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Legal Alert

San Francisco Unveils Plan To Allow Employees to Use Employer Healthcare Funds For Food, Rent, And Utilities During The COVID-19 Pandemic

4.28.20

Mayor Breed just announced a plan to allow employees in San Francisco to now use funds their employers have contributed in compliance with San Francisco’s Health Care Security Ordinance for necessary expenses such as food, rent, and utilities, in addition to eligible health care expenses.

What Is San Francisco’s Health Care Security Ordinance (HCSO)?

The HCSO requires for-profit businesses with 20 or more employees and nonprofits with 50 employees or more to make Health Care Expenditures (health insurance, Medical Reimbursement Accounts, City Option payments, etc.) on behalf of their employees, which can be used for eligible medical expenses. 

SF City Option is one option for employers to satisfy their HCSO Health Expenditure Requirement. The SF City Option covers a wide range of San Francisco employees, including employees in the retail, accommodation, and food service sectors and currently has a balance of $138 million for 104,000 employees, or an average of $1,300 per eligible employee.

SF City Option Can Now Be Used For Necessary Expenses

Before this announcement, SF City Option Medical Reimbursement Accounts could only be used for eligible medical expenses. Mayor Breed’s Supplemental Declaration will allow SF City Option Medical Reimbursement Accounts to be used for food, rent, mortgage payments utilities, and other basic needs during the declared local emergency. 

What Employers Need to Know

If you contributed on behalf of you employees to SF City Option Accounts, you should be aware of the following:

Other Important HSCO Reminders

Consistent with the Mayor's February 25th, 2020 Emergency Proclamation, you are not required to submit the 2019 Annual Reporting Form for the Health Care Security Ordinance. However, this only means that the 2019 Annual Reporting Form does not need to be submitted to the Office of Labor Standards Enforcement. 

Meanwhile, you must continue to make health care expenditures on behalf of your Covered Employees. The deadline for Q1 2020 expenditures is April 30, 2020. Finally, remember that HCSO-mandated health care expenditures are not a tax, and therefore there are no deferrals for these expenditures.

Conclusion

Fisher Phillips will continue to monitor the rapidly developing COVID-19 situation and provide updates as appropriate. Make sure you are subscribed to Fisher Phillips’ Alert System to get the most up-to-date information. For further information, contact your Fisher Phillips attorney, any attorney in our San Francisco office, or any member of our Post-Pandemic Strategy Group Roster. You can also review our FP BEYOND THE CURVE: Post-Pandemic Back-To-Business FAQs For Employers and our FP Resource Center For Employers.


This Legal Alert provides an overview of a specific developing situation. It is not intended to be, and should not be construed as, legal advice for any particular fact situation.

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