Employers covered by the San Francisco Health Care Security Ordinance (HCSO) are required to submit the 2022 Annual Reporting Form by Monday, May 1, 2023. This annual HCSO reporting requirement was reinstated in 2022 for the 2021 reporting year after being suspended for the 2019 and 2020 reporting years due to the pandemic.
Click here for the website to access the 2022 HCSO Employer Annual Reporting Form. Covered employers who fail to make a timely submission of the HCSO Annual Reporting Form may be subject to a penalty of $500 per quarter.
HCSO Background
The HCSO is a San Francisco city law, in place since 2008, establishing several employer health-care-related obligations and enforced by the Office of Labor Standards Enforcement (OSLE). The HCSO requires all covered employers in San Francisco to spend a minimum amount of money, called an expenditure, on a quarterly basis toward their covered employees’ healthcare costs.
Under the HCSO, covered employers are those for-profit businesses with 20 or more employees and non-profit businesses with 50 or more employees who have employees working within the geographic boundaries of the City and County of San Francisco. Employers must count all employees, regardless of where they live or work, to determine if they are covered under the HCSO. Covered employees are those employees who have been employed for more than 90 days and who regularly work at least 8 hours per week in San Francisco.
The minimum health care expenditure for each covered employee is determined quarterly by multiplying the total number of hours payable to the employee in the quarter (capped at 172 hours per month) by the applicable expenditure rate.
Refer to the table below for the 2023 HCSO expenditure rates based on size and type of employer:
| Employer Size |
Number of Workers |
2023 Expenditure Rate |
| Large |
All employers w/ 100+ workers |
$3.40 per hour payable |
| Medium |
Businesses w/ 20-99 workers
Nonprofits w/ 50-99 workers |
$2.27 per hour payable |
| Small |
Businesses w/ 0-19 workers
Nonprofits w/ 0-49 workers |
Exempt |
Covered employers can comply with the HCSO by making health care expenditures for their covered employees under the following options:
- Payments for medical, prescription, dental, and/or vision insurance.
- Payment into health savings accounts (HSAs) or other irrevocable reimbursement accounts.
- Payments to the San Francisco City Option (common option for those covered employees who waive employer-sponsored health plan coverage). Employers who make payments to the City Option program on behalf of a covered employee are required to provide the employee with a one-time Health Care Payment Confirmation notice and are encouraged to post the City Option poster, both of which can be accessed here.
- Payments to covered employees to reimburse them for out-of-pocket health care costs.
Exempt Employees
The HCSO exempts the following employees:
- Employees who voluntarily waive their right to have their employers make health care expenditures for their benefit by completing the waiver form, certifying that they are receiving health benefits through another employer, including an employer of their spouse, domestic partner, or parent.
- Employees who qualify as managers, supervisors, or confidential employees and earn more than the applicable salary exemption amount ($114,141 annually / $54.88 per hour in 2023).
- Employees who are eligible for Medicare or TRICARE.
- Employees who are employed by a non-profit corporation for up to one year as trainees in a bona fide training program consistent with federal law.
- Employees who receive health care benefits under the San Francisco Health Care Accountability Ordinance.
Remote Employees
As a result of the San Francisco City public health order on June 11, 2021, which removed the remote work recommendation for employers, employees working remotely outside of San Francisco are not covered under the HCSO employer spending requirements.
HCSO Recordkeeping, Notice & Reporting Requirements
Covered employers are required to maintain sufficient records for four years from each covered employee’s employment dates, including itemized pay statements and records of health care expenditures for each covered employee.
Covered employers must post the 2023 HCSO Poster in a conspicuous place at all workplaces with covered employees in English, Spanish, Chinese, and other applicable languages spoken by covered employees.
Covered employers are also required to submit an annual reporting form to the OLSE by April 30th of each year (May 1st for 2023 due to April 30th falling on a weekend in 2023), including information on total health care spending and any applicable surcharges that a covered employer imposes on customers to offset HCSO costs.
Employer Actions
Employers covered under the HCSO are advised to take note of the upcoming May 1, 2023 deadline to submit the 2022 Annual Reporting Form and take action accordingly.
Click here for OSLE-released preview guidance of the 2022 Annual Reporting Form. Click here for OSLE-released HCSO administrative guidance.
The HCSO requirements can be confusing and complex. Contact your Risk Strategies representative for assistance or contact us directly at benefits@risk-strategies.com.
