US Supreme Court Denies Appeal to Overturn
San Francisco’s Health Care Security Ordinance
 

On June 28, 2010 the US Supreme Court declined to hear the Golden Gate Restaurant Association’s appeal to end the San Francisco Health Care Security Ordinance (HCSO). The High Court’s decision closes a four-year legal battle and eliminates any future action against the legality of the HCSO. This denial means employers subject to the HCSO must continue to meet the mandated health care spending requirements.

The HCSO requires most businesses with a San Francisco business license and 20 or more employees to meet a minimum level of health care spending for their employees or pay into a City fund. All companies with employees working within City boundaries more than a minimum number of hours per week must comply with the HCSO. The funding level and effective date are determined by the total number of employees, regardless of where the employees work or reside.

How does the San Francisco Health Care Security Ordinance interact with federal health care reform (Patient Protection and Affordable Care Act)?

• Employers using limited benefit plans (i.e., low limit medical plans or health reimbursement accounts) to comply with the HCSO may need to reevaluate those strategies in light of new federal mandates that will prohibit certain annual maximums.

• The HCSO has a lower threshold for benefit eligibility (8 hours/week) than the new federal pay or play requirements (30 hours/week) that begin in 2014. As a result, employers will be subject to HCSO funding for employees for whom the employer has no pay or play liability under federal health care reform.

• It is unlikely that employer taxes or fees paid under health care reform’s pay or play rules starting in 2014 will qualify as employer health care spending under the HCSO. Further guidance may be provided by the City and County of San Francisco.

For more information, please reference past ArlenGroup Insight articles on both the San Francisco HCSO and federal health care reform available in the archives.