about health reimbursement accounts and health savings accounts. it is a very confusing part of the law. the same language has been used interchangeably, and they are not interchangeable terms. when you have a high deductible insurance plan, you compare that with the health savings account. an hsa can only be used with a high deductible insurance plans. there are then separate flexible spending accounts that provide for various -- i had one at my last employer that i used for health care reimbursement. this was a flexible spending account. family costs -- my child's day care, i can get reimbursed, but i have to use it every year. ssa's are required to be use it

or lose it. there is then an hra, which in many ways mirrors the hsa, but is a more flexible approach that does not have to be prepared with a high deductible plan. i just want to clarify that because the distinction got lost when people were talking about how to use hra's. an hra is more flexible than an hsa. an employee can take advantage of this money and it is not reflected as income. if i want to go in need to go to the doctor, i can see the doctor and get reimbursed $100. that $100 does not reflect as

income to me. that is a tax advantage and benefit for that employee. i have to admit, the testimony today, especially from the employees, was carried challenging and difficult. it was hard to hear those stories. as supervisor, said, i agree that must be a minority of employers behaving in that way. but i would like to be able to find out if that is the case. all we are relying on now is anecdotal education -- information. we do not know what is being provided and what is not. that is something we could investigate. i also believe it is important that employees know what their legal rights are and what their benefits are. other than when you first sign up with an employer and you have to fill out the form regarding

healthy san francisco, i do not believe there is any other point in the ordinance that requires notice. i believe that can be addressed so that when there are employers who are not educating employees about their legal rights -- that is incorrect. that is wrong. we should be letting our employees know. i think there are ways to address policy concerns. do people know about this? what are they providing in their benefits packages? there are ways that do not require $50 million annually to small businesses in san francisco. this will kill jobs without a doubt. you cannot take $50 million out of the economy without it having an impact. i would finish with the idea that nationally we are talking about health care and people accessing this at 20% of the expenditure levels from 1944.

from 1944 to 1930, it is about 9%. if employees are not using their benefits when i am providing it and they know about it -- if they do not take advantage of it and i can bring it back into my business and hire more people, isn't that a more efficient use of the money and then letting it go away from the business for a benefit employees are not using? if they do not know about it, that can be addressed. if they know about it and are not accessing it, why is that an efficient way to reallocate money that could go to hiring in the city? president o'brien: thank you. thank you to all the presenters. thank you supervisor campos.

at this stage, we will go to general public comment. clearly, there are a lot of us here this evening. >> mr. president, a point of clarification generally. do commissioners asked their questions of the presenting supervisor or any of the panel? president o'brien: before we go to public comment. thank you for that. i apologize. commissioner yee riley: you mentioned that your department determines whether employers should be on the healthy san francisco.

how'd you decide that? >> employers fill out a form. we ask the employer for the address of the employee, the name of the employee, telephone number, their date of birth, and if that employer has health insurance. we ask that information because help the san francisco -- healthy san francisco is designed for individuals who are uninsured, who lived in san francisco, and who are between 18 and 64. there are many individuals who work in san francisco who do not live in san francisco. many of those employers would not be eligible. in addition, because healthy san francisco is for individuals who are not insured, there are

employers who use it to make supplemental expenditures above and beyond what they may choose for their employees. that individual would be ineligible for healthy san francisco. they would get an mra. finally, because it is for individuals between 18 and 64, if that employer was making contributions on behalf of someone under the age of 18 or over the age of 64, irrespective of their county of residents, they would also get an mra. those are the principal factors we would use to decide whether they would get healthy san francisco. commissioner yee riley: are

their standards in terms of access? >> we use the guidelines that are set out by the internal revenue service, the tax code. we use that guideline in reference for the range of expenditures that are held related that are eligible for reimbursement. we provide a listing of that two employees. they also get a listing of the types of health care expenditures they can use those dollars for. commissioner yee riley: what about the money in the account? >> if the request is for more

than the account, the individual will begin to use up to the amount in that account and would argue anything above that could not be reimbursed by that account. they could submit a new request. commissioner yee riley: this would be provided to all the employees as well? >> this is provided to the employees in three languages -- english, chinese, and spanish. you did not ask this question, but the payout rate for the mra year to date is 55%. commissioner kasselman: that was

a good segue to my question. what happens to the remaining 45%? after seven years of inactivity, you said that account closes. what happens to this fund? >> those funds are deposited in to help the san francisco. the account is closed after 18 months. that employee goes back. we reinstate that account. the funds would come out of that help the san francisco department account. we would transfer them back into the mra. we maintain information on

inactive accounts seven years from the date they were enacted. if that individual were to come back three years after the account was closed. we would be able to give the information about what was in the account at the time it was closed. the department of public health would authorize what could be used for those expenditures. >> how much money is redistributed back to help the san francisco -- healthy san francisco annually? >> we have not done it annually. we have only done it once.

i think that figure is in the range of $3 million over the course of a 34-month period. vice president adams: this is for supervisor campos. my question to you is that since the majority of businesses are complying, wouldn't it be better to strengthen the employee noticing requirements? supervisor campos: thank you for that question. i have a lot of respect for my friend rob black, but i will respectfully disagree with that. i do not think this is what he said. i think this is about notice. it is not just about the fact that notice is about how these

accounts are being used -- as was noted before, the way the rules of the ira's work, it is up to the employer to set these restrictions, including the comments provided. we as a city do not have the ability to dictate the specifics of how the account worked. we were careful in how we drafted this piece of legislation. this was drafted in close consultation with the city attorney's office, knowing the restaurant association had sued the city to try to stop the implementation of healthy san francisco. we have drafted this carefully to make sure we follow the clear guidelines the ninth circuit court has faced. while we do not have the right to dictate the specifics of these accounts, we do have the

right to define an expenditure. we are simply saying that when we mean expenditure we mean the lemon's definition of that. expenditure -- the lame man fifth definition of that. the use of these -- the layman's definition of that. i would like to see expansion of these accounts, but i am against expansion on the back of the workers or other businesses, their competitors, that are following the rules. i am also against expansion on the backs of consumers, who are making these statements when they go to a restaurant in san francisco. thank you. commissioner kasselman: i guess i just, to follow up on that, 7%

of businesses are using the hra's. we have 4000 businesses resurveyed. -- we surveyed. who is using those? , many of those businesses would even know if they are not -- how many of those businesses would even know if they are not complying? if we are taking away so much money from businesses based on substantial statistical information, that is a hard thing to justify it. supervisor campos: the interesting thing about this tete-a-tete is that it is coming directly from the businesses. we have 80% of the businesses who are meeting their

obligations under help the san francisco not doing it using these accounts. we are talking about only 13% of the businesses using the services we are talking about. >> let me try tore- summarize -- let me try to summarize. the details i gave earlier -- president o'brien: let me stop you. the 90% is not a problem at all, right? and the 3% and 7% -- does the problem manifest through both of those, or just one of them?

>> i believe supervisor campos's legislation has not tended to have an impact on the money allocated to healthy san francisco. those who meet the spending requirements through that would not be impacted. the only thing it would impact is the 7% of the money allocated to reimbursement plans. president o'brien: go ahead. thank you. >> the second way we have been trying to talk about this -- that would be the number of employers who the majority of their expenditures go to reimbursement -- 29% of

employers use a reimbursement account in some way, shape, or form. one related point is to say that it is absolutely right that there are a number of variations and varieties of irs-recognized accounts. there are flexible spending accounts, health savings accounts, health reimbursement accounts, and medical savings accounts. that provides a veneer of confusion here. but the percentage of these dollars are toward health and savings accounts. supervisor campos's legislation would not have an impact on that

subset that goes to health and savings accounts. by law in definition, they have precisely the features that the legislation is imposing upon or requiring with respect to the health reimbursement accounts. in some respects, that is a way to look at defining the expenditures in a way of changing these accounts that are already in place. flexible spending is another variation. in our enforcement experience, there are no employers who use those to meet the requirement of the ordinance. many of us have these accounts to our employers. while the irs permits an employer to contribute to them, 99% are employee contributions only.

there are essentially a health care reimbursements and accounts. supervisor campos: i wanted to add something, through the chair. one of the points i think is really important is to put this in the context of employees who are under health insurance. . even if you look at the businesses that are anywhere from 20 to 99 employees -- let's say the employee works full time the whole year. at the most, they can accumulate $2,850 in that account. you can imagine that will not even pay for one night at the hospital, let alone some procedures that have to be

covered. that gives you some context of what that means for the employees. commissioner clyde: thank you for being here. michael tonight is not to penalize the high road employers. there are employers who use health reimbursement accounts who i believe use them properly, who do not have expirations. who provide benefits statements regularly, who allow the broadest possible use of the account, and whose employees may elect to use their benefit to be part of healthy san francisco, to be part of a spouse's health plan, to meet a copayment, or to drop it down any way they

choose. we have such a diverse employment base that we have people who work five hours a week. but in cases i know they get $1.37 per hour, and when the have a package of receipts for clarity and, -- claritin, aspirin, contact lens solution -- they submitted. my concern is our small employers and our high road employers who are doing everything to comply with the spirit and letter of the law, which is to make money available to employees for their personal health care. to that, i have to say that 55% reimbursement rates for medical reimbursement accounts, i think,

is a really good goal. if that is what the city can do with all of the city's outreach, education, language -- we have a very educated and active workforce. we have an engaged work force. we have organized labor that is very active. that is, i think, a great goal, a beginning. it would be great to have it at 80% or 90%, but maybe that is not even a goal. if you are one of these young 23 year olds who does not get injured but in three years needs it for something, or has multiple accounts, i just see the benefits to the hra for the small employer. i would ask that the people who work for the city really look at

making sure that we have access to an important tool that was created at the beginning of this program that is important to manage these expenditures on behalf of our employees. the other thing i wanted to communicate to you is that for many employers they meet and exceed the spending requirement for their total employees. i'd just want it to be remembered that if an employer is retaining use of the funds before they make an expenditure to their employees, then in many cases they are using it for their employee health care. we are at age -- we are age- banded. my 23-year-olds do not cost very much for health insurance.

the 62-year-old and the 55-year- old i have are three and four times the cost. we provide the same benefit. so i just want to let -- just want you to know that companies are using their health care dollars across the work force, and many times at a much greater rate than is the spending requirement. this is a policy. i just want you to be aware of this, when you are talking to our small companies and what they are facing. providing fair and flexible benefits that benefit our employees -- these are some things i really want you to consider on behalf of the small businesses. supervisor campos: we have considered them. we are here to listen as much as we can to what you have to say. the vast majority of businesses, as you noted, are trying to do

the right thing, not only under the letter but the spirit of the law. i think that one of the things that is frustrating about this process is there are many arguments that people make about the impact that healthy san francisco would have on the local economy. those arguments were made repeatedly to argue against healthy san francisco. but the reality is that the parade of horribles that people anticipated did not occur. it did not occur even though there were many sacrifices that were made and continue to be made by businesses. people may want to the engage in that debate again, but that is not the point here. we have the program in place. this is about making sure that to the extent we are requiring employers to follow the rules,

let us make sure the rules apply fully to everyone and there is a level playing field that protect the workers and protect other businesses who are doing what they were supposed to do. commissioner clyde: to that end, i agree with the intent absolutely. i just am very concerned about the implementation as this legislation is currently written, if it will disadvantage highroad employers who are complying and using these to comply. i would like more information about that. >> great. thank you very much. president o'brien: i will later, but i want to give the other commissioners -- commissioner dooley: i wanted to ask tangerines some questions. could you give me the statistics on the complaints coming into your office of employers

violating their notification, their excess ability to their employees? also, what is the enforcement procedure on that? can you walk me through that? >> i do not think we have actually had any complaints from employees who asked us -- you mean him. ok. >commissioner dooley: no, you. >> you are talking about the medical reimbursement account. commissioner dooley: i just wanted to know how many complaints have been filed for violation. >> i think you want matthew. >> won distinction or confusion is which agency is responsible for what function. essentially it is the office of

labor standards enforcement that enforces this requirement. one of the methods for meeting the requirement is to speak to tangerine at healthy san francisco. in the three years the law has been in place, we have initiated a little over 300 enforcement investigations. there are different ways to look at bat. we have received hundreds of inquiries and have worked with employees and employers informally to ensure that employers are meeting the requirements of the law and employees are getting the benefits that are required. some complaints do not rise to the level of investigation. with respect to the enforcement law -- enforcement arm, between 304 hundred cases have been opened during this process.