Thursday, December 5, 2013

State and Local Mandates After PPACA: San Francisco

With all of the focus on Obamacare, many employers ask if they still need to comply with state and local health plan mandates such as San Francisco’s Health Care Security Ordinance (“SFHCSO”).  In short, the answer is yes.  But in so doing an employer cannot violate the new federal rules and regulations.  

This is from McKenna Long & Aldridge LLP:   

SFHCSO continues to require medium and large-sized employers to spend a minimum amount of money on health care for their employees who work in San Francisco. If you have San Francisco employees, the SFHCSO provides that you may elect to satisfy this obligation by purchasing health insurance coverage, making payments to San Francisco for the benefit of your covered employees, reimbursing your employees for their health care expenditures, or providing a medical spending account for your employees that meets certain requirements. 

Recent guidance under ACA, however, suggests that some of these methods for satisfying the SFHCSO, such as reimbursement or direct payment of employee individual health insurance coverage and stand-alone health reimbursement accounts (“HRAs”), will violate ACA in 2014 and later years. (See ACA guidance here and here). San Francisco has issued an FAQ acknowledging that the use of stand-alone HRAs may violate ACA and promising future guidance on the interplay between ACA and SFHCSO. (See FAQ here). If you are currently using a reimbursement arrangement or directly paying for individual policies, you should consult with legal counsel to make sure your arrangement does not violate ACA.