San Francisco health care law exemption rises for highest-paid employees

SAN FRANCISCO—Managerial, supervisory or confidential employees who earn an annual salary of least $84,051 in 2012 are exempt from a San Francisco law that requires employers to spend a certain amount of money on their employees' health care coverage.

The increase from this year's $81,450 is tied to the rise in the Consumer Price Index for urban wage earners and clerical workers in the San Francisco-Oakland-San Jose metropolitan statistical area, according to the City and County of San Francisco Office of Labor Standards Enforcement, which administers the law.

The law requires employers with 100 or more employees to spend $2.20 per hour per covered employee on health care in 2012, up from $2.06 this year. Employers with 20 through 99 employees must spend at least $1.46 per hour per covered employee next year, up from $1.37 in 2011.

Employers typically satisfy the requirement through the payment of group health care premiums. However, the law also offers an alternative in which employers contribute the required amounts to health reimbursement arrangements, which reimburse employees for health care expenses. Employers can design their HRAs so that unused funds revert back to them at the end of the year.

This month, though, Mayor Edwin Lee vetoed a proposal by David Campos, a member of the city’s board of supervisors, that would have required funds remaining at the end of the year to be rolled over automatically to be used the next year. Terminating employees would have access to the funds for 18 months.

While Mayor Lee favors amending the HRA provision, he said in a veto letter that the Campos proposal was “overly broad.”