San Francisco
Health Care Security Ordinance
Group Limited Accident & Sickness Indemnity Insurance


Designed Primarily For Part-Time Employees


No other HCSO compliance solution costs less
or is easier to implement and administer




Since 2008 the City of San Francisco has required companies with 20 or more employees to meet minimum health care spending requirements. For 2018, Large Employers (100 or more employees) must spend $2.83 per hour on health care forBalance HCSO with ACA their employees who work in the City. The minimum for Medium-Sized Employers (20 – 99 employees) is $1.89 per hour. Companies with 19 or fewer employees and not-for-profit organizations with 50 or fewer are exempt.

As of January 1, 2014, employers with 50 or more full-time employees must also consider their obligations to provide health insurance coverage as required by the federal Affordable Care Act (“ACA”).

This plan is designed primarily for part-time employees working less than 30 hours per week – who are subject to the HCSO but not the ACA. It may also be provided for full-time employees with the understanding that it does not satisfy the requirements of the ACA.


Employers have a number of ways to meet their HCSO obligations:
  1. CONTRIBUTE TO THE “CITY OPTION” HEALTHY SAN FRANCISCO MANAGED CARE PLAN

  2. CONTRIBUTE TO A “CITY OPTION” MEDICAL REIMBURSEMENT ACCOUNT

  3. PAY EMPLOYEE HEALTH CARE EXPENSES DIRECTLY

  4. CONTRIBUTE TO A PRIVATE HEALTH REIMBURSEMENT ARRANGEMENT (“HRA”) -
    NO LONGER AVAILABLE AFTER 12/31/2016 IF THE HRA IS “REVOCABLE”

  5. BUY INSURANCE

The cost per hour is the same regardless of the method chosen

So what is an employer to do?

We suggest #5 – Buy Insurance Because it offers:
  1. Better Value For The Dollars You Are Required To Spend

  2. PRIVATE SECTOR MANAGEMENT VersuS CITY BUREAUCRACY

  3. MORE CERTAINTY OF FAVORABLE TAX TREATMENT

Employees will appreciate the AGU San Francisco Limited Accident & Sickness Indemnity Plan more than the City Option, because:

  1. It is a familiar group insurance policy
    unlike the City Option which relies on managed care, a type of program perceived to restrict care, or reimbursement accounts, which are difficult to understand and can offer very few benefits until the funding builds up over time;
  2. It provides broader geographic coverage
    an insurance policy pays benefits regardless of where care is received – anywhere in the nation. Under Healthy San Francisco, all treatment must be obtained in San Francisco;
  3. It offers a wider choice of doctors and hospitals
    MultiPlan, one of the nation’s largest preferred provider organizations, opens the door to substantially more providers than the small, mandatory San Francisco-only network supporting the City Option;
  4. No referrals are required to see specialists
    under Healthy San Francisco, each member is assigned to a “Medical Home” by whom all care is coordinated. This can be a doctor or a nurse practitioner;
  5. Insurance provides higher benefits
    claims on medical reimbursement accounts are restricted to the amount of money that has built up in the account. Insurance policies, on the other hand, can pay their full benefits from day one;
  6. It offers extra features not available with the City Option
    including Accidental Death & Dismemberment and Dental (large groups only) .

Employers like this approach because group insurance policies, like this one, have long enjoyed tax-advantaged status in two respects. First, premiums paid by an employer are deductible as a business expense and second, neither the value of the employer’s contribution nor the value of benefits received under the policy are taxable income to employees. Neither part of the City Option involves group insurance so the tax treatment may not necessarily be the same. Consult your tax advisor.


PLEASE NOTE: The AGU San Francisco Limited Accident & Sickness Indemnity Plan is a fixed indemnity plan and exempt from the requirements of ACA as an “excepted benefit” plan. It does not satisfy ACA requirements for coverage for full-time employees. Since employers have no ACA requirements for part-time employees, they can be enrolled in the AGU San Francisco Limited Accident & Sickness Indemnity Plan but part-time employees may be subject to the IRS penalty for non-compliance with the individual mandate.

The San Francisco Health Care Security Ordinance applies to all employers with 20 or more employees. Because of conflicting California small group insurance law, however, this plan cannot be sold to employers with 50 or fewer total employees.