Employer Resources

Health Care Reform

In 2010, the federal government enacted a comprehensive law to reform the health care system, called the Patient Protection and Affordable Care Act (ACA). The purpose of the law is to increase access to affordable health insurance. The ACA requires certain businesses to offer qualifying health care coverage to employees or pay a penalty, and to comply with notice and reporting provisions.

Employers with employees working in San Francisco should determine whether they are subject to both the ACA and the San Francisco Health Care Security Ordinance (HCSO), only the HCSO, or neither the ACA nor the HCSO. Employers subject to both the ACA and the HCSO need to comply with the requirements of both laws. Compliance with the ACA does not necessarily ensure compliance with the HCSO, and vice versa.

The San Francisco Office of Labor Standards Enforcement (OLSE) has published answers to some frequently asked questions about the impact of the ACA on the HCSO. Click here to read FAQs on the HCSO and ACA.

The following table compares the HCSO and ACA:

 Health Care Security Ordinance (HCSO)Affordable Care Act
(ACA)
ScopeSan Francisco lawFederal law
Effective DateJanuary 9, 2008January 1, 2015 for employer enforcement and reporting provisions
Covered Employers – Employer Size

  • For-profit businesses with 20+ employees

  • Nonprofit businesses with 50+ employees


Businesses with 50+ full-time (FT) and/or full-time equivalent (FTE) employees
Covered Employees – Hours WorkedEmployee works an average of 8 hours per week in San FranciscoEmployee works an average of 30 hours per week
Options to Comply

  • Payments for health, dental, and/or vision insurance for covered Employees

  • Payments on behalf of covered Employees to a health reimbursement account

  • Payments to covered Employees for reimbursement for health care expenses

  • Payments on behalf of covered Employees to the City Option Program


  • Offer qualifying health insurance coverage to covered Employees

  • Pay a tax penalty

Requirements for Health Care CoverageAs stated under Section 14.1(9) of the San Francisco Administrative Code: “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”

  • Minimum Essential Coverage as defined by Section 5000(A)(f) of the Internal Revenue Code

  • Affordable: Employee contributions for Employee-only coverage do not exceed 9.5% of household income

  • Minimum Value: Plan pays at least 60% of the cost of covered services


Minimum Contribution

  • Cost of qualifying health insurance coverage to 95% of full-time employees; or

  • Possible penalties

Penalties

  • Failure to make minimum contribution: $100/Covered Employee/quarter

  • Failure to submit HCSO Annual Reporting Form: $500/quarter


  • For no coverage: $2000 annually per FT/FTE employee beyond the first 30 FT/FTE employees

  • For unaffordable coverage, lesser of:


    • $2000 annually per FT/FTE employee beyond the first 30 FT/FTE employees

    • $3000 annually per FT/FTE employee purchasing subsidized coverage through Covered California


Enforcement AgencySan Francisco Office of Labor Standards Enforcement (OLSE)US Internal Revenue Service (IRS)
NoticePost Official HCSO Notice at every workplace where a Covered Employee worksProvide notice of Covered California health insurance marketplace to Employees
ReportingSubmit HCSO Annual Reporting Form to OLSE by April 30 annuallyFile employee health care coverage information with IRS annually as required by IRS Code Section 6056