Health FSA & S.F. Mandated Health Care Ordinance

[Christine Roberts]

The San Francisco Health Care Security Ordinance provides several options to employers to make up the difference between pre-existing health benefit subsidies, and the requirements of the new law, including use of a HSA, or employer reimbursement of health care expenses.

The question has arisen, is it sufficient for employer to make the "catch-up" amount available as a health FSA budget, which the employee may or may not use or forfeit, or must the employer actually reimburse medical expenses incurred by the employee, to satisfy the "catch-up" requirement?

I.e., is "money on the table" enough or must it actually be in the employees' pockets at the end of the day.

[Peter Gulia]

That an employer needs to ask a smart lawyer like Christine Roberts what benefit to provide and exactly what form it should take reveals why ERISA must preempt this ordinance.

If a client follows the Ordinance (until it’s preempted or repealed):

Based on the Ordinance and its Regulations, I could make a good-faith argument for either of the views suggested.

But if a small or medium employer (as SF-HCSO defines them) asks this question, a lawyer’s fee to write up the reasoning for why providing the right coverage limit (rather than claims paid) meets the requirement might be more than the margin of difference in what the employer would spend under the differing interpretations.