HCSO Employer Annual Reporting Form Self-Funded …

HCSO Employer Annual Reporting FormSelf-Funded Insurance Plans

Office of Labor Standards EnforcementCity & County of San Francisco

April 5, 2019Maura Prendiville, Compliance Officer

Ellen Love, Principal Administrative Analyst

Webinar Housekeeping

• You should see a control panel like this on the right side of your screen

• The panel should minimize automatically when you aren’t using it. To minimize or re-open, click the orange arrow.

• Use the “Questions” box to ask your questions during the presentation.

2Office of Labor Standards Enforcement

HCSO Basics


• Spending requirement (2018 Large Employer rate was $2.83/hour); notice requirement; recordkeeping requirement.

• Reporting requirement. – Annual Report for 2018 is due April 30, 2019

WHY?


WHY?• Annual Reporting mandated by two City laws:

– HCSO: S.F. Admin Code Section 14.4. Fines can be imposed for failure to submit ARF on time.

– Fair Chance Ordinance (FCO): S.F. Police Code Section 4910 and S.F. Admin Code Section 12T.7

• City uses the data to report to City officials on employer healthcare spending. See most recent HCSO Annual Reporting Summary on OLSE’s website– From 2014 - 2017, San Francisco employers spent $1.86 -

$2.36 billion annually on employee health benefits!!


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The Employer should already have verified that it was complying with the employer spending requirement during 2018—then, simply document that in the Annual Reporting Form.

Reporting is easy when you’ve been complying with the law!


Recap: the work you’ve already done

• Resources for self-funded employers available on our website (forms & documents section):– Feb 2019 webinar recording & slides– Calculation instructions– Sample letter to employees

• Resources for all employers available on our website:– Reporting form PDF preview– Reporting form instructions– General ARF webinar will be posted on Tues 4/9.


Recap: the things you already knowHCSO Rules changed in Oct 2017: Beginning 1/1/18, employers may no longer use the COBRA rate to calculate their required health care expenditures. New rules state:

(1) For self-funded plans in which the employer pays claims as they are incurred, the employer may calculate the health care expenditures on an annual basis (in the past, quarterly calculations were required);

(2) If the employer’s annual spend fell short of the HCSO expenditure rate, the employer must make “top-off” payments for employees enrolled in these plans by February 28th

If you’re attending this webinar, you should have already completed these tasks two months before Annual

Reporting season!!!


Recap• 5.9(a): employer pays a fixed monthly premium to a

carrier the premiums are the cost, and employer must satisfy the

spending requirement each quarter. This functions like a fully funded plan, and 2018 premiums can be reported in the “Health Insurance” page of the reporting form.

• 5.9(b): employer pays claims as they are incurred the employer may look at the annual spend Note: for employees enrolled in traditional insurance plans, or

employees who are not enrolled in the company’s insurance, the regular quarterly deadlines still apply, and are reported in the “Health Insurance” page of the reporting form.


Recap: the things you already know

Under Rule 5.9(b), How does the employer assess the annual “cost” of the plan?Remember, you thought about this in advance of

2018 because you knew you’d need to comply with the spending requirement of the HCSO.Then, you did the calculations and top-off

payments in advance of the Feb. 28th deadline.Now you just need to report on what you’ve

already done. Right?



Average Expenditure Calculation


Total Spending

Total Hours

Payable

Average Hourly

Expenditure Rate


Uniform Health PlansFor information about how to average

expenditures across uniform health plans, please see the following resources:

• Rule 5.8

• February 2019 webinar slides

• Administrative Guidance Section D9


Calculation Notes – Geography and Max Hours

• Employer can opt to average total costs and total hours for:A. all employees in the plan, or (nationwide)

B. all “Covered Employees” (San Francisco only) in the plan.

C. Expenditures for all employees in the plan nation-wide and an estimated hours per employee of172 hours per month.

• Note: HCSO requires expenditures for a maximum of 172 Hrs./Mo. A full-time employee will have 2064 hours in a year (not 2080).


Self-Funded Calculation Example


Option A: Nationwide Average: 350 employees enrolled in the self-funded plan. 300 are full-time and 50 are part-time employees working 20 hrs/week.

Total Claims Paid by Employer

Total Payable Hours Average HourlyExpenditure

Compliance

$1,508,000 300 FT employees (x2064 hrs) and 50 PT employees (x1032 hrs) = 670,800 hrs

$1,508,000 / 670,800 Hrs. = $2.24 per Hr.

$2.24 per hour falls short of the 2018 Large Employer rate of $2.83.

Do NOT count employee’s share of premium.

Include paid vacation hours, sick time, etc. (172 Hr. /mo. maximum)

Calculation: Total Claims Paid / Total Payable Hours

Employer must make additionalexpenditures of $.59 per Hours Payable to each employee covered by the HCSO.



Option B: Covered Employee-only Average: 25 SF employees enrolled in the plan are all covered by the HCSO.

Total Claims Paid by Employer

Total Payable Hours Average HourlyExpenditure

Compliance

$120,000 25 FT employees x 2064 hrs = 51,600 hrs

$120,000/51,600 Hrs = $2.33 per hr

$2.33 does not meet the 2018 Large Employer rate of $2.83

Do NOT count employee’s share of premium.

Include paid vacation hours, sick time, etc. (172 Hr. /mo. maximum)

Calculation: Total Claims Paid / Total Payable Hours

Employer must make additionalexpenditures of $.59 per Hours Payable to each employee covered by the HCSO.



Option C: Employer can’t isolate SF claims, and can’t match up nationwide hours with nationwide enrollment info

Claims paid for all employees enrolled nationwide

Use 2064 annual payable hours (172/mo)

Average HourlyExpenditure

Compliance

$3,500,000 claims paid for 950 employees enrolled

950 employees enrolled x 2064 hrs= 1,960,800 hrs

$3,500,000/1,960,800 hours = $1.78 per hr

$1.78 does not meet the 2018 large employer rate of $2.83

*Total # employees enrolled during calendar year, regardless of lengthof enrollment

Use 2064 figure as a stand-in since e’er does not know actual payabehours for enrollees

Calculation: Total Claims Paid / Total Payable Hours = hourly rate

Employer must make additional expenditures of $1.05 per Hour Payable to each employee covered by the HCSO.

Account for other Health Care Expenditures

• Dental/Vision/Employer contributions to Health Savings Account

• Other irrevocable spending for health care services

• Questions about which types of fees self-funded employer can count as expenditures see the Feb webinar and call OLSE


Self-Funded Insurance Plan Top-offs

• If average expenditures fall short of the required amount for 2018, the employer should have already made “top-off” payments by February 28, 2019.

• Detailed instructions on top-off payments are in the Feb 2019 webinar and the instructions on OLSE website.


Access the 2018 Employer Annual Reporting Form

• Form: https://etaxstatement.sfgov.org/olse/

• Resources: www.sfgov.org/olse/hcso• PDF Preview of the full form• Instructions

– Call (415) 554-7892– Email [email protected]


https://etaxstatement.sfgov.org/olse/

http://www.sfgov.org/olse/hcso

mailto:[email protected]

Before You Begin• You cannot save the form and return to it later.• For multiple locations with one San Francisco

business registration, submit a single form.• Visit web pages for both laws:


Health Care Security Ordinance• www.sfgov.org/olse/hcso

Fair Chance Ordinance • www.sfgov.org/olse/fco

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Before You BeginMAKE SURE YOU HAVE YOUR BUSINESS

ACCOUNT NUMBER!!!• It is NOT your FEIN. It is the number your business uses

when it registered to do business with the City.• If your business account number has six digits, put a

“0” in front of it to make it seven digits.• Find your number on the San Francisco Data website

– https://data.sfgov.org/Economy-and-Community/Registered-Business-Locations-San-Francisco/g8m3-pdis/data

– Search box at the top right corner

• If you need to register, go to: – http://sftreasurer.org/registration– OLSE cannot register your business for you or update your company’s contact information


https://data.sfgov.org/Economy-and-Community/Registered-Business-Locations-San-Francisco/g8m3-pdis/data

http://sftreasurer.org/registration

Introduction Page1. Did any employees work an average of 8 or more hours per

week (or 104 hours in a quarter) within the geographic boundaries of San Francisco (including tele-working from a home in San Francisco) during any quarter of 2018?

2. Is the employer a for-profit or a non-profit employer?

3. What was the highest average number of persons performing work for compensation for your business or organization (worldwide) in any quarter of 2018?

4. Did any employees perform work for a contract with the City and County of San Francisco during calendar year 2018?


Business Size• How many people worked for your business in

each quarter of 2018?– Total worldwide– Include all persons, regardless of status (temp, etc.)– If number fluctuates, average 13 weeks of the quarter– Ranges:

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Employees

Office of Labor Standards Enforcement

Covered by the HCSO• How many employees were entitled to health care

spending from your business under the HCSO in each quarter of 2018?– Regularly worked at least 8 hours of work/week or an

average of 8 hours in SF– Employed for 90 calendar days after first day of work;– Limited exemptions—see OLSE website. Most SF

employees are covered by this law.– If not covered by the HCSO, do not count for this question

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Employees


• If the employer has fully-funded health plans, you can report the premium amounts here. For more info about how to input this data, see the April 4th

webinar.• For the self-funded plans, select “yes” for these

questions:– Were any of your health insurance payments for a self-insured or

self-funded health plan?– If yes, did you use an average hourly expenditure calculation to

determine whether one or more of your plans met the spending requirement under HCSO Rule 5.9(b)?

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Health Insurance


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Self-Funded Plan

Addendum


– List out each type of plan (medical, dental, vision) and the hourly expenditures for 2018. These are the calculations that should have been done prior to the end of Feb 2019, and are explained again here in slides #14 – 16.

– There are multiple rows available because sometimes employers have multiple plans—for example, an employer may have a self-funded medical plan and a self-funded dental plan.

– Top off payments: now we have a – Example:

• Self-funded plan 1: Medical. Average Expenditures: $2.43/hr• Self-funded plan 2: Dental. Average Expenditures: $.12/hr.• Top-offs: Yes • Top off payment 1: Health Savings Account: paid $12,500 to 89 e’ees• Top-off payment 2: City Option: paid $5,000 to 3 e’ees.

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Self-Funded Addendum


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Remainder of Report


• See the April 4th Webinar, and instruction sheets, for more info.

• It is common for employers to comply in a variety of ways. You may be reporting on self-funded plans, fully-funded plans, AND City Option payments!

Reminder: What’s the point of all this?


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Reminder: What’s the big picture?


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• OLSE needs to know how much you spent on health care for its SF workforce.

• The most important part is to keep documentation of everything!!!!

• If the employer is audited, it will be asked to explain and justify its calculations, and provide verification and documentation of expenditures. An employer who submits an annual report but cannot do this is missing the point, and will not be able to show that it met the spending requirement!!!!

Recordkeeping


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• Employers must keep records for 4 years. (Rule 7.2)• Self-funded employers should keep records of the

following:– Calculation for expenditures of the self-funded plan(s);– Underlying data (record of claims paid, enrollment records,

etc).– Calculations for determining the amount of the top-off

payments;– Underlying data used to calculate the individual top-off

payments (employee payroll records)– Copies of communications to employees regarding the top-

off payments.

Institutional Memory: Best Practices


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• Have a knowledgeable point person who knows that some of the plans are self-funded and can explain how the calculations were done.

• OLSE often looks at the employer’s most recent Annual Reporting Form when we are looking for a point of contact for an employer. – It may be a good idea to have the head of your

benefits department listed as the contact person. • If you use a benefits consultant, use that person

as a resource for reporting and for answering questions from our office!

Frequent Question #1


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• Help!!! I didn’t do my calculations and top-off payments by the February deadline!

• Fill out the Annual Report timely and truthfully, even if it demonstrates an underspend or other violation.

• By doing the Annual Report, you’ll be calculating how much you should have made in top-off payments.

• Make the top-off payments ASAP and keep records of them.

• Late payments are better than non-payments. Penalties can be imposed on late payments, but non-payments can subject employer to complaints, audits, assessment of restitution + interest + penalties + various levels of enforcement activity.


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Q: Which employees do I include in my calculations?A: To calculate the value of a plan (self-funded or uniform coverage in fully funded), only include employees enrolled in that plan. However, when the plan falls short of the spending requirement, only Covered Employees (SF) are entitled to top-offs.



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Q: What about the SF employees who aren’t enrolled in our health plan(s)?

A: These people should have been getting alternate health care expenditures every quarter of 2018!!!!Fill out the Reporting Form truthfullyCall OLSE for instructions about how to fix your

violation as soon as possible.

Frequent Question #4 & 5


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Q: Can I have an extension?A: Extensions are not granted, but the form will be available through the end of May.

Q: What if I made a mistake on the form?A: You can resubmit the fillable form. To resubmit the Self-Funded Addendum, just email it in again but put “Amended” in the subject line so we know it’s a correction.


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More Questions?

HCSO resources


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• Sign up for OLSE updates • OLSE HCSO Website

– Self-funded instructions & examples– Rules & Administrative Guidance– Sample letters to employees– OLSE Official Notices– Annual Reporting Form– Employee Voluntary Waiver Form

• Email us: [email protected]• Call us: (415) 554-7892

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http://bit.ly/2yAYNYJ

mailto:[email protected]

Office of Labor Standards Enforcement(415) 554-7892

www.sfgov.org/olse

http://www.sfgov.org/olse

Documents

HCSO Employer Annual Reporting Form Self-Funded …