San Francisco HCSO HRA Tools

Quick Navigation:


PDFs:

HCSO Provision Presentation

HCSO HRA Statement Order Form

HCSO Termination Form 2013


 

 

HCSO FAQs

Q. When does the HRA need to be established?

A. The HRA should be established prior to the expenditure due date, which is 30 days after the end of the calendar quarter. The HRA plan application should be submitted at least 15 days prior to the expenditure due date.

 

Q. How do I make a deposit for my employees in the HCSO HRA?

A. We will provide a spreadsheet for you to submit participant information and “expenditures” each quarter. When a participant files a claim, he/she will be reimbursed from our processing account and your designated account will be debited for the total amount of claims processed for your participants.

 

Q. How is the quarterly administration fee processed?

A. An $18 quarterly administrative fee is deducted from the participant’s reimbursement account balance at the beginning of each quarter. The total fees payable will be debited from the employer within seven days of sending the employee census. For example: If an employer’s required expenditure is $150 for an employee’s reimbursement account at the beginning of the quarter, the employee will actually have a balance of $132.

 

Q. How is an employee reimbursed for medical expenses?

A. HCSO HRA participants submit a claim for reimbursement via fax, mail, or e-mail to info@beneflexhr.com. Claims are processed daily and reimbursement checks are issued every Thursday. All claims received by Tuesday at 1:00 p.m. PST are issued for reimbursement on Thursday. Direct deposit is available to all participants at no extra charge. Denial letters are issued for all ineligible claims or claims missing information. Participants receive a claim form in their enrollment packet. In addition, all forms may be accessed online under EMPLOYEES, HCSO HRA Employee Resources.

 

Q. Can an employee submit a claim larger than the available expenditure?

A. Yes, an employee can submit a claim for larger than the fund balance, but will only be reimbursed up to the balance available.

 

Q. Can an employee submit a reimbursement request for expenses incurred before the plan became effective? (i.e. Can an employee submit a reimbursement request for medication purchase in 2007?)

A. Expenses must be incurred after the date eligibility begins in the HCSO HRA.

 

Q. What happens to unused balances at year end and termination?

A. The employer chooses if the unused balance remaining at the end of the year is rolled over or is forfeited back to the employer. If an employee terminates prior to the end of the quarter, he/she will still have access to the earned funds. Employees have 90 days after the end of the quarter in which they terminated to use the funds.

 

Q. Must medical services or purchases be conducted within San Francisco to qualify for reimbursement?

A. No, there are no service area limitations for qualified reimbursements.

 

Q. Whom do I call with administrative questions about the HCSO HRA?

A. You may call BeneFLEX’s HRA administrator at (800) 631.3539, Monday through Friday from 5:00 a.m. to 4:00 p.m. PST, or e-mail info@beneflexhr.com.

Questions about San Francisco’s HCSO, including how to comply with the ordinance, should be directed to San Francisco Office of Labor Standards Enforcement (OLSE). More information specific to the HCSO and ESR is available at the OLSE website. Specific inquiries may be e-mailed to HCSO@sfgov.org or placed by phone at (415) 554.7892.

 

Q. How do employees access their HCSO HRA balance information?

A. Employees enrolled in the HCSO HRA have 24-hour online access to their account information, 24-hour Interactive Voice Response number, and a toll-free daytime access to customer service at (800) 631.3539.

 

Q. What is a summary of the new rules that went into effect January 1, 2012?

A. First, all “Covered Employers” (i.e. businesses with 20 or more employees) must post an Official OLSE Notice regarding the HCSO at every workplace. You can access it online HCSO website or e-mail your request to hcso@sfgov.org.

Second, the 2013 Health Care Expenditure rate for large employers (100+ employees) is $2.33/hour. For medium-sized employers (20-99 employees), the rate is $1.55/hour.

Third, the 2012 Annual Salary Exemption Figure (for managers, supervisors, or confidential employees) is $84,051 (or $40.41/hour). (not released for 2013)

Fourth, the following new provisions apply only to businesses that utilize reimbursement accounts to satisfy, in whole or in part, the HCSO spending requirement.

In order for reimbursement account contributions to qualify as healthcare expenditures, all of the following criteria must be met:

  1. The contributions must be reasonably calculated to benefit the employee;
  2. The contributions must remain available to the employee for a minimum of twenty-four months from the date of the contribution;
  3. The employee must receive a written summary of each contribution within 15 days of the date of the contribution;
  4.  Any reimbursement account funds available at the end of 2011 must roll-over to 2012; and
  5.  Upon separation, employees must be provided with a written summary of their account within 3 days and the funds must remain available for a minimum of 90 days.

Fifth, the following new provisions apply only to employers that impose a surcharge on customers to cover, in whole or in part, the costs of the HCSO spending requirement.

  1. You will be required to report two new pieces of data to the OLSE on the Annual Reporting Form (instructions will be mailed to businesses in March 2012 and in March each year thereafter): the amount of money collected from the surcharge for employee healthcare and the amount of money spent on employee healthcare.
  2. If the amount collected from the surcharge for employee healthcare is greater than the amount spent on employee healthcare, the Covered Employer must irrevocably pay or designate an amount equal to that difference for employee healthcare.

 

Q. What is the new Notice-posting requirement?

A. Every Covered Employer must post the Official OLSE Notice in a conspicuous place at any workplace or job site where any Covered Employee works.

 

Q. Where can I get the Official OLSE Notice?

A. You can download and print a PDF-version of the Official Notice from the OLSE website at www.sfgov.org/olse/hcso. For best results, print in color on legal size paper (8.5 x 14). You can also call the OLSE at (415) 554-7892 or e-mail them at hcso@sfgov.org, and they will gladly send you copies by U.S. mail.

 

Q. Must a Covered Employer use the official OLSE Notice or may the employer draft and post a modified version?

A. Covered Employers must post the Official OLSE Notice. Drafting and posting a different version will not satisfy the requirement of the law.

 

Q. What if a Covered Employer has multiple workplaces?

A. Covered Employers are required to post the Official Notice at every workplace where even a single Covered Employee works.

 

Q. What is the new rule regarding surcharges?

A. If a Covered Employer imposes a surcharge on its customers to cover, in whole or in part, the costs of the healthcare expenditure requirement, the Covered Employer will be required to report two pieces of data to the OLSE during the annual reporting process: 1) the amount of the money collected from the surcharge for employee healthcare and 2) the amount of money spent on employee healthcare.

If the amount collected from the surcharge is greater than the amount spent on employee healthcare, the Covered Employer must irrevocably pay or designate an amount equal to that difference for healthcare expenditures for its Covered Employees. OLSE may refer any potential cases of consumer fraud to appropriate authorities.

 

Q. Is a business supposed to charge sales tax on any such health surcharge?

A. The OLSE does not enforce tax laws nor provide tax advice. However, on May 1, 2009, the State Board of Equalization issued a “Special Notice” entitled “Sales Tax Applies to the San Francisco Health Care Security Ordinance (SFHCSO) Surcharge.” You can access a copy of this Special Notice at www.boe.ca.gov/news/pdf/1224.pdf.

 

Q. What does it mean for a contribution to be available to the employee for a minimum of twenty-four months from the date of the contribution?

A. Healthcare expenditures must be made regularly, and no later than 30 days after the end of the preceding quarter. In order for a reimbursement account contribution to qualify as a healthcare expenditure, the Covered Employee must be entitled to seek reimbursement from the contributed funds for any eligible medical expenses incurred during the twenty-four month period following the date of the contribution.

Consider the following example. If an employer makes a contribution to an employee’s reimbursement account on April 15, 2012 (based on the hours “worked by” or “paid to” the employee in the first quarter of 2012), the contribution must remain available to the Covered Employee until at least April 15, 2014 in order to qualify as a healthcare expenditure under the Ordinance. In other words, the employee can see reimbursement from the account for eligible medical expenses incurred anytime between April 15, 2012 and April 15, 2014.

In order to qualify as healthcare expenditures, subsequent contributions made to the reimbursement account in July 2012 (for the second quarter), October 2012 (for the third quarter), and January 2013 (for the fourth quarter) must remain available for reimbursement of eligible medical expenses incurred until July 2014, October 2014, and January 2015, respectively.

 

Q. How does it work for an employee when an employer elects to make each reimbursement account contribution available for the minimum twenty-four months?

A. Under this scenario, at any given time, the employee may have an account balance comprised of various underlying contributions, each with different expiration dates.

For example, an employee could have a reimbursement account balance of $5,000.00, where $800.00 is set to expire in one month, $500.00 is set to expire in four months, etc.

 

Q. If an employee’s reimbursement account balance is comprised of underlying contributions that expire on different dates, which individual contribution is debited when an employee is reimbursed for an eligible medical expense?

A. In order for reimbursement account contributions to qualify as healthcare expenditures, any disbursement for eligible medical expenses must be debited from the oldest contribution first (i.e. the one set to expire soonest).

 

Q. Are there any specific requirements for the written summary of the contribution?

A. Yes. Employers are required to provide written summaries of reimbursement account contributions (“Contribution Summaries”) to Covered Employees within 15 days of the date of the contribution. Furthermore, the Contribution Summary must include the following information:

  • The name, address, and telephone number of any third party to whom the contribution was made;
  • The date and amount of the contribution;
  • The date and amount of any other debits or credits to the account since the most recent Contribution Summary provided to the employee;
  • The balance in the account, and
  • Any application expiration dates for the funds in the account.

OLSE developed a sample “Contribution Summary,” which Covered Employers are permitted, but not required, to use as a model. The sample Contribution Summary is available at www.sfgov.org/olse/hcso.

 

Q. Are there any rules regarding how the employer must distribute the Contribution Summary?

A. The distribution of Contribution Summaries is not limited to any particular method, but it is the Covered Employer’s obligation to ensure that the Contribution Summaries are, in fact, provided to employees. Moreover, Covered Employers are obligated to keep all records necessary to establish compliance with the Ordinance.

* Proof of distribution mailing $6.95 out of employee account.

 

Q. Are there any special rules or requirements when an employee “separates” from employment with a positive balance in a reimbursement account?

A. Yes. In order for a reimbursement account contribution to qualify as a healthcare expenditure, the following two conditions must be met with respect to separated employees (e.g. employees who quit, are fired, etc.):

First, any remaining balance in the account at the time of separation must remain available to the employee (and any other person eligible for reimbursement for healthcare expenses through the employee) for a minimum of ninety days from the date of separation.

Second, the employee must receive, within three days following the separation, a written notice (“Separation Notice”), which shall include the balance in the account and any applicable expiration dates for the funds in the account.

 

Q. Will a Covered Employer’s use of a reimbursement account to satisfy its obligation to make healthcare expenditures trigger additional reporting requirements?

A. Yes. If a Covered Employer uses a reimbursement account to satisfy its obligation to make healthcare expenditures for any of its Covered Employees, the Employer will be required to report to OLSE, on an annual basis, the terms of such accounts, including what medical expenses are eligible for reimbursement. OLSE will provide specific guidance and instructions on this reporting requirement during the annual reporting process, which typically occurs in April.

Note: BeneFLEX will supply our clients the information needed so they can submit their annual report. This information is provided on our monthly year-to-date report.

 

Q. Are Health Reimbursement Arrangements subject to COBRA continuation coverage?

A. The OLSE does not provide advice regarding compliance with federal laws, including COBRA. For an overview of some of the rules regarding the administration of HRAs, you may want to review IRS Notice 2002-45, which is available at www.irs.gov/pub/irs-drop/n-02-45.pdf. Section 7 of this Notice is entitled “COBRA Continuation Coverage,” and provides, in part, “an HRA is a group health plan generally subject to the COBRA continuation coverage requirements.”

Note: If you administer your COBRA internally or outsource your COBRA to someone other than BeneFLEX, you need to make sure the HCSO HRA is offered through COBRA.

 

Q. What are the new penalty provisions?

A. There are four new penalty provisions.

First, OLSE is now required to impose administrative penalties upon Covered Employers who fail to make the required healthcare expenditures on behalf of their employees within five business days of the quarterly due date (which is 30 days after the conclusion of each quarter). The maximum penalty for this type of violation is now $100 for each employee for each quarter that the required expenditures were not made within five business days of the quarterly due dates. This maximum penalty amount will increase each year for inflation.

Second, the penalty for failing to maintain or retain accurate and adequate records has increased to $500 per quarter that the violation occurs.

Third, the penalty for failing to submit the annual reporting information to the OLSE has also increased to $500.00 for each quarter that the violation occurs.

Fourth, poster penalty OLSE may impose a penalty of $25 per day for each work site.

 

Q. Due to PPACA Health Care Reform does the HCSO HRA require distribution of the Summary of Benefits and Coverage (SBC)?

A. Yes, effective 9/23/12 all HRA plans are required to comply with the PPACA guidance for Health Plans.

 

 

HCSO Details Employer

BeneFLEX’s Solution for the San Francisco Health Care Security Ordinance (HCSO)

 

What is the HCSO?

The HCSO requires “covered employers” located in and outside the geographic boundaries of San Francisco with a San Francisco Business Registration Certificate and 20 or more employees to make a quarterly Health Care Expenditure to, or on behalf, of each of its “covered employees.” A covered employee:

  • Has been employed by the employer for at least 90 calendar days.
  • Effective January 2008, worked at least 10 hours per week in San Francisco, and effective January 2009, works at least 8 hours per week in San Francisco.

 

Who is exempt?

Employers with less than 20 employees, or non-profit organizations with less than 50 employees are exempt from HCSO requirements. The following employee classes are excluded from coverage or eligibility:

  • Those who sign a Voluntary Waiver Form stating that they have other employer sponsored coverage.
  • Managers, supervisors and confidential employees who earned more than a salary of $76,851 annually ($36.95 per hour) in 2008, or $80,397 annually ($38.65 per hour) in 2009 and 2010 or $81,450 annually ($39.16 per hour) in 2011 or $84,051 annually ($40.41 per hour) in 2012 or $86,593 annually ($41.63 per hour) in 2013.
  • Those who are covered by Medicare or TRICARE.
  • Those who are employed by a non-profit for up to one year as trainees.
  • Those who receive healthcare benefits under the San Francisco Health Care Accountability Ordinance.

 

Required Expenditures

Covered Employers must make “healthcare expenditures,” or funds for medical benefits, available by the 30th day of the month following the last day of each calendar quarter.

Effective January 2009

  • Employers with 100+ employees must pay $1.85/hour.
  • Employers with 20-99 employees must pay $1.23/hour.

Effective January 2010

  • Employers with 100+ employees must pay $1.96/hour.
  • Employers with 20-99 employees must pay $1.31/hour.

Effective January 2011

  • Employers with 100+ employees must pay $2.06/hour.
  • Employers with 20-99 employees must pay $1.37/hour.

Effective January 2012

  • Employers with 100+ employees must pay $2.20/hour.
  • Employers with 20-99 employees must pay $1.46/hour.

Effective January 2013

  • Employers with 100+ employees must pay $2.33/hour.
  • Employers with 20-99 employees must pay $1.55/hour.

 

What are the methods in which the Expenditure can be made?

A healthcare expenditure is any amount paid by an employer on behalf of an employee for the purposes of providing healthcare services or reimbursing for the cost of healthcare services. Examples that meet the requirements of this ordinance include:

  • Paying health insurance premiums.
  • Contributions to a health spending account, such as a Health Savings Account (HSA), Health Reimbursement Arrangement (HRA), Flexible Spending Account (FSA), etc.
  • Cash reimbursements for out-of-pocket medical expenses.
  • Payments to the City to fund membership in Healthy San Francisco (HSF) or to setup a Medical Reimbursement Account for those who do not qualify for HSF.

 

How is the HCSO enforced?

The Office of Labor Standards Enforcement will investigate and/or audit employers. Any person may file a complaint to the OLSE to initiate an investigation. There are four new penalty provisions.

First, OLSE is now required to impose administrative penalties upon Covered Employers who fail to make the required healthcare expenditures on behalf of their employees within five business days of the quarterly due date (which is 30 days after the conclusion of each quarter). The maximum penalty for this type of violation is now $100 for each employee for each quarter that the required expenditures were not made within five business days of the quarterly due dates. This maximum penalty amount will increase each year for inflation.

Second, the penalty for failing to maintain or retain accurate and adequate records has increased to $500 per quarter that the violation occurs.

Third, the penalty for failing to submit the annual reporting information to the OLSE has also increased to $500.00 for each quarter that the violation occurs.

Fourth, poster penalty OLSE may impose a penalty of $25 per day for each work site.

 

Record Keeping Requirements

Employers are required to keep, among other things, detailed records of the healthcare expenditures made for each Covered Employee, including calculations, and proof that the required expenditures were made. If a Covered Employer uses a reimbursement account to satisfy its obligation to make healthcare expenditures for any of its Covered Employees, the Employer will be required to report to OLSE, on an annual basis, the terms of such accounts, including what medical expenses are eligible for reimbursement. OLSE will provide specific guidance and instructions on this reporting requirement during the annual reporting process, which typically occurs in April. The records need to be maintained on a quarterly basis. Failure to do so could result in a penalty.

Note: BeneFLEX will supply our clients the information needed so they can submit their annual report. This information is provided on our monthly year-to-date report.

 

Additional Information

For detailed information on the HCSO, including record keeping requirements and enforcement policies, employers should contact the Office of Labor Standards Enforcement at 415.554.7892, or visit their Web site at http://www.sfgov.org/site/olse_index.asp. Employers can also access additional information at our Web site, www.beneflexhr.com.

 

Why Choose BeneFLEX’s HCSO HRA?

The HCSO HRA is specially designed to meet the specific requirements of the HCSO. The HCSO HRA provides a better solution than the City’s Healthy San Francisco Program or other medical reimbursement plans because:

  • Unused funds are forfeited back to the employer after employees out-of-pocket medical expenses are covered.
  • The cost and liability are lower than other medical reimbursement plans.
  • Administration fees are reduced from the covered employee’s expenditure.

 

Simple Setup and Administration

One simple enrollment kit with the following makes enrollments quick and easy:

  1. Employer overview of the HCSO, HCSO HRA checklist and fee information,
  2. Plan Applications,
  3. Employee Overview with Claim form and instructions, and
  4. Census Template to report quarterly earned expenditures.

For more information about the HCSO HRA and other plans, visit www.beneflexhr.com.

 

Client Submission and Processing Quicklist:

Once the initial Plan applications are processed, the employer will receive the Plan Document, Summary Plan Descriptions, and a Census Template. The following Quicklist outlines the steps in setting up and administering your HCSO HRA.

  • Submit a check payable to BeneFLEX for setup fees, the completed Plan Application and Direct Debit Authorization form no later than the 15th of the month following the end of the quarter.
  • Complete the Census Template using formatting specifications and print a copy of the quarterly Invoice prior to e-mailing the file to BeneFLEX. The electronic file is used to enroll all participants in the plan, determine the expenditure amount for covered employees and load them into the system. Employers should allow five business days following receipt of file to load, update and finalize accounts. The census file should be submitted by the 15th of the month following the end of the quarter.
  • Quarterly administration fees will be debited from the employer’s designated account within seven days of sending the census file.
  • Employees can submit claims with a weekly deadline on Tuesday at 1:00 p.m. (PST) for processing on Thursday. Reimbursement is available via a manual check or direct deposit.
  • Employers will receive weekly reports and notification of the total amount to be debited from the designated bank account for claims processing on Thursday of each week.

The combination of the Census Template and reporting provided to you on a monthly basis helps satisfy the HCSO record-keeping requirements!

 

Submission Guidelines and Fees

The employer may submit the enrollment documents and census at anytime during the quarter, but no later than 15 days after the end of the quarter. If the requirements are submitted after the 15th, there is an option for expedited processing with an additional fee of $75 for the setup or census processing.

Other Option Fees Include

  1. Mailing of quarterly statement $5.95 PP*
  2. Proof of mailing of quarterly statement $1.00 PP*
  3. Required 3-day separation notice $5.95 PP*
  4. Proof of mailing required 3-day separation notice $1.00 PP*

*All of these fees may come out of the employees’ HCSO HRA account.