accounts (HRAs) or Flexible Spending Accounts (FSAs) now make more sense to consider.
ArlenGroup clients will be contacted directly to discuss their long-term compliance strategies.
Prior Communications regarding the Health Care Security Ordinance
The Insight newsletter is not intended to provide legal advice but perspective on recent regulatory issues,
trends and standards affecting employee benefits. Please consult your own legal counsel for further information on the topics discussed in this issue of Insight.
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