The Vita Blog

California SB 729 was signed into law by Governor Newsom on September 29, 2024. The law mandates large group health insurance plans to cover fertility treatments.
 

Coverage Mandate Summary

Large Group Policies: The bill mandates that large group insurance policies (covering 100+ employees) provide coverage for the diagnosis and treatment of infertility and fertility services, including in vitro fertilization (IVF). 

Small Group Policies: The bill does not mandate small group policies to provide infertility coverage. However, the bill does require small group contracts to offer infertility coverage. This means that carriers must offer the coverage as an option on small group health insurance policies. Employers must be able to elect coverage for infertility services but are not required to provide it under their policies. 

Self-Insured Employers: This bill does not apply. As with all self-funded plans, ERISA preempts state laws that relate to employee benefit plans.

Religious Employers: The bill exempts religious employers from these requirements.
 

What fertility services are mandated?

Required fertility coverage includes a maximum of three completed oocyte retrievals with unlimited embryo transfers in accordance with the guidelines of the American Society for Reproductive Medicine (ASRM), using single embryo transfer when recommended and medically appropriate.
 

Impetus of the Law

The law aims to make IVF more accessible, particularly for those who face financial barriers or belong to the LGBTQ+ community. One significant provision removes the requirement that patients must attempt natural conception for 12 months prior to becoming eligible for fertility treatments, benefiting same-sex couples and others who face unique challenges in family-building.
 

Discrimination Prohibited

The law is very clear that discrimination of any sort is prohibited. Specifically, coverage for the treatment of infertility and fertility services must be provided without discrimination based on:

• Age

• Ancestry

• Color

• Disability

• Domestic partner status

• Gender

• Gender expression

• Gender identity

• Genetic information

• Marital status

• National origin

• Race

• Religion

• Sex

• Sexual orientation
   

Effective Date

Contracts issued, amended, or renewed on or after July 1, 2025, must comply with the new mandate. For employers with calendar year renewal cycles, that means January 1, 2026.
 

What the Future Holds

Large employers subject to this law should expect standardized infertility coverage to be included in fully insured plans. A premium increase can be expected. However, at this early stage, it is premature to project what the premium impact might be.
 

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Coverage Details (For Those Who Want the Nitty-Gritty)

Definition of Infertility

The law defines infertility as a condition or status characterized by any of the following:

1. A licensed physician’s findings, based on a patient’s medical, sexual, and reproductive history, age, physical findings, diagnostic testing, or any combination of those factors. This definition shall not prevent testing and diagnosis of infertility before the 12-month or 6-month period to establish infertility in paragraph (3).

2. A person’s inability to reproduce either as an individual or with their partner without medical intervention.

3. The failure to establish a pregnancy or to carry a pregnancy to live birth after regular, unprotected sexual intercourse. For purposes of this section, “regular, unprotected sexual intercourse” means no more than 12 months of unprotected sexual intercourse for a person under 35 years of age or no more than 6 months of unprotected sexual intercourse for a person 35 years of age or older. Pregnancy resulting in miscarriage does not restart the 12-month or 6-month period to qualify as having infertility.
    

Prohibitions in the Law

The law also outlines specific exclusions that are prohibited under the law. The headings below are intended to quickly capture the high level intent of each paragraph. The wording that follows is the actual text of the law for reference. 

The policy may not include any of the following:

1. Exclusions for Fertility Rx: Any exclusion, limitation, or other restriction on coverage of fertility medications that are different from those imposed on other prescription medications.

2. Exclusions for Third-Party Involvement: Any exclusion or denial of coverage of any fertility services based on a covered individual’s participation in fertility services provided by or to a third party. For purposes of this section, “third party” includes an oocyte, sperm, or embryo donor, gestational carrier, or surrogate that enables an intended recipient to become a parent.

3. Different Cost Sharing for Fertility: Any deductible, copayment, coinsurance, benefit maximum, waiting period, or any other limitation on coverage for the diagnosis and treatment of infertility, except as provided in subdivision (a) that are different from those imposed upon benefits for services not related to infertility.
   
   
   
   
   
    

The San Francisco Healthcare Security Ordinance (HCSO) requires covered employers to spend a minimum amount set by law on healthcare for each employee who works 8+ hours each week in San Francisco.
 

2025 Expenditure Rates

Following are the required expenditure rates, effective January 1, 2025. These reflect an increase of more than 8% over the 2024 rates.
 

Category	2025 Expenditure Rate	2025 FTE Monthly Max*
100+ Employees	$3.85 per hour	$662.20
20 to 99 Employees (For Profit) 50-99 Employees (Nonprofit)	$2.56 per hour	$440.32
0 to 19 Employees (For Profit) 0-49 Employees (Nonprofit)	Exempt	N/A

There is an exemption for certain managerial, supervisory, and confidential employees who earn more than $125,405 per year or $60.29 per hour for 2025. These employees are considered exempt, and the HCSO expenditure requirements do not apply to them.

* Total hours for which a healthcare expenditure is required are capped at 172 per employee per month.

 

SF HCSO Primer

For those who might want a refresher!

 
Covered Employers

An employer need not be physically located in San Francisco to be a covered employer. HCSO applies to all employers that must obtain a San Francisco business registration certificate and meet one of the following criteria:

• Private Employers: Private employers who employ 20+ employees where any single employee works at least 8 hours per week in San Francisco.
• Non-Profit Employers: Non-profit employers who employ 50+ employees where any single employee works at least 8 hours in San Francisco.

Employer size counts are based on the average number of employees per week who perform work for compensation during an applicable quarter (not just those employees working in San Francisco).
 

Covered Employees

A covered employee is any person who meets all of the following four criteria:

1. Works for a covered employer
2. Is entitled to be paid minimum wage
3. Has been employed by the employer for at least 90 days
4. Performs at least eight hours of work per week in San Francisco.

The definition of employee under the ordinance includes all employees, even if they are temporary, part-time, commissioned, or contracted (unless they are a legitimate independent contractor).

Work performed by an employee who lives in San Francisco and works from home is considered work performed within San Francisco.

Employees who travel through San Francisco while carrying out their job duties are not considered to have performed work in San Francisco. However, if an employee's job requires him or her to make stops in San Francisco (e.g., deliveries), the employee is considered to have performed work in San Francisco. For these employees, hours worked include travel within the geographic boundaries of San Francisco.
 

Exempt Employees

There is an exemption for certain managerial, supervisory, and confidential employees who earn more than the compensation thresholds outlined below. These employees are considered exempt, and the HCSO expenditure requirements do not apply to them, regardless of whether they meet the “work in San Francisco” requirements.
 

Category	2024 Thresholds	2025 Thresholds
Salary for Exempt Employees	$121,372	$125,405
Hourly Rate for Nonexempt Employees	$58.35	$60.29

Employees covered by Medicare or TRICARE may also be excluded if the employer maintains documentation of employee eligibility.
 

Creditable Expenditures

Fully Insured Plans: Employers can count toward their required HCSO expenditures any premium payments for healthcare coverage (for employee and/or dependent coverage). This includes medical, dental, and vision plans, as well as EAP plans that qualify as health coverage. In addition, payments to the SF City Option also qualify.

Self-Funded Plans: Employers may not use COBRA premium rates to calculate required health care expenditures. 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. If the employer’s annual spend falls short of the HCSO expenditure rate, the employer must make “top-off” payments for employees enrolled in these plans by the end of February of the following year. There are very specific requirements on how to calculate premiums for self-funded plans. Refer to the OLSE documentation on Calculations for Self-Funded Plans for more information.

HSA Contributions: Employer contributions to an employee’s HSAs qualify.

HRA Funding: The rules for HRA funding require that contributions be irrevocable in order to qualify. This results in “traditional” HRAs rarely qualifying as healthcare expenditures. Employer contributions must meet both of the following conditions to qualify:

• Employer contributions must be irrevocable. This means that no portion of the contribution may ever be recovered by the employer, even if an employee terminates.
• Employer contributions must be paid into a separate account on the employee’s behalf within 30 days of the end of each quarter.

Most typical HRAs do not pass either of these criteria. Thus, few (if any) will qualify as health care expenditures for HCSO purposes.
 

Employee Waivers

Employers may ask employees who have other employer-provided coverage to waive the expenditure. However, such employees are not required to waive the expenditure (and in many circumstances, it does not behoove them to do so).

If an employee elects to waive, they must do so using the authorized HCSO voluntary waiver form. The waiver form must be signed each year, cannot be retroactive, and is revocable at any time.

If an employee with other coverage does not sign the voluntary waiver, the employer must still make the required health care expenditure on their behalf and may be liable for noncompliance penalties if expenditures are not made.
 

Insufficient Health Care Expenditures

If health care expenditures fall short of the required amount, employers have 30 days after the end of the calendar quarter to remit the difference to the SF City Option program. These payments fund a Medical Reimbursement Account (MRA) in the employee’s name.
 

Reporting Requirements

The SF HCSO requires that employers submit the employer Annual Report Form (ARF) by April 30th each year. The report must be submitted to the Office of Labor Standards Enforcement (OLSE), the organization with oversight over the HCSO ordinance.

The purpose of the Annual Report Form is to provide OLSE with a snapshot of each employer’s compliance with this ordinance. The penalty for failing to submit the form by the deadline is $500 per quarter.
 

Reporting Details

The reporting requirement includes basic business data as well as data to clarify Covered Employer status. In addition, the following data points are requested:

• Number of individuals employed in each quarter
• Number of employees covered by HCSO in each quarter
• Employer’s total spending on healthcare
• Types of healthcare coverage the employer offered to employees.

The Annual Report Form must be completed online. OLSE provides robust assistance material online, including instructions for completing the ARF, form previews, and a video guide to completing the Annual Reporting Form Resource Guide.
 

Expenditure Requirements

Following are the required expenditure rates required for covered employees:
 

2024	Expenditure Rate	Monthly Maximum*
100+ Employees	$3.51 per hour	$603.72
20 to 99 Employees (For Profit) 50-99 Employees (Nonprofit)	$2.34 per hour	$402.48
0 to 19 Employees (For Profit) 0-49 Employees (Nonprofit)	Exempt	N/A

 
 

2025	Expenditure Rate	Monthly Maximum*
100+ Employees	$3.85 per hour	$662.20
20 to 99 Employees (For Profit) 50-99 Employees (Nonprofit)	$2.56 per hour	$440.32
0 to 19 Employees (For Profit) 0-49 Employees (Nonprofit)	Exempt	N/A

* Total hours for which a healthcare expenditure is required are capped at 172 per employee per month.

 

Resources

PCORI fee filings are due on July 31^st each year. That means it is time to get a refresher on requirements and responsibilities.
 

What is PCORI?

The Patient-Centered Outcomes Research Institute (PCORI) is an independent, non-profit research organization created to help patients and providers make better informed healthcare decisions. The organization commissions research within the framework of creating actionable, evidence-based medicine.

PCORI was created as part of the Affordable Care Act and is funded by a fee that was also included in the legislation. The fee is paid by all health plans, including fully insured health plans, self-funded health plans, and account-based plans.
 

PCORI Counting Rules

1. Per Human Not Per Employee: Counting for PCORI fees is based on number of covered persons (not just covered employees). As such, each employee and each dependent must be counted for PCORI fee payment purposes.

2. Exception for Account-Based Plans (HRAs): The one exception is for calculation of PCORI fees for account-based plans (such as HRA plans), which are counted on a per employee basis even if dependent expenses are eligible for reimbursement under an account-based plan. This includes plans such as HRAs and funded or matched FSAs. The regulations provide this special rule where dependents are not counted for account-based plans only. 

3. Exception for More Than One Self-Funded Plan: There is also a special rule that PCORI fees are only payable for one self-funded plan, even if an employer has more than one self-funded plan, and even if an individual may be covered under more than one of the employer’s self-funded plans. This special rule eliminates “double-paying” for participants.
    

Who pays the fee?

Fully Insured Plans: Insurance carriers pay the fee on behalf of fully insured employers. The PCORI fee is baked into the fully insured premium. Therefore, no action is required for employers with only fully insured plans (and no account based plans).

Self-Funded Plans and HRAs: Plan sponsors/employers are required to pay the fee directly for all self-funded plans and any HRA plans. This includes the following plan types:

• Self-funded medical plans (including hybrid plans, such as level-funded, balance funded, or graded)

• Health Reimbursement Arrangements (HRAs) that are not considered excepted benefits (such as dental and vision only)

• Employer-funded Health Flexible Spending Accounts (FSAs) in excess of $500 or in excess of a $1:$1 match
   

Current PCORI Rate

The updated PCORI rate for 2024 filings (based on 2023 Plan Year data) is $3.22 per covered life (or per participant for HRA plans).

This rate applies for policy and plan years ending on or after October 1, 2023 (which includes calendar year plans ending on December 31, 2023).
 

PCORI Reporting

PCORI Fees are paid on the Q2 IRS Form 720.

The fees are reported in the first section of Part II, under the clump of rows numbered “133” on Form 720.
 
Fees paid on behalf of self-funded plans should be reported under the “Applicable self-insured plans” section of Form 720. (The “Specified health insurance policies” applies to health insurance carriers reporting on behalf of their fully insured populations.)
 
The Q2 Form 720 is due on July 31, 2024 (one month after the last day of the quarter).
 

Complex Counting Example

The following is an example of an employer with 500 employees. Employees have a choice between a self-funded health plan and a Kaiser HMO plan. In addition, the employer provides a non-integrated medical travel HRA plan that covers all employees.
 

Plan	Covered Employees	Persons Counted for PCORI	Persons for whom PCORI Payment is Due	Who Pays PCORI Fee
Self-Funded Plan	400	1,000	1,000	Employer
Fully Insured Kaiser Plan	100	250	250	Kaiser
Medical Travel HRA Plan	500	500 by special rule	100	Employer

In this example, PCORI fees would be due as follows: 

• Employer pays PCORI fees for the 1,000 humans on the self-funded health plan.

• Kaiser pays the PCORI fee for the 250 humans on the Kaiser plan.

• Employer also pays PCORI fees for the 100 “extra” employees that are covered under the self-funded HRA plan (but whose health plan PCORI fee was paid by Kaiser because they are covered under the fully insured Kaiser plan). The employer owes a PCORI fee for these 100 employees (but not their dependents because of the special rule for account-based plans).

• Employer would report 1,100 covered lives and pay the PCORI fee accordingly.

As an aside, if there was not a Kaiser plan in place, only one PCORI fee would be due for the 1,000 humans on the self-funded medical plan. In the above example, the 500 employees covered by the medical travel HRA plan would be a "gimme" because that would be a second self-funded plan. 




 

The IRS recently announced the 2025 cost-of-living adjustments to the applicable dollar limits for the following accounts and plans: 

• Health savings accounts (HSAs)
• High-deductible health plans (HDHPs)
• Excepted benefit health reimbursement arrangements (HRAs).

All the dollar limits currently in effect for 2024 will change for 2025 (except the HSA catch-up contribution for individuals ages 55 and older as this limit is not subject to cost-of-living adjustments).
 

High Deductible Health Plan Policy Limits

2025 Minimum Deductible

• Individual: $1,650  (2024 - $1,600)
• Family: $3,300  (2024 - $3,200)

 

2025 Maximum Out of Pocket Limit

• Individual: $8,300  (2024 - $8,050)
• Family: $16,600  (2024 - $16,100)

Health Savings Account Limits

2025 Maximum HSA Contribution

• Individual: $4,300  (2024 - $4,150)
• Family: $8,550  (2024 - $8,300)

 

Over Age 55 Catch-Up Contribution

• 2025: $1,000  (2024 - $1,000)
   

Excepted Benefit HRA Limit

• EBHRA Per Employee: $2,150 (2024 - $2,100)

High Deductible Health Plan Policy Limits

Any amount can be contributed to an HSA up to the maximum annual contribution, regardless of the actual deductible of the underlying HDHP plan.
 
The general rule is that HSA contributions are calculated on a monthly basis (reflecting the number of months that an individual was covered under a qualified HDHP).

For individuals covered under an HDHP for only a portion of the calendar year, there is a special rule that allows them to contribute the full annual maximum to an HSA. This is known as the “full contribution rule.” The catch is that individuals who make contributions in reliance upon the full contribution rule must remain HSA-eligible (that is, covered under an HDHP without other disqualifying coverage) during a 13-month period from December of that year through the following calendar year) to avoid adverse tax consequences.
 

A Reminder about Embedded Deductibles

HDHPs are typically structured with an aggregate family deductible. This means that when any dependents are covered on the plan, the deductible applies collectively to all family members, and the individual deductible is not taken into account.

However, there are some plans that have an embedded individual deductible. Notably, California law requires that HDHPs have an embedded individual deductible. This means that once an individual covered on a family plan meets the embedded individual deductible, the plan coinsurance would start to pay for that individual (but not for other family members). In order for such a plan to remain a qualified HDHP, the embedded individual deductible must be at least the minimum family deductible outlined above. As an example, the minimum embedded individual deductible on a family plan in 2025 would be $3,300.
 

References

Revenue Procedue 2024-25

On April 10, 2024, the Centers for Medicare and Medicaid Services (CMS) announced that the Prescription Drug Data Collection (RxDC) submissions portal is now open for 2023 submissions. The system is known as Health Insurance Oversight System (HIOS). Employers who are responsible for submitting any of the required files directly must be registered with HIOS.
 

Who Needs to Register and Submit Files?

As a reminder, the required process includes the submission of eight data files. The reality of who is responsible for filing the various data file elements is a function of whether plans are fully insured or self-funded AND how the self-funded carriers are contracted to handle the filing.

Fully Insured Employers: Fully insured employers will rely on their carriers for the full submission process, assuming the client has participated in the data gathering process if required. It is important to remember that employers must obtain and retain written confirmation that their carriers will be handling the RxDC submission on their behalf. Many fully insured carriers are requiring employers to submit or confirm certain data points by a specified deadline in order for the fully insured carrier to complete the reporting on the employer’s behalf.

Self-Funded Employers: Self-funded employers will need to coordinate with their Administrative Services Only (ASO) and Pharmacy Benefits Manager (PBM) partners to confirm filing requirements. As a reminder, while most of the data is in the hands of the PBMs, some of the required data elements are only known by the employer. Therefore, some measure of coordination will be required. Some vendors are collecting required employer data from clients and doing the complete filing on their behalf. Other vendors are splitting the file submission process between the PBM and the employer.

Some action is required for all self-funded employers. Depending on the structure of the arrangement, either:

• Provide the required data to PBM vendor for them to complete the full filing (when vendor has responsibility for submitting all files).

OR

• Register for HIOS portal and submit required files directly (when employer has direct responsibility for submitting any data files).

 

Resources for Navigating Registration

For those self-funded employers who must submit any data files directly, CMS has provided several resources for navigating the registration process:

• HIOS Access Training

• HIOS Access RxDC User Guide

• RxDC User Manual

The registration process can take several weeks, so employers are encouraged to register early.
 

Deadline

The RxDC filing for the 2023 reference year submission is due June 1, 2024, regardless of renewal term.



 

Administration

Independent Audit Time for Large Retirement Plan Filers

Now that the retirement plan nondiscrimination testing season is wrapping up for calendar year retirement plans, steps should be taken toward completion of the annual independent audit. The independent audit report must be included with the 2023 Form 5500 filing, due on July 31, 2024, or by October 15, 2024, for plans that are on the extended filing due date.

The independent audit requirement applies to employers who sponsor “large” plans – those with over 100 participants on the first day of the Plan Year (January 1st for Calendar Year plans). There are special rules that allow for growing companies to first exceed 120 participants before becoming subject to the audit requirement, and thereafter continue to be subject to the requirement while staying above the 100-participant threshold.

Please contact Vita Planning Group if you have questions about whether the independent audit applies to your plan. For other important dates on the horizon, download our online Compliance Calendar.
 

Market Update¹

While equity and bond markets moved in tandem during 2023, we saw a separation in returns between these two major asset classes in Q1 2024. US equity markets continued to rise on the expectation of a “soft landing” with positive GDP growth through 2024, while bond markets declined on the expectation of “higher rates for longer” with delayed and/or fewer FED rate decreases in 2024. Overseas equity markets also started the year positively, with both the developed market MSCI EAFE index up 5.9% for the quarter (in USDs) and the MSCI Emerging Markets index up 2.44%, despite a decline of 2.2% in Chinese equities in Q1 (in USDs). While US economic conditions appear favorable for the remainder of 2024, the biggest unknown will be the US presidential election which has historically heightened volatility during an election year.

The US Bureau of Economic Analysis (“BEA”) announced that the US economy grew at an annual rate of 3.4% in Q4 2023 resulting in 2.5% growth for all of 2023². The Philadelphia Federal Reserve Bank’s survey of forecasters median forecast for Q1 2024 GDP growth is 2.1% (up from last quarter’s 0.8% estimate), while the median forecast for the full-year 2024 has risen slightly to 2.4%³. The labor market continues to be strong. March 2024 saw non-farm payrolls grow by 303,000, and US unemployment was 3.8%, making this the longest period with unemployment below 4% since the 1960s⁴. The American consumers, who account for 68% of US GDP, are expected to maintain their level of spending in 2024 with the continued improvement in personal finance and wealth accumulation; American businesses have increased fixed investment spending, due in part to legislation (the CHIPS and Infrastructure Acts) as well as the AI revolution and productive capacity due to labor shortages.

Inflation in the US continues to trend downward, despite hiccups such as the rise in March 2024 to 3.5% (annualized), up from 3.2% in February. Shelter accounts for approximately 38% of the Consumer Price Index (“CPI”), which along with gasoline and automobile insurance appear to be the main factors for the bump up in inflation. But with shelter a lagging indicator and gasoline prices notoriously volatile, there is still the expectation that inflation will decline through 2024 bringing us closer to the FED’s target of 2%. The FED is on record to cut rate three times in 2024, but bond markets are nervous whether the strength of the US economy and the stickiness of inflation may cause the FED to delay or to limit rate cuts this year.

The first quarter of 2024 seemed to indicate that the US can maintain economic growth even in the face of continued inflation. For US equity markets to continue to rise, it will be important to see whether the rally in large cap tech stocks can be broadened to include other sectors. The FED’s apparent willingness to cut rates to counteract any decrease in GDP growth should continue to support equities until corporate earnings can catch up to currently high multiples. Conversely, US Bond markets are expected to continue to be under pressure, as indicated by the inverted US bond yield curve (yield on short-term bonds higher than long term bonds), given the possibility of the FED keeping rates higher for longer if it is not comfortable with progress on inflation. The biggest unknown is the US presidential election, which can impact markets quite separately to the economic factors discussed above.


 

Sources:

1. Unless otherwise indicated, data and commentary for the Market Update is sourced from two JPMorgan Asset Management sources: 1) Guide to the Markets – U.S. Economic and Market Update, 2Q 2024, December 31, 2024, and 2) the “2Q 2024 Guide to the Markets Webcast” on April 1, 2024.

2. https://www.bea.gov/data/gdp/gross-domestic-product

3. https://www.philadelphiafed.org/surveys-and-data/real-time-data-research/spf-q1-2024

4. https://www.bls.gov/news.release/pdf/empsit.pdf

Disclosures:

This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Past performance does not guarantee future results.

+The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is a market value weighted index with each stock's weight in the index proportionate to its market value.

++ Indices are unmanaged and investors cannot invest directly in an index. Unless otherwise noted, performance of indices do not account for any fees, commissions or other expenses that would be incurred. Returns do not include reinvested dividends.

The Bloomberg Barclays US Aggregate Bond Index, or the Agg, is a broad base, market capitalization-weighted bond market index representing intermediate term investment grade bonds traded in the United States. Investors frequently use the index as a stand-in for measuring the performance of the US bond market.

The MSCI All Country World Index ex USA Investable Market Index (IMI) captures large, mid and small cap representation across 22 of 23 Developed Markets (DM) countries (excluding the United States) and 23 Emerging Markets (EM) countries*. With 6,062 constituents, the index covers approximately 99% of the global equity opportunity set outside the US.

The MSCI EAFE Index (Europe, Australasia, Far East) is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the US & Canada.

The MSCI Emerging Markets Index is a float-adjusted market capitalization index that consists of indices in 21 emerging economies: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.

The FTSE NAREIT All Equity REITs Index is a free-float adjusted, market capitalization-weighted index of U.S. Equity REITs. Constituents of the Index include all tax-qualified REITs with more than 50 percent of total assets in qualifying real estate assets other than mortgages secured by real property.

The Consumer Price Index (CPI) is a measure of inflation compiled by the US Bureau of Labor Studies.



 

The San Francisco Health Care Security Ordinance (HCSO) requires that employers submit the employer Annual Report Form by May 3, 2024. The report must be submitted to the Office of Labor Standards Enforcement (OLSE), the organization with oversight over the HCSO ordinance.

The purpose of the Annual Report Form is to provide OLSE with a snapshot of each employer’s compliance with this ordinance. The penalty for failing to submit the form by the deadline is $500 per quarter.
 

Reporting Details

The reporting requirement includes basic business data as well as data to clarify Covered Employer status. In addition, the following data points are requested:

• Number of individuals employed in each quarter of 2023
• Number of employees covered by HCSO in each quarter
• Employer’s total spending on healthcare
• Types of healthcare coverage the employer offered to employees.

The Annual Report Form (ARF) must be completed online. OLSE provides robust assistance material online, including instructions for completing the ARF, form previews, and a video guide to completing the ARF: ARF Instructions.

The deadline for filing the 2023 form is May 3, 2024.

 

HCSO Primer

For those that might want a Refresher!

Covered Employers

An employer need not be physically located in San Francisco to be a covered employer. HCSO applies to the following employers:

• Private Employers: Private employers who employ 20+ employees where any single employee works at least 8 hours per week in San Francisco

• Non-Profit Employers: Non-profit employers who employ 50+ employees where any single employee works at least 8 hours in San Francisco.  

Employer size counts are based on the average number of employees per week who perform work for compensation during an applicable quarter (not just those employees working in San Francisco).
 

Covered Employees

A covered employee is any person who meets the following four criteria:

1. Works for a covered employer

2. Is entitled to be paid minimum wage

3. Has been employed by the employer for at least 90 days

4. Performs at least eight hours of work per week in San Francisco.

The definition of employee under the ordinance includes all employees, even if they are temporary, part-time, commissioned or contracted.

Work performed by an employee who lives in San Francisco and works from home is considered work performed within San Francisco.

Employees who travel through San Francisco while carrying out their job duties are not considered to have performed work in San Francisco; however, if an employee's job requires him or her to make stops in San Francisco (e.g., deliveries), the employee is considered to have performed work in San Francisco. For these employees, hours worked include travel within the geographic boundaries of San Francisco.
 

Employee Waivers

Employers may ask employees who have other employer-provided coverage to waive the expenditure. However, such employees are not required to waive the expenditure (and in many circumstances, it does not behoove them to do so).

If an employee elects to waive, they must do so using the authorized HCSO voluntary waiver form. The waiver form must be signed each year, cannot be retroactive, and is revocable at any time.

If an employee with other coverage does not sign the voluntary waiver, the employer must still make the required health care expenditure on their behalf and may be liable for noncompliance penalties if expenditures are not made.
 

Expenditure Requirements

The ordinance requires covered employers to spend a minimum amount set by law on healthcare for each employee who works 8+ hours each week in San Francisco. Following are the required expenditure rates:
 

2023 Expenditure Rates	Expenditure Rate	Monthly Maximum*
100+ Employees	$3.40 per hour	$584.80
20 to 99 Employees (For Profit)  50-99 Employees (Nonprofit)	$2.27 per hour	$390.44
0 to 19 Employees (For Profit)  0-49 Employees (Nonprofit)	Exempt	N/A

* Total hours for which a healthcare expenditure is required are capped at 172 per employee per month. 

There is an exemption for certain managerial, supervisory, and confidential employees who earn more than $114,141 per year (or $54.88 per hour) in 2023. These employees are exempt and the HCSO expenditure requirements do not apply to them.
 

Resources

Administrative Guidance for SF HCSO

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Vita announced a new partnership with Summer, a leading end-to-end workplace student loan solution. This partnership honors the work of Vita’s non-profit clients by providing their employees free student loan support and navigation services, specifically with the government’s Public Service Loan Forgiveness (PSLF) program.

“Vita’s partnership with Summer helps our amazing non-profit clients deliver impactful student debt relief to their employees so they can continue doing important work in our communities,” says Erik Hansen, President at Vita. “By subsidizing this benefit for non-profits, we can help reduce benefits costs so employer benefit dollars can remain mission focused.”

“Vita’s non-profit clients are in a unique position to help their employees by leveraging PSLF,” says Dan Macklin, President at Summer. “Summer guides these employees through the complicated PSLF process, resulting in a 95% application acceptance rate and saving users an average of $40,000, equivalent to an average of a six percent salary raise.”

This partnership will have the following impact:

• Help non-profits attract and retain top talent with 20% improved attrition.

• Support employers’ Diversity, Equity, Inclusion, and Belonging (DEIB) efforts by assisting those who need it the most. More than two-thirds of student loan borrowers are women and BIPOC.

• Capitalize on government funding, helping 50-80% of employees save on their monthly student loan payments. 

About Vita: Vita is a leading employee benefits brokerage and consulting company based in California. Founded in 1979, Vita creates innovative solutions that help clients meet the ever-changing needs in employee engagement and risk management. From healthcare plans to retirement solutions, Vita partners with employers to develop and deliver the solutions needed to help companies attract and retain talent while maintaining compliance.

About Summer: Summer is the only end-to-end student loan solution that saves employees an average of $40,000 and is proven to reduce turnover by 20 percent. Summer partners with employers to deliver tailored benefits that empower employees to save for education, better manage their student loans, find forgiveness options, and lower monthly payments. As a Certified B Corporation, Summer has partnered with leading employers, financial institutions, unions, and government leaders to generate over $1.5 billion in savings for borrowers.

Employer interest in student loan support as an employee benefit has waxed and waned over the last several years as employee demand, political forecasts, and competing budget priorities have shifted. Several important events occurred in 2023 that set the stage for a change in the landscape:

• The US Supreme Court struck down the Biden Administration’s student loan forgiveness program 

• Pandemic-era forbearance ended 

• Secure 2.0 codified retirement plan matching against student loan repayments

As a result, interest in student loan support as an employee benefit has once again risen and is more likely to remain at an all-time high.
 

Why is support needed?

According to a top student loan support vendor, Summer, 50% of American households have a member with student loan debt and 70% of those borrowers would be eligible for an existing government repayment program. Due to the complexities of navigating the various programs and exceptionally high rejection rate, only 15% of those individuals apply for a repayment program. 

Additionally, student loan support programs fit well in corporate Diversity, Equity, and Inclusion strategy:

• Women hold 2/3 of the country’s student loan debt

• Student loan debt repayments have disproportionate impacts across racial and ethnic groups

 

Defining a Student Loan Support Program

Student loan support as an employee benefit can be distilled down to three options: 

1. Support and Navigation Services: Help employees navigate existing government repayment programs, including Income-Driven Repayment (IDR), Save on A Valuable Education (SAVE), Pay As You Earn (PAYE), Public Service Loan Forgiveness (PSLF), and more. 
   
   Though any individual can apply for these programs on their own, data suggest a high rejection rate. As an example, the PSLF program has a rejection rate of over 90%, and rejections are typically due to minor administrative or formatting issues. Additionally, navigating and choosing the optimal program for individual circumstances can be particularly difficult without expert guidance or intuitive modeling.
    

2. Employer Contributions: Contribute directly to employee student loan debt through tax-free employer contributions up to $5,250 per year. This tax-free option was initially introduced in response to the COVID-19 pandemic in 2020. The exclusion has been extended for payments made before January 1, 2025.
    

3. Retirement Matching: Help employees save for retirement using an existing retirement plan match program while they focus on paying down student debt. This idea was popularized through an IRS Private Letter Ruling several years ago, but now has been formally extended to all employers. Through this program, employers can consider student loan repayments “equivalent to” employees making contributions to the retirement plan. As such, employers can deposit matching contributions to the employee’s retirement plan for student loan debt repayments. 

For example, if an employer has a $1:$1 retirement plan match and an employee makes a $200 student loan repayment (and $0 retirement plan contribution), the employer can deposit the $200 matching contribution to the employee’s retirement plan as if the student debt repayment was a retirement plan contribution. 

The first option above can be positioned as a solid foundation which could be combined with either the Employer Contribution or the Retirement Matching option where financial sponsorship is added.
 

Avoiding Pitfalls to Ensure Success

The student loan support landscape has changed dramatically within the last decade. Today, leading student loan support programs can include the following features to maximize return on investment: 

• Minimize employer administrative burden: Ease of enrollment, linking existing student loans, and coordination with retirement recordkeeper are key elements to consider when vetting vendor solutions.  

• Reporting to measure ROI: Although the need for support is well-documented, actual utilization is important to measure to ensure a program’s effectiveness. Market leaders will also be willing to share book-of-business ROI statistics, including average savings, average utilization, and even reduced turnover impacts.  

• Expanding access: Many employers value broad-range impactful benefits when selecting how to allocate benefits dollars. Many student loan support vendors have expanded scope of services to include college savings planning and even extending access to family members (thus expanding household reach.) 

• Aligned incentives: When selecting a student loan support vendor, Vita believes that highest-quality vendors will refuse kick-backs from private refinancing, which would disqualify individuals from Federal programs for which they may be eligible. Though private refinancing may occasionally make long-term financial sense, evaluating government repayment programs for Federal loans is a crucial first step for the majority of borrowers.

 

Vita’s Strategy

Vita is thrilled to announce a new partnership with Summer to bring student loan Support and Navigation Services to the nonprofit clients of our health and welfare benefits consulting team. Vita has focused on our non-profit segment to honor the amazing work done by our nonprofit clients and to maximize ROI through Summer’s support of PSLF program navigation.
  

About Summer (in Summer’s Words)

Summer is the only end-to-end student loan solution that saves employees an average of $40k and is proven to reduce turnover by 20%. Summer partners with employers to deliver tailored benefits that empower employees to save for education, better manage their student loans, find forgiveness options, and lower monthly payments. As a Certified B Corporation, Summer has partnered with leading employers, financial institutions, unions, and government leaders to generate over $1.5B in savings for borrowers.

 

The Consolidated Appropriations Act, 2021 (CAA) added a new annual reporting requirement for group health plans and health insurance issuers. The new rules require plans to submit an informational report on prescription drug and health care spending to the HHS, the Secretary of Labor, and the Secretary of the Treasury.

The reported information will be aggregated by the departments and published on the internet, with the intention of offering plan sponsors and individuals insight into where their healthcare dollars are spent.

The CMS recently issued detailed reporting instructions that clarify important information about the reporting process for employers.
 

Which plans are subject?

Essentially all health plans (group and individual) are subject to the new reporting requirements. This includes small and large plans, self-funded and fully insured plans, and both grandfathered and non-grandfathered plans. Essentially, no plans escape this requirement. 

Fortunately, the lion’s share of reporting requirements falls on the shoulders of carriers, PBMs, and ASO providers. That said, all employers will be required to file some basic plan data elements. 
 

Which plans are not subject?

The reporting requirement does not apply to health reimbursement accounts (HRAs) and other account-based group health plans (such as FSAs or HRAs). In addition, coverage consisting solely of excepted benefits, such as dental or vision plans, is also exempted.
 

What data must be included in the reports?

Data required to be included in the reports fall into two categories:

• Data that is unique to each plan/employer

• Data that can be aggregated between all plans by a carrier, ASO provider or TPA.

 

Employer-Specific Data (Non-Aggregated Data)

• General plan and reporting entity identifying information

• Market segment (large group, small group, etc.)

• Average number of members covered

• State in which the plan is offered

• Average contributions paid by member

• Average premium paid by employer

• Total annual premium (or equivalent for self-funded plans)

Plan specific information, such as average contribution, payments by employer, and total premium can be reported by plan or combined for all plans. We believe most employers will find it easier to report the information by health plan. 
 

Aggregated Data

• 50 Most Frequently Dispensed Rx: The 50 brand prescription drugs most frequently dispensed by pharmacies for claims paid by the plan or coverage and the total number of paid claims for each such drug.

• 50 Most Costly Rx: The 50 most costly prescription drugs with respect to the plan or coverage by total annual spending and the annual amount spent by the plan for each such drug.

• 50 Rx with Greatest Cost Increase: The 50 prescription drugs with the greatest increase in plan expenditures over the plan year preceding the plan year that is the subject of the report and, for each such drug, the change in amounts expended by the plan or coverage in each such plan year.

• Total Plan Spending: Total spending on healthcare services by the plan, broken down by the types of costs, including hospital, primary provider/clinic, specialty provider/clinic, drugs covered by pharmacy benefit, drugs covered by medical benefit, and other costs (such as wellness services).

• Rx Spend by Spender: Spending on prescription drugs is broken down by the health plan spend and the participant spend (copays and coinsurance).

• Premium Information: Average monthly premium, including total premium amount, amount paid by plan sponsor, and amount paid by participants. This category applies to total plan premiums, not just the Rx portion.

• Rebate Information: Prescription drug rebates, fees, and other compensation paid by drug manufacturers to the plan or its administrators or service providers, including the amounts paid for each therapeutic class of drugs, the amounts paid for each of the 25 drugs that yielded the highest amount of rebates, and any reduction in premiums and out-of-pocket costs associated with rebates, fees, or other compensation.
   

  Required Data Elements and Structure

A full report consists of three different elements:

• 1 Plan File: There are 3 types of Plan files, P1, P2, and P3. The P2 file applies to group health plans. The others don’t apply to employers.

• 8 Data Files: There are 8 required Data files D1, D2, etc. A description of the details for each is outlined below.

• 1 Narrative Response: The Narrative Response must be a pdf or Word file. There are six required elements to address. This will generally be handled by carriers, PBMs, and ASO providers. 

The following diagram illustrates what we expect to be a typical division of reporting between employers and plan partners.





 

Costs for RxDC Reporting

Carriers, TPAs, and PBMs are adopting differing strategies for the RxDC reporting. These entities have and will incur substantial data gathering and reporting costs to comply with the RxDC requirements. As a rule, fully insured carriers have included the cost in overall administration costs and are not charging a direct fee to employers. Some ASO providers, TPAs, and PBMs are passing through a direct fee to employers.
 

Deadlines for Annual Reports

Reporting runs on a calendar year basis. This law introduced a new term, the “reference year.” The Reference Year is the prior calendar year for which the report is submitted.

Annual reports are due on June 1st following the reference year. June 1, 2024 marks the deadline for the 2023 calendar year.
 

Employer Action

Employers should keep an eye out for information requests from carriers and other plan partners. Fully insured employers will want to attend to information requests and note the deadline for providing necessary data. Most carriers have set deadlines between March 15^th and April 10^th. 

If you are a Vita Benefits client, your account management team will reach out to you to assist with understanding carrier-imposed deadlines and submission of required information.