- Q: What is a Health Care Expenditure?
- Q: What are some examples of Health Care Expenditures that meet the requirements of the HCSO?
- Q: What qualifies as “health care services”?
- Q: As an employer, do I have to choose only one of the options listed above?
- Q: Does the HCSO require employers that already provide health insurance to their employees to spend more money on their employees?
- Q: I currently provide benefits to all full-time employees, but only provide benefits to part-time employees who work more than 20 hours per week. Does the HCSO require me to do more?
- Q: What if my employees have other insurance? Am I still required to make health care expenditures for those employees?
- Q: What if my employees choose not to participate in the health plan that I offer?
- Q: What should I do if a Covered Employee stops working for me before I’ve made the quarterly Health Care Expenditure?
1. Q: What is a Health Care Expenditure?
A: A Health Care Expenditure is any amount paid by a Covered Employer to its Covered Employees or to a third party on behalf of its Covered Employees for the purpose of providing health care services for Covered Employees or reimbursing the cost of such services for its Covered Employees. Amounts paid by employees shall not count towards the Covered Employer’s minimum Health Care Expenditure.
2. Q: What are some examples of Health Care Expenditures that meet the requirements of the HCSO?
A: All of the following examples meet the requirements of the HCSO:
- Payments to a third party to provide health care services for the Covered Employee, such as payments for health insurance or payments to a health care provider;
- Payments on behalf of the Covered Employee to the City Option;
- Contributions on behalf of the Covered Employee to a reimbursement program;
- Payments to the Covered Employee to reimburse the employee for costs incurred in the purchase of health care services; and,
- Costs incurred by the employer in the direct delivery of health care services for the Covered Employee.
- Payments made directly or indirectly for workers’ compensation or Medicare benefits do not qualify as health care expenditures.
3. Q: What qualifies as “health care services”?
A: Health care services means medical care, services, or goods that may qualify as tax deductible medical care expenses under Section 213 of the Internal Revenue Code, or medical care, services, or goods having substantially the same purpose or effect as such deductible expenses.
Examples of qualifying expenditures include vision and dental coverage; nonprescription drugs, including, but not limited to, antacids, allergy medicines, pain relievers, and cold medicines; doctor’s fees; and necessary hospital services not paid for by insurance. Qualifying medical expenses include dental treatments and fees paid to dentists for x-rays, fillings, braces, extractions, dentures, and the like; eyeglasses and contact lenses needed for medical reasons; and fees for eye examinations and eye surgery to treat defective vision.
4. Q: As an employer, do I have to choose only one of the options listed above?
A: No, an employer may choose more than one option to satisfy its obligations. An employer may, for example, pay for health coverage for its full-time employees while making contributions to the City Option for its part-time employees.
5. Q: Does the HCSO require employers that already provide health insurance to their employees to spend more money on their employees?
A: Not necessarily. The premiums that a Covered Employer pays for medical insurance for its Covered Employees count toward its required Health Care Expenditures, so if that amount meets the minimum required under the HCSO, the Covered Employer will have no further obligations. However, if the amount spent does not meet the minimum expenditure amount set by the HCSO, the Covered Employer must decide how it will spend the difference. The employer could choose a health insurance plan that provides more comprehensive benefits, such as dental and visions benefits, or increase its contribution towards the health care premiums while decreasing the portion paid by the employee. Another option is to allow the employee to be reimbursed, up to that difference, for out-of-pocket health care expenses, such as co-payments for doctor's visits or prescription medications. Yet another way to spend the remainder of the minimum spending requirement is to send a check to the City to create a medical reimbursement account for the Covered Employees.
6. Q: I currently provide benefits to all full-time employees, but only provide benefits to part-time employees who work more than 20 hours per week. Does the HCSO require me to do more?
A: Probably. Minimum Health Care Expenditures are required for all Covered Employees working at least eight hours per week in San Francisco. Thus, Covered Employers who currently provide health benefits to full-time employees, but not to part-time employees, must begin making Health Care Expenditures for all part-time employees who work at least eight hours per week in San Francisco.
7. Q: What if my employees have other insurance? Am I still required to make health care expenditures for those employees?
A: Possibly. Covered Employees who already have health care benefits through another employer may voluntarily waive their right to health care expenditures under the HCSO by signing the OLSE’s Employee Voluntary Waiver Form. An employer will not be required to make health care expenditures for employees that choose to sign this form .Keep in mind, however, that the waiver will not be valid unless health care benefits are provided either by another employer of the Covered Employee or by the employer of that Covered Employee’s spouse, domestic partner, or parent. If a Covered Employee has health insurance that is not provided by another employer, you are still required to make the minimum health care expenditures for that employee.
(Updated August 14, 2014)
8. Q: What if my employees choose not to participate in the health plan that I offer?
A: A Covered Employer that establishes or maintains a health insurance program that requires contributions by a Covered Employee must do more than offer the Covered Employee an opportunity to participate in such a program. If the employee declines to participate in such a program, the employer must satisfy its Employer Spending Requirement in some other manner.
9. Q: What should I do if a Covered Employee stops working for me before I’ve made the quarterly Health Care Expenditure?
A: Covered Employers must comply with the Employer Spending Requirement for all hours paid to a Covered Employee, even if the employment relationship is terminated before the end of the quarter. Covered Employers that have not yet made the quarterly Health Care Expenditure for a Covered Employee may make the expenditure in the same manner as was done in the immediately preceding quarter. Where an employer has chosen to purchase health insurance for its Covered Employees, COBRA payments to continue health insurance coverage shall also qualify as valid health care expenditures. The Covered Employer may also comply by making payments to the City, even if the employer had previously complied with the Employer Spending Requirement in some other manner.
If an Employer meets the Employer Spending Requirement by contributing to a reimbursement program, there are additional rules that apply when a Covered Employee leaves the business.