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Compliance Briefing Center

Legislation and Reform

Making it Easier for You
to Manage Benefits

Updates to the San Francisco Health Care Security Ordinance Announced

New as of January 1, 2017 Health Care Expenditure Rates just released under the San Francisco Health Care Security Ordinance.

What is this? 
The San Francisco Health Care Security Ordinance (HCSO) provides individuals, who work in San Francisco and qualify as an employee entitled to minimum wage, with access to affordable health care through a Health Access Program. The HCSO requires Covered Employers to spend a minimum amount of money each quarter on behalf of their Covered Employees’ health care; i.e., those who have been employed for more than 90 days and who regularly work at least eight hours per week in San Francisco. The 2017 health care expenditure rates have recently been released, and the rate history is as follows:

Employer Size*Rate Per Hour
2011 2012 2013 2014 2015 2016 2017
Large Employers 
(100+ Employees)
$2.06 $2.20 $2.33 $2.44 $2.48 $2.53 $2.64
Medium Employers 
(20-99 Employees)
$1.37 $1.46 $1.55 $1.63 $1.65 $1.68 $1.76

*Non-profits with fewer than 50 employees are exempt from the Employer Spending Requirement.

HCSO Amended to Require Irrevocable Expenditures 
On June 17, 2014, the San Francisco Board of Supervisors amended the Health Care Security Ordinance to phase in, over a three-year period, a requirement that all health care expenditures made by Covered Employers on behalf of their Covered Employees, be made “irrevocably.” Currently, Covered Employers have the option to make health care expenditures on behalf of their Covered Employees either with irrevocable expenditures, such as insurance premium payments, or with revocable expenditures, such as allocations to Health Reimbursement Arrangements (HRAs), where unspent funds can be returned to the employer. 

The three-year “phase-in” requires that 60% of the employer expenditure in 2015 must be irrevocable; 80% must be irrevocable in 2016; and all employer health care expenditures must be irrevocable on and after January 1, 2017.  The amended Ordinance also permits employees to voluntarily waive the unused balance of revocable expenditures made on their behalf for hours worked prior to January 1, 2014.

The amended Ordinance clarifies benefits available under the Health Access Program, a public health benefits program for employees whose employers choose to make expenditures under the City Option, and directed the Department of Public Health to develop a plan by August, 2015 to maximize participant enrollments in health insurance through the State insurance exchange, Covered California.

Updated Administrative Guidance on the HCSO is now available with new sections information concerning “Revocable and Irrevocable Health Care Expenditures,” “The HCSO and the Affordable Care Act,” and “Expenditures and Enforcement for 2014.” There is also available a Notification for employers who used HRAs to previously comply with the HCSO.

For details about these and other requirements, Frequently Asked Questions, or other resources, please visit the San Francisco government website at

Download a copy of this Alert.