San Francisco Expands Uses for SF City Option Funds Under Health Emergency

April 29, 2020Alerts

Companies with employees working in San Francisco should be aware of some changes in the city's implementation of its Health Care Security Ordinance (HCSO) — which requires employers to make health care expenditures (health insurance, SF City Option payments, etc,) on behalf of employees working in the city — in response to the COVID-19 pandemic.

SF City Option Medical Reimbursement Accounts Can Now Be Used for Other Basic Needs

With the SF City Option, an employer makes payments on behalf of a covered employee directly to the city. Depending on the employee’s eligibility, the city allocates those funds to one of three programs for the employee:

  1. SF City Option Medical Reimbursement Account, which employees who reside outside San Francisco can use to pay for eligible health expenses;
  2. SF Covered Medical Reimbursement Account, which workers who reside in San Francisco can use to help pay for Covered California health insurance premiums and other eligible health care expenses; or
  3. For workers who reside in San Francisco residents but are uninsured, fund enrollment in the Healthy San Francisco, a program that provides affordable health care services in the city.

The Change

The city announced on Tuesday, April 28 that it will allow employees to use SF City Option Medical Reimbursement Accounts to pay for food, rent, mortgage payments, utilities and other basic needs during the declared local health emergency (not just medical expenses).

The SF City Option program will be contacting eligible employees with Medical Reimbursement Accounts about how to withdraw funds. If an employer has contributed to SF City Option Accounts on behalf of employees, it may: 

  • Inform employees that, should they choose to do so, they can now request a one-time distribution of available funds to help cover certain expenses during the declared local emergency.
  • Tell eligible workers that the SF City Option program will get in touch with them to explain how to withdraw their funds if they choose to take advantage of this option. It is important to caution employees not to disclose their personal or financial information over the phone to any caller. The SF City Option will not request Social Security Numbers or banking information.
  • Point them to the San Francisco City Option website for the latest updates about disbursement.

The HCSO Remains in Full Effect

The HCSO, along with all other San Francisco labor laws, remains in full effect. HCSO-mandated health care expenditures are not a tax, and therefore there are no deferrals for these expenditures.

Other city labor laws that remain in effect include:

The City Has Canceled the HCSO Employer Requirement to Submit the 2019 Annual Reporting Form

This means that the 2019 Annual Reporting Form does not need to be submitted to Office of Labor Standards Enforcement. Employers must continue to make health care expenditures on behalf of covered employees by making City Option payments and/or paying for health insurance.

Fox Rothschild will continue to provide updates regarding recent legislation and events surrounding COVID-19 and its impact on businesses. For additional information, visit our Coronavirus Resources Page and subscribe for automated updates, or contact any of the labor and employment attorneys in our San Francisco office.