way to use that money. they would usually like the money to accrue over time, so if they are faced with a medical emergency they would have access to that money, if they were in the hospital with a broken bone after a bike accident. as you know, that can easily cost $6,000. the inability to allow the money to accrue over time and have access to it leaves a number of workers feeling as though they are in a conundrum as to how best to utilize that money, because you are turning that money back on them. there are employers who are taking advantage of this opportunity to restrict and make it difficult for workers.

>> do you have a hard number on that in the last year? are there a hard number of them lawyers that you have had to investigate? >> it does not lead to investigation. it has been construed to be a permissible way to meet the requirement. >> thank you. president o'brien: thank you. supervisor campos: if i may call for a very brief presentation -- brendan munos conducted a study for the office of labor standards. he was part of the program of

professional education at the goldman school. >> members of the commission, my name is brenda munos. we are a federal agency. but i am not here representing gao today. my testimony is based on a study that i conducted at the goldman school of public policy. they were interested in learning more about how various health reimbursement accounts worked. the difference supreme and health reimbursement account, held savings account, etc. -- the difference between a health reimbursement account, a health savings account, etc. what i learned during the study is that typically sell for

reimbursement accounts have been used -- health reimbursement accounts are high-deductible health plans offered in tandem with spending accounts for the most part used as incentives to recruit employees or keep employees, given that health care premiums are very high. they try to incentivize employees to pay for a high deductible plan but put money in their account. in a lot of cases, this money is rolled over. although hra's have been offered with high deductible plans, they can be offered alone. that means that at this point there are accounts like that for catastrophic illness.

the stray away from the consumer-directed model there were designed for. they are designed to be controlled by the employer. they can decide what they want to cover. they can decide whether the plans will roll over to the next year or whether they want to take it back. one of the interesting things is trying to understand hra's. i've reached out to a lot of employee benefits experts. nowhere could i find information on stand-alone hra's. i remember calling them several times and saying, "are you sure you do not know anything about this?" they had never heard of it. they had been doing this work for many years. they said they had not heard of it and it must be something that is new. i also learned that benefits

brokers within and outside of san francisco were targeting san francisco employers to set up stand-alone products, claiming they are a cheaper option than health insurance. if employees do not use the funds at the end of the year, employers can choose to take them back. we have examples of these advertisements, if you are interested. there is one here that says san francisco health care security ordinance compliant plans can reduce employer costs by an amazing 50%. that is one example. employee benefits brokers i spoke with said additional advantages for san francisco employers is that can restrict the types of benefits employees can get reimbursed for. i also heard that their

employers were restricting reimbursements of health insurance premiums. people who already have health insurance they were paying for where excited they would now have the money, because they thought they could use them to pay for the health insurance premiums they were already paying for. but that was restricted. i was conducting his research with the office of labor standards enforcement. employers had said they did not want to reimburse health insurance premiums because people would use the money. i also spoke to a couple of benefits brokers who told me the majority of san francisco employers do not reimburse employees for health insurance. employers are choosing not to. i spoke to a few employees in

san francisco. they shared that employers did not notify them or educate them about their stand-alone plan. therefore, they missed the types of care they could get reimbursed for, vision, dental, and these health insurance premiums. they were restricted, and some of them did not know they had health reimbursement accounts to submit to. it was very difficult to get information about what the reimbursement rates are for health reimbursement arrangements at a national level, because brokers would not sure that. but i did get an opportunity to speak with a broker who said that for plants in conjunction with high-deductible health plans, there was a survey of

2000 employers. the reimbursement rate for plans that allowed all iras-eligible expenses was 63%. however, when it was limited to, medical and prescription expenses only, the reimbursement rate decreased to 36%. that is still higher than the 20% in san francisco. thank you for your time. president o'brien: thank you. supervisor campos: the final piece of the puzzle today, and we will look forward to public comment, is we are going to hear from two employees. i will thank them again for being here, their courage to speak about their own experience. thank you. >> hello.

i work for a major dealership in san francisco. i would rather not say which dealership. i would rather not give you my last name, due to retaliation may be. -- maybe. the first year that this plan came into effect was really good. i was able to get eyeglasses. i was able to use my coat-pay for everything. -- cote pay for everything -- co-pay for everything. after that, we got a paper that you could not use it for dental or vision. you could only use it for co- pays for kaiser, over the counter drugs, and drugs to buy at the hospital. i had kaiser with them. they only paid $125 for that.

i was having these health issues last year. every year after that, and when i had a toothache and went to the dentist, it turned out that the bridge that a dentist had previously put into my mouth didn't set the bridge right. they had to redo the whole side of my mouth which was $7,000 that i did not expect to pay. they give you these statements of how much money that you have and you accrued working there. i'm like wow, i got like $3,000 here. i can pay for part of that with the flex plan. turns out that i wasn't able to use it. so i went up to my employer and

said can you give me my $3,000 and i'll just take it out of my check. i never heard back from him so i went online and i got ahold of donna and i said this flex plan is totally useless. i can't use it. what use is it if i have $3,000 why can't i use this money to get my teeth fixed? she said oh, really? do you work? she talked to the dealership and they reimplemented the flex plan in. so i was able to get part of the money to pay for it. meanwhile, this was back in october. she got it reimplemented in november, i believe. so i got the money but still, from october until now, i still have temporary teeth in because

i can't afford to get the rest of the work done. tomorrow morning i'm actually going to get the teeth put in. but it just seems to me the way this is set up and i can see it. i used to be a business owner. they put all of these limitations down so that at the end of the year you can get the money back so they don't have to -- and that's why they put all the limitations on it. so i just wanted to come here. i have two other guys at the shop that wanted to come here but they decided not to because they were afraid to come and talk about the situation. i just wanted to come and tell you guys what is really going on out there and the fact that it is not just at our work but it is like -- i know a lot of people at other dealerships. it is a trend that is happening.

so i just wanted to share that with you guys. i hope you can learn to what i had to say. >> thank you very much for that. very brave of you. rosanne? [applause] please keep the drama down. we want to be impartial here and hear every speaker. >> hi. my name is rosanne and i worked at my current place of employment since july 2009 and i haven't like personally had too many problems. but i'm kind of here on behalf of all of my co-workers and employees, especially those who don't speak english since we have had many problems related to not being able to use our funds. we had many problems, one just

because of the fact that our funds would disappear at the end of the year and second of all, going off what everybody else is saying, the fact that these funds are expiring gives an incentive to our employer to severely restrict the amount of things that they will cover because they know we're very unlikely to use our funds for the things they will and will not cover and then they are able to take the money at the end of the year. about 4% in lieu of all the stuff like the san francisco tax and aalto things on it. $8 comes to $11 with everything on there. we make about clr $5,000 a day there so it is about $5600 a noont we're charging customers. we have signs that say we're chorge charging this money so we

can provide the best health care to our employees. our customers have paid almost $250,000 toward our health care. we first started inquiring about -- like what we had available and what was covered and what wasn't covered last october because we had the placards in the front but none of the employees there had ever used it or been told about it before. when they started asking questions about what it was. we have these little placards in the front and one day somebody asked about it and we sent an email to our corporate office to ask about what was covered. nobody wanted to go out and get $2,000 worth of dental work or $1,000 worth of glasses if it wasn't going to be covered.

they said we're looking into it. we're not sure. that went back and forth since october. in january i got a letter, it was an actual list of everything that was covered and the fact that all of our balances were now zero because they had all expired january even though we had been inquiring since october. the things that it covered were like dialysis for people with severe, advanced case of diabetes. stuff for severe autoimmune disease. organ transplant. things that we were not going really need. conventionals ent care was covered. things we wouldn't need the funds for. if we needed a nurse 24 hours a day. it was stuff that we would never actually utilize. basic physician stuff was covered like basic doctor bills.

prescriptions used to be covered but the one person who was refunded for $400 for a prescription was the only money that was ever reimbursed. the next time somebody brought in all of her bills and we have a worker who spends about $500 a month. she brought in ule her prescriptions which was about $3,000 worth of bills but she never heard back and then two months later we got a letter saying prescriptions were not covered for anymore. the one thing we used our money for was strick frontline our h.r. policy. there was another case too of money expiring to get a direct example of that. one of our food runners missed a lot of work due to to scabeys. she could not be, you know, handing customers food and

having contact with them with the sores on her arms, hands and fingers. she missed so much work she had goten in trouble at work and -- for being unreliable because of her absences. she had to bring a note that showed she was getting it fixed or she was going to get fired. we had to pool money together for her. it was like $700 for her and her son. so i get really emotional talking about this because she is actually my best friend and she had about $3,000 worth of money that expired that december but she didn't have the money to go pay for prescriptions and the creams and the injections and everything she needed to get that treated for her and we all pooled money together at work and we came up with almost $800 for her from our own money. i gave her my whole entire

check. i pay outor pocket for grad school. that was my tuition payment. i gave her help to pay for this medical stuff. her money has expired and they would not pay for it and they were telling her she was going to lose her job if she didn't get the treatment for it. we gave mer part of our paychex. i gave her part of my paycheck. i don't regret doing that. i would do it again a million times over. it is sad what we had to pay $8,000 when she had $3,000 expire at the end of december and we had this dishwasher who worked there whose foot was really swollen from some kind of medical condition. i didn't get too personal to ask him about. he went to the doctor. he brought his bill. he had zero funds left because they were expired. he didn't go back and get the treatment. he can't afford it.

i have six kids and i make minimum wage here. i'm not going to go back and spend the money if i don't have any money in my account. he came to work , on one shoe he had a work shoe and the other shoe -- foot he had an old tennis shoe without the laces because that was the only shoe that would fit on his foot. there are just too many cases of us either being denied stuff because it wasn't covered in our policy or funds that had directly expired. that is about it. now i think there have been a few more people reimbursed. we're about up to $1,000. thank you. >> thank you. commissioners and members of the public who are here and thank you for giving us your time.

[applause] i want to thank ron for taking the time to share -- and rosanne for taking the time to share their experiences with us. i just want to make a final point and i will be happy to take any questions. you have heard from the employees and you know, i think that better than i certainly can explain what it means to the worker and we're going to hear from a number of folks through public comment and i'll recognize including some folks who are against this legislation. good people who are here to speak against this. and i want to hear what they have to say. but this is really about whether or not, i mean, we're going to have a healthy san francisco work the way this is supposed to work. some of the folks, some of the institutions that are going speak against this legislation are some of the institutions

that were against healthy san francisco. i understand their arguments and i respect their i.p.o. for my perspective. beyond the compelling testimony of the workers for me why i feel so passion eighth about this, i think this is about recognizing that the vast majority of businesses here in san francisco actually are doing right by the workers of san francisco and the vast majority of businesses in san francisco you don't hear of the situations we heard of today where you have fellow employees having to hand over another co-worker paycheck so they can pay for a basic treatment. i think it is out of respect to those businesses if we are going to have healthy san francisco, then that debate has been had. the city decided to have it. but if we are going to have it, we need to make sure that businesses play by the same rules and i have, you know, gained so much respect in

learning more about what businesses are doing because it is a struggle but it is a change that they have made. they have made that sacrifice because they recognize that is one of the things that i learned in a very personal way of hearing about the owner of the restaurant, she recognizes that as difficult as it is for her to make that payment that as a business owner there is a vested interest you in treating your employees are dignity because those employees give everything of themselves to be the best employee they can be and by recognizing their humanity and the fact that they have basic needs, that they have a family then you are not only helping them but you're actually helping yourself because it is in the interest of small businesses, it is in the interest to treat every worker are respect. that is -- with respect. that's why we're here today. >> ok. so do we have the director of

healthy san francisco here? >> good evening. the director with the san francisco department of public health. i just wanted to take this opportunity to give you a sense of how the city has approached the m.r.a., which is our medical reimbursement account option, how we administer it and how readminister it to ensure that not only employers but also employees understand what is available to them and now they can use those accounts. when an employer decides to select the city option, they are able to submit information through an electronic web-based system. that information that employers submit, essentially the address of the employees, the birth date of the flow and whether or not that employee currently has health insurance will determine whether or not we give them access to a medical

reimbursement klt account or to healthy san francisco. the employer in no way makes that decision and once those funds have been transferred through our system, the employer is not able to recapture any portion of the dollars that are submitted on behalf of the employee. we work very hard to ensure that our employers number one have a good understanding of the options that are available to their employees. under the regulations of the employer spending requirement, all employers are required to provide their employee with notice that a deposit has been made on their behalf. once that notice has taken place, we go into action to make sure that the employees ares are notified. we provide them with a telephone call giving them information that these deposits have been made on their behalf. we follow up that telephone

call, which is also made, and i should mention in three languages in either english, spanish or cantonese. we follow that up with written information to each of our employees giving them information on the m.r.a. that is available to this. we actually take on the charge of setting up the m.r.a. accounts for the employee. the employee is not responsible for setting up the account. we do that. we give the employee instructions on how to set up a technique password for themselves so that at any point in time they are able to once they have incurred an expenditure, to go online, pull down the form, complete that form, mail it in with copies of their receipts to get reimbursement. we ensure that the level and the types of health care benefits that are available for

reimbursement are quite broad from prescriptions that you have heard about, health care, vision, individuals can even use the reimbursements to pay for health care people areups if they so desired. we work to ensure that individuals on a regular basis are up to date on the dollars that have been deposited by their employers on their behalf. so we provide to all employees quarterly noticed. those noticed are in three languages. english, spanish and/or chinese. it gives them a statements telling them how much is available on their account and we encourage on a regular basis for individuals to use those dollars, as much as possible because we recognize that out of pocket expenses are difficult for our population to the extent where they can get reimbursed sooner rather than later is within their best interest. we do have on the healthy san

francisco website, a language that indicates that the accounts are closed after a 12-month period if there is no activity. i will tell the commission that we have never closed an account for 12 months of inactivity because we really want individuals to use the dollars that are available to them. we also recognized at the same time that individuals sometimes need incentives to use those dollars so we want to make sure that individuals use them. we do have a policy where by which an account becomes inactive. inactivity is based on two simultaneous actions occurring. one there has been no deposit into an account for an employee by an employer for 18 months, meaning that they have received no deposits, and at the same time, the employee has not

withdrawn any funds from their account for an 18-month period. if, for example, an employee has withdrawn funds or an employer has not deposited funds, that accounts stays open. and vice versa. if an employer has deposited funds but the employee has not withdrawn funds the account stays open. it is only in those cases for an 18-month period that we will close an account. when we close an qu account, we notify the individual that account has been closed prior to closing that accounts. we notify the individual at 90 days, 60 days and 30 days and we call them twice to let them know their account is in danger of closing. if we have closed an account, we can reinstate that account. so the individual does not lose access to those dollars. if an account has been closed,