Health Care Security Ordin inance (HCSO) Office of Labor Standards - - PowerPoint PPT Presentation

Health Care Security Ordin inance (HCSO)

Office of Labor Standards Enforcement (OLSE)

Ellen Love Principal Administrative Analyst Maura Prendiville Compliance Officer

Office of Labor Standards Enforcement

Today’s Topics

• 1. Health Care Security Ordinance (HCSO) Overview
• 2. New HCSO Rules
• 3. Common Compliance Issues

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Office of Labor Standards Enforcement

Office of Labor Standards Enforcement (OLSE)

• OLSE enforces San Francisco labor laws, including:
• Min

inimum Wag age

• Paid

aid Si Sick Le Leave

• Healt

lth Car are Se Security Ordin inance

• Famil

ily Frie Friendly Workplace Ordin inance

• Fai

air Chan ance Ordin inance

• Formula Retail

l Employee Ri Rights Ordinance

• Ne

New in in 20 2017 17: Paid aid Par arental l Le Leave Ordin inance

• Ne

New in in 20 2018 18: La Lactation in in th the Workplace, Con

• nsid

ideration of

• f Sa

Salary ry His istory ry

• Sp

Special l lab labor la laws for City ity contractors

• Investigative authority; enforcement power; technical assistance for

employers

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Office of Labor Standards Enforcement

HCSO History and Overview

• The HCSO was passed unanimously by the Board of Supervisors

in July 2006 and implemented on January 1, 2008

• The HCSO requires covered employers to make health care

expenditures (spend money) on behalf of covered employees for health care services

• The HCSO was amended in 2011 and 2014
• New Rules in

in effect October 29, , 2017

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Office of Labor Standards Enforcement

Covered Employers

• Applies to any entity doing business in San Francisco
• Minimum size threshold based on total number of persons

performing work in ALL locations throughout the world, not

• nly San Francisco
• For-profit employers: 20+ persons perform work per quarter
• Nonprofit employers: 50+ persons perform work per quarter

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Office of Labor Standards Enforcement

Employer Obligations under the HCSO

1) Post official OLSE notices in all workplaces

• Download notice from the OLSE website

2) Report health care expenditures to OLSE annually

• Annual Reporting Form (ARF)

3) Maintain employment records and records of compliance

• Time sheets, employee info, records of health care

expenditures made 4) Satisfy Employer Spending Requirement (ESR) for covered employees

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Office of Labor Standards Enforcement

Employees Covered by the HCSO

• Employees employed for at least 90 calendar days at the

company and work at least 8 hours per week (104 per quarter) in San Francisco

• NOT COVERED (Exempt from the HCSO)
• Managers/Supervisors. Must satisfy (1) job duties test and (2) salary

requirement of $95,101/yr (2017), $97,722/yr (2018)

• Medicare or TRICARE
• Employees covered by the Health Care Accountability Ordinance (HCAO)
• Employees who are receiving health care services through another employer

and who voluntarily sign an HCSO Employee Waiver Form

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Office of Labor Standards Enforcement

OLSE Voluntary Waiver Form

Employees who opt out of insurance are still covered by the HCSO, so are entitled to health care expenditures unless they’re exempt from the law. Employer may ask employee to sign a waiver if:

• Employee has insurance from another employer (2nd job, spouse’s employer,

parent’s employer).

• Employee is willing to waive their right to alternative health care expenditures

going forward (waivers cannot be signed retroactively)

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Office of Labor Standards Enforcement

OLSE Voluntary Waiver Form

If a waiver is signed:

• It is valid for one year only; the employer must continue to ask for signatures each

year or the employee is automatically covered by the HCSO once the waiver expires;

• The employee can choose to revoke her signature at any time during that year;
• The employer must keep copies of the waiver form as part of the recordkeeping

requirement.

Employee’s signature on forms from employers or third parties (ie, “opt-out”

• r “waiver” forms from insurance companies) are not accepted as HCSO

waivers. HCSO waiver form was updated November 1, 2017. Only use new version going forward. (available in multiple languages on OLSE website)

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Employer Spending Requirement

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• Health Care Expenditure Rates
• What this looks like for a FULL TIME employee:

• Payable Hours x Health Care Expenditure (HCE) Rate = Amount

To Spend Quarterly

• Payable hours includes hours worked and any hours a person is

entitled to be paid wages, like sick leave, vacation, PTO

• Payable hours cap: 172 hours/month
• HCEs must be made 30 days after the end of the preceding
• quarter. Quarterly Deadlines:

Employer Spending Requirement

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Q1: Apr. 30 Q3: Oct. 30 Q2: July 30 Q4: Jan. 30

Options to satisfy ESR:

• Provide health insurance:
• medical, dental, and/or vision premiums
• covered employees and/or their spouses, partners, children,
• r other dependents
• Contribute to SF City Option
• Contribute to a Health Savings Account, Medical Savings

Account, or other irrevocable reimbursement account

• Combination of these options

Employer Spending Requirement

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HCSO 2017 RULES

Office of Labor Standards Enforcement

2017 Rulemaking Process

• Draft Rules posted August 8, 2017
• Emailed to 9,102 employers
• Public hearing held September 7, 2017
• Final Rules published October 10, 2017
• Effective date October 29, 2017
• Full text of rules available at http://sfgov.org/olse/hcso

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Office of Labor Standards Enforcement

2017 Rulemaking Updates: Waivers

• Rule 3.8: Waivers
• New waiver form updated as of Nov. 1, 2017  Only use the new

form going forward

• Must be signed voluntarily
• Must state that he/she has insurance from another employer
• Rule 3.9: Electronic Waivers
• Permissible as long as the electronic form is identical to the OLSE

form, and is voluntary

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Office of Labor Standards Enforcement

2017 Rulemaking Updates: PPLO-HCSO overlap

• Rule 4.4: Paid Parental Leave Ordinance (PPLO)
• PPLO went into effect in 2017
• While an employee is receiving PPLO benefits, in order to comply

with the HCSO the employer must make a health care expenditure proportionate to the amount of the employee’s supplemental compensation

• For general guidance about the PPLO, contact pplo@sfgov.org or

(415) 554-4190

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Office of Labor Standards Enforcement

2017 Rulemaking Updates: Uniform Health Plans (averaging)

• In general, employers must make expenditures for each employee
• Extra spending on Employee A does not count toward Employee B
• Rule 5.8 provides exception for “uniform health plans”
• Employees with uniform benefits – copays, deductible, etc.
• Employer may average the expenditures for enrolled employees
• Example: age-banded plans
• Make sure you maintain calculation records

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Office of Labor Standards Enforcement

2017 Rulemaking Updates: Self-funded insurance plans Poll: How many have self-funded/self-insured health plans?

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Office of Labor Standards Enforcement

2017 Rulemaking Updates: Self-funded insurance plans

• Rule Change: COBRA equivalent rates are no

longer accepted as a way for self-funded/self- insured plans to calculate HCEs

• Employers must look at amounts irrevocably

spent

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Office of Labor Standards Enforcement

2017 Rulemaking Updates: Self-funded insurance plans

• Rule 5.9(b): When employers pay claims as incurred (pay-as-you-go), the average

hourly expenditures for a calendar year meet or exceed that year’s expenditure

• rates. Example:
• Calendar year calculation
• Employer can “top-off” expenditures by end of February 2019 if necessary

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Covered Employees in 2018 100 Total spending on self-insured health plan for those employees in 2018* $600,000 Total Hours Payable for Covered Employees in 2018 206,400 Average Hourly Expenditure $600,000/206,400 = $2.91 Exceeds the 2018 rate of $2.83

Office of Labor Standards Enforcement

2017 Rulemaking Updates: Level-funded self-funded insurance plans

• Monthly payments to third party administrator
• Rule 5.9(a): If an employer pays a third party administrator (TPA),

amounts paid to the TPA and never returned to the employer count towards HCEs.

• Quarterly calculation
• Premiums, admin fees, stop-loss insurance count as expenditures
• Check with OLSE for specific questions about which fees to include

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Office of Labor Standards Enforcement

2017 Rulemaking Updates: Self-funded insurance Q4 2017

Q: What are self-funded employers supposed to do about Q4 2017, when they’ve been relying on the COBRA equivalent rate to comply for 2017? A: Even though the effective date of the new rules is 10/29/17, OLSE will not penalize employers for using COBRA equivalent rate for the entirety of 2017. OLSE will begin enforcing the new provision of Rule 5.9(b) for calendar year 2018.

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Common Compli liance Is Issues

Office of Labor Standards Enforcement

HCSO Best Practices for Employers

• Transparency and Communication with employees
• Well-trained staff in HR and benefits department
• Stay up to date: HCSO email list, website, webinars. Hotline

available for individual technical assistance.

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Office of Labor Standards Enforcement

HCSO Compliance Quiz: Question 1

Q: Acme Corp. offers insurance to all of its employees pursuant to the Affordable Care Act. Does that make Acme compliant with the HCSO? (a) Yes. (b) Yes, but only for the employees who accept the insurance. (c) No, unless Acme is spending enough on the insurance and also making expenditures for the employees who choose not to participate in the insurance.

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Office of Labor Standards Enforcement

HCSO Compliance Quiz: Question 1

Answer: (c) No, unless Acme is spending enough on the insurance and also making expenditures for the employees who choose not to participate in the insurance.

• Acme must analyze the total cost of the plan to see if it satisfies the spending

requirement for employees who enroll (if not, must make additional expenditures)

• Acme must make sure it makes health care expenditures for employees who

don’t enroll

• BUT, the amount Acme is spending counts towards its obligations under the

HCSO.  See Administrative Guidance Sections E6, E7, E9, E10

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Office of Labor Standards Enforcement

HCSO Compliance Quiz: Question 2

Q: Acme Corp. spends more than it’s required to on some employees, and less than it’s required to on other employees. Is Acme complying with the HCSO?

(a) Yes, because the spending amounts will balance out. (b) It depends. (c) No, because it has to make the correct expenditure for each individual employee.

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Office of Labor Standards Enforcement

HCSO Compliance Quiz: Question 2

Answer: (b) It depends. This would only be compliant if Acme offers uniform coverage and is correctly averaging its expenditures within each plan. Acme can only use averaging for the people enrolled in each plan.  See Administrative Guidance Sections D8, D9, D11

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Office of Labor Standards Enforcement

HCSO Compliance Quiz: Question 3

Q: Acme gets HCSO waiver forms filled out from all the employees who don’t want Acme’s health insurance. Does this comply with the HCSO? (a)

• No. The HCSO doesn’t allow Acme to ask its employees to sign

waivers. (b)

• No. Acme needs to make health care expenditures for its

employees who don’t want the insurance. In limited situations, the employer may ask some of those employees to sign a waiver. (c)

• Yes. The HCSO requires Acme to get waivers from employees if

they’re not enrolled in the insurance.

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Office of Labor Standards Enforcement

HCSO Compliance Quiz: Question 3

Answer: (b): No. Acme needs to make health care expenditures for its employees who don’t want the

• insurance. In limited situations, the employer may ask

some of those employees to sign a waiver.  See Administrative Guidance Sections E8, E9, C9, C10, C11.

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Office of Labor Standards Enforcement

HCSO Compliance Checklist

Expenditures for each covered employee are accounted for Employer spends sufficiently for each employee Expenditures are made on time (quarterly deadline) Employer reports health care spending to OLSE annually Employer keeps records of compliance Employer keeps HCSO notice posted for employees to see

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Office of Labor Standards Enforcement

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• Sign up for OLSE updates
• OLSE/HCSO Website
• Administrative Guidance
• OLSE Official Notices
• Annual Reporting Form
• Employee Voluntary Waiver Form
• Email us: HCSO@sfgov.org
• Call us: (415) 554-7892

HCSO Resources

Office of Labor Standards Enforcement

Q&A

After the webinar, please direct your questions to hcso@sfgov.org at any time.

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