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San Francisco Health Care Security Ordinance and IRS Inflation Adjustments for 2019

December 3, 2018

Who: San Francisco based employers (small employers under 20, or under 50 if a non-profit, are exempt from this requirement)

Action: Review and adjust the minimum HCSO expenditure requirements for 2019 in accordance with the HSCO.

Background

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 2019 have been released. Please note that there are different expenditure rates for medium and large employers:

Group Size 2016 Rate
  (per hour paid) 
2017 Rate
 (per hour paid) 
2018 Rate
 (per hour paid) 
2019 Rate
 (per hour paid) 
Medium: 20-99
 (non-profit 50-99) 
$1.68 $1.76 $1.89 $1.95
Large: 100+ $2.53 $2.64 $2.83 $2.93


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 2019. An employee classified as a manager, supervisor or confidential employee and who earns more than $100,796 per year is exempt (increased from the 2018 annual maximum of $97,693).

2019 State Disability Adjustments

The California Employment Development Department (EDD) has announced that the 2019 employee contribution rate for State Disability Insurance (SDI) will remain at 1%. The taxable wage base from which the contributions will be taken will increase from $114,967 to $118,371 and the maximum cost to an employee will be $1,183.71.

2019 IRS Inflation Adjustments

On November 15, 2018, the IRS released Revenue Procedure 2018-57 which details 2019 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, 2019.

  2018 2019
Commuter Benefits    
Qualified Monthly Parking  $260 per employee  $265 per employee
Qualified Monthly Commuter Transit Pass:    $260 per employee   $265 per employee 
FSA & Dependent Care    
Flexible Spending Account (FSA) Annual Election $2,650 per employee $2,700 per employee
Dependent Care Account Annual Election: $5,000 per household $5,000 per household
Health Savings Account    
Individual Annual Maximum: $3,450 $3,500
Family Annual Maximum: $6,900 $7,000
401(k)    
401(k) Annual Elective Deferrals: $18,500 $19,000
Catch Up Annual Contribution: $6,000 $6,000

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