Background: The HCAO applies to most San Francisco city contractors and tenants (including those at the San Francisco international Airport and the Port of San Francisco).
For specified workers at the San Francisco International Airport, the HCAO was amended in 2020 to include the Healthy Airport Ordinance which has different standards from what is set forth below.
The HCAO requires employers to follow minimum standards with regards to health care. This can be satisfied by the following:
- The employer must offer minimum standard health plan benefits (set forth by the HCAO) to their covered employees – updated for plan years beginning on or after January 1, 2023
- The employer can make payments to the Department of Public Health or, under limited circumstances, make payments directly to their covered employees.
Which employers must comply? An employer is covered by the Health Care Accountability Ordinance (HCAO) if it meets one the following two conditions:
- Employers with a contract, or seeking to contract with the City and County of San Francisco, regardless of size or location
- An employer leasing City property for a term of 29 consecutive days or more in any calendar year, whether established by single or cumulative agreements
Who is a “covered employee”? An individual that meets the following conditions:
- An employee who works on a City Contract or Subcontract for 20 hours or more per week
- If the employee works on multiple projects in a week, the employer must track how many hours are spend on San Francisco related work versus non-San Francisco work
- An employee of a Tenant or Subtenant who works 20 hours or more per week on property that is covered by a Lease or Sublease
- An employee of a contracting party or subcontractor that has a contract or subcontract to perform services on property covered by a lease or sublease if the employee works 20 hours or more per week on the property
What is required of the employer?
Employers must offer a medical plan that meets the Minimum Standards on the first day of the month following 30 calendar days after the first day of work.
Employers must pay 100% of the employee premium and either cover half the out-of-pocket maximum with first-dollar coverage or sponsor an HRA/HSA that will cover that cost.
For every week a Covered Employee works the minimum number of hours, the employer pays the Department of Public Health $6.10 per hour work on an San Francisco related job, to a maximum of $244 per week – updated July 1, 2022
Employers should make payments directly to the covered employees that do not live or work in San Francisco
A covered employee may sign a voluntary waiver form which includes verification from the employee that he/she is receiving medical coverage elsewhere
Note: if the project involves a subcontractor, the subcontractor information form must be completed as the employer is responsible for the subcontractor’s compliance with HCAO.
Does the employer have notice requirements? Yes, employers must post a notice to employees at all offices/worksites where work related to a City contract is being performed – notice updated July 1, 2022. Employers also must obtain a signature from each covered employee annually acknowledging receipt of the HCAO Know Your Rights Notice.
Written by: Michelle Cammayo
IMA will continue to monitor regulator guidance and offer meaningful, practical, timely information.
This material should not be considered as a substitute for legal, tax and/or actuarial advice. Contact the appropriate professional counsel for such matters. These materials are not exhaustive and are subject to possible changes in applicable laws, rules, and regulations and their interpretations.