The Vita Companies Blog

San Francisco Health Care Security Ordinance and IRS Inflation Adjustments for 2018

Written by Vita Companies | November 28, 2017

Overview

The City and County of San Francisco Health Care Security Ordinance (HCSO) became effective January 1, 2008.

The HCSO requires San Francisco based employers to spend a certain dollar amount on health care on behalf of all employees. Employers can choose to offer health, dental and/or vision insurance, make payments to the City Option or make contributions that reimburse employees for out-of-pocket health care costs.

Required Health Care Expenditure Amounts

The minimum expenditure requirements for 2018 have been released. Please note that there are different expenditure rates for medium and large employers:

Group Size 2015 rate
(per hour paid)
2016 rate
(per hour paid)
2017 rate
(per hour paid)
2018 rate
(per hour paid)
Medium: 20-99
(non-profit 50-99)
$1.65 $1.68 $1.76 $1.89
Large: 100+ $2.48 $2.53 $2.64 $2.83

Small employers under 20, or under 50 if a non-profit, are exempt from this requirement.

Please note that the annual salary exemption has also increased for 2018. An employee classified as a manager, supervisor or confidential employee and who earns more than $97,693 per year is exempt (increased from the 2017 annual maximum of $95,101).

New Final HCSO Rules

The San Francisco Office of Labor Standards Enforcement published new Health Care Security Ordinance Rules on October 10, 2017. The new Rules took effect on October 29. The two changes worth noting pertain to the new waiver form and the irrevocability of expenditures that apply to self-insured health plans.

New Employee Voluntary Waiver Form

As noted above, a new Employee Voluntary Waiver Form was published on November 1, 2017. Employees may voluntarily choose to sign this waiver only if they have health benefits through another employer (such as a parent or spouse's employer). Be sure to review the HCSO Rule 3.8 in the new HCSO Rules for more information on the use of the waiver.

2018 State Disability Adjustments

The California Employment Development Department (EDD) has announced that the 2017 employee contribution rate for State Disability Insurance (SDI) will increase to 1%. The taxable wage base from which the contributions will be taken will increase from $110,902 to $114,967 and the maximum cost to an employee will be $1,149.67.

Note: AB 908, signed into law on April 11, 2016, will take effect on January 1, 2018. This bill increases the benefits available under SDI, as well as the California Paid Family Leave Program (PFL). This bill makes two major changes as it increases the SDI and PFL wage replacement rates from 55% to: 

  • 70% wage replacement for individuals who earned less than 1/3 of the state’s average quarterly wage during the prior four quarters; or
  • 60% for individuals who earned 1/3 or more of the state’s average quarterly wage during the prior four quarters

It also eliminates the one-week waiting period for PFL claims, but does not change the waiting period for SDI claims.

Reminder: Per San Francisco's new Paid Parental Leave Ordinance (PPLO), effective January 1, 2018, San Francisco employers that employ 20 or more employees (total employees, not just those who work in San Francisco) will be required to make up the remaining 45% of the employee's base period earnings, so the employee receives 100% of their normal wages. For more information on the PPLO, you can visit http://sfgov.org/olse/paid-parental-leave-ordinance

2018 IRS Inflation Adjustments

On October 19, 2017, the IRS released Revenue Procedure 2017-58 which details 2018 annual inflation adjustments for more than 50 tax provisions. As expected, the IRS increased the pre-tax allowance for a few accounts but held firm on others. See below for the revised maximums effective January 1, 2018.

  2017 2018
Commuter Benefits    
Qualifed Monthly Parking:  $255 per employee $260 per employee
Qualified Monthly Commuter Transit Pass: $255 per employee $260 per employee
FSA & Dependent Care    
Flexible Spending Account (FSA) Annual Election: $2,600 per employee $2,650 per employee
Dependent Care Account Annual Election: $5,000 per household $5,000 per household
Health Savings Account    
Individual Annual Maximum: $3,400 $3,450
Family Annual Maximum: $6,750 $6,900
401(k)    
401(k) Annual Elective Deferrals: $18,000 $18,500
Catch Up Annual Contribution: $6,000 $6,000