Health Care Security Ordinance (HCSO)

Transcription

1 Health Care Security Ordinance (HCSO) (OLSE) Ellen Love Principal Administrative Analyst Maura Prendiville Compliance Officer

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

3 Office of Labor Standards Enforcement (OLSE) OLSE enforces San Francisco labor laws, including: Minimum Wage Paid Sick Leave Health Care Security Ordinance Family Friendly Workplace Ordinance Fair Chance Ordinance Formula Retail Employee Rights Ordinance New in 2017: Paid Parental Leave Ordinance New in 2018: Lactation in the Workplace, Consideration of Salary History Special labor laws for City contractors Investigative authority; enforcement power; technical assistance for employers 3

4 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 effect October 29,

5 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 only San Francisco For-profit employers: 20+ persons perform work per quarter Nonprofit employers: 50+ persons perform work per quarter 5

6 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 6

7 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 7

8 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 (2 nd 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) 8

9 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 or waiver forms from insurance companies) are not accepted as HCSO waivers. HCSO waiver form was updated November 1, Only use new version going forward. (available in multiple languages on OLSE website) 9

10 Employer Spending Requirement Health Care Expenditure Rates What this looks like for a FULL TIME employee: 10

11 Employer Spending Requirement 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: Q1: Apr. 30 Q3: Oct. 30 Q2: July 30 Q4: Jan

12 Employer Spending Requirement Options to satisfy ESR: Provide health insurance: medical, dental, and/or vision premiums covered employees and/or their spouses, partners, children, or 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 12

13 HCSO 2017 RULES

14 2017 Rulemaking Process Draft Rules posted August 8, ed 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 14

15 2017 Rulemaking Updates: Waivers Rule 3.8: Waivers o New waiver form updated as of Nov. 1, 2017 Only use the new form going forward o Must be signed voluntarily o Must state that he/she has insurance from another employer Rule 3.9: Electronic Waivers o Permissible as long as the electronic form is identical to the OLSE form, and is voluntary 15

16 2017 Rulemaking Updates: PPLO-HCSO overlap Rule 4.4: Paid Parental Leave Ordinance (PPLO) o PPLO went into effect in 2017 o 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)

17 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 17

18 2017 Rulemaking Updates: Self-funded insurance plans Poll: How many have self-funded/self-insured health plans? 18

19 2017 Rulemaking Updates: Self-funded insurance plans Rule Change: COBRA equivalent rates are no longer accepted as a way for self-funded/selfinsured plans to calculate HCEs Employers must look at amounts irrevocably spent 19

20 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: Covered Employees in Total spending on self-insured health plan for those employees in 2018* $600,000 Total Hours Payable for Covered Employees in ,400 Average Hourly Expenditure $600,000/206,400 = $2.91 Exceeds the 2018 rate of $2.83 Calendar year calculation Employer can top-off expenditures by end of February 2019 if necessary 20

21 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 21

22 2017 Rulemaking Updates: Self-funded insurance Q 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 OLSE will begin enforcing the new provision of Rule 5.9(b) for calendar year

23 Common Compliance Issues

24 HCSO Best Practices for Employers Transparency and Communication with employees Well-trained staff in HR and benefits department Stay up to date: HCSO list, website, webinars. Hotline available for individual technical assistance. 24

25 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. 25

26 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 26

27 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) (b) (c) Yes, because the spending amounts will balance out. It depends. No, because it has to make the correct expenditure for each individual employee. 27

28 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 28

29 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) (b) (c) No. The HCSO doesn t allow Acme to ask its employees to sign waivers. 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. Yes. The HCSO requires Acme to get waivers from employees if they re not enrolled in the insurance. 29

30 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. 30

31 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 31

32 HCSO Resources Sign up for OLSE updates OLSE/HCSO Website Administrative Guidance OLSE Official Notices Annual Reporting Form Employee Voluntary Waiver Form us: Call us: (415)

33 Q&A After the webinar, please direct your questions to at any time. 33