will be made for them. >> the good news is that allows an individual to buy health insurance, and use that money to actually buy subsidized health insurance on coverage california. >> and so you can see here, that 20 percent of all employers contributed to the city option, in 2012. and 18 percent, had or were small businesses with fewer than 50 employees, and small businesses were less likely to rely on the city option than on other methods of compliance. and this is the comparison. and so the contributions are it is same and both by the employer and meant to show the key differences between the two and so the contributions are the same and the employer contributes on behave of the employee and it meets and it has met in the past, the

employer's healthcare security ordinance requirement. it rolls over and requires that the funds be made available to the employee for 24 sxhos after 24 months, the funding reverts back to the employer. and the average expenditure rate for the hras is about 25 percent and so what this means is particularly for small business and why small businesses may be disproportionately impacted, the small businesss that rely on and so budgeting for the expenditure and it may be costly for a small business in

particular. >> the city mra,plan. and they take it back from the account, and the funds are technically available to the individuals. and at termination of employment, that is different, also. and for employee, at the termination of the employment, the funds revert to the employers for the health reimbursement accounts and for the medical reimbursement, they remain available for the employees and they stay in an account with us, as long as the employee is able to and it can access it and as often as they like until it is exhausted.

>> the types of there is only one kind of city option mra and after the aca market reforms and this is also another area of key difference and i mentioned the area of the key difference on what happens to the funds and reverting to the employer and staying with the city is one key difference and so making the full expenditure verses making it on the utilization of the employee and that is different. but also s mra allows the individual to use those funds to purchase health insurance on the exchange. and hras may are may not be allowed to do that and the employers can determine how they want them them to be spend and going forward, it won't be

and we will not be able to use those funds for purchasing health insurance, coverage, and only for purchasing vision or dental coverage and so, the mra option, really gives the person another opportunity to buy health insurance on the exchange. >> so, this is my final slide, and this is really the impact of aca market reforms on the employers compliance choices. so, group health insurance is still by far, that the method that we expect most employers will use to comply with both the aca and the healthcare security ordinance. and it is the gold standard and it is what is best for the individuals as a person from the health department and the health insurance is better than uninsurance and it provides people with stable access to healthcare service and it protects them financially from

catastrophic illness. and so this is really the gold standard and this is how the employers are complying today and will continue to comply in the future. >> the health insurance, and it can no longer comply with the stand alone unless it is the benefits for the other benefits that are not covered by the health insurance. and, the city option, the city option will continue to remain but more people will be eligible for health insurance, but the medical reimburse accounts will be there for those who make contribution to them and so the employees can purchase the health insurance and have other healthcare services reimburse and so that is the conclusion of my presentation, and i can turn it over to the office of labor standard enforcement and i am happy to answer the questions from you now whichever you prefer. >> okay. >> and it is up to you.

>> let's take some questions, first. mark, commissioner dwight? >> okay, so an affordable option, but the employee elects to be covered by a plan that a significant other has because it is favorable, and how is that situation dealt with, as the employer still have an obligation? they still have a healthcare obligation and will have to make a expenditure in a different way, is that true? >> yes. and i just don't get that, because the objectivity here, is not to penalize the employers it is to provide coverage and so what you are doing is double dipping, you are just saying, whether you can get insurance or not, we are coming to get money from you. >> and i don't understand that. >> as an employer myself. >> sure, with more than half of my employees. >> and the intention there is that the employee could have

other expenditures reimbursed and suppose that it went to the city option, if he was an employer and contributed to the city option and that person has health insurance and so they would be ineligible for healthy san francisco and that funding could instead go to the city, mra and the city could reimburse for the out of pocket expense and so if they have a high deductible and co-pay and those things could be reimbursed on behalf of the employee. >> so this employee is then going to not only take advantage of their spouse's insurance, but now, also be eligible take advantage of sub, and extra reimbursements from the city, is that what you are saying? >> the individual would have healthcare expenditures on their behalf and their significant other would have expenditures on their behave and they will have the total of the two, yes. >> and any other commissioner questions? >> i think that i probably want to hear from them. >> okay. >> and so to hear from the

office of labor standards enforcement. questions? >> i see, all right. good evening, commissioners, my name is ellen love and i am with the office of labor standards enforcement and thank you for having us here tonight and also, many thanks to coleen for a great overview of these complex policy area and fortunately she covered almost everything and so we don't have that much territory to cover and we did want to bring your attention to the guidance that we or our office of the office of labor standards has recently issued on the hcfo and related to the affordable care act and we also wanted to notify you about upcoming reporting deadlines, and a upcoming rule making process and so we will be conducting.

>> so the office of the labor enforcement issued faqs on the intersection, between the healthcare security ordinance and the affordable care act. and releases between october 21st of last year and december 20th and that covered three areas, one is general questions, about the affordable care act. and the hcso and coleen covered all that have pretty well and the second area is the area of accepted benefits, and which she discussed briefly when she talked on the accepted benefits, hras that are now an option. and the third area is the funds remaining in the stand alone medical hras at the end of 2013 and that is something that i am going to talk a little bit more about now. and the other thing to note is

that the ofc may issue additional guidance on these issues as we move forward as you may have noted it is a complex policy area and additional questions may arise. and we will be looking at those issues moving forward as well. and you have been provided with copies as well. >> and so, remaining hra balances and so if you have been using a health reimbursement account to compile them, what you do at the end of it, and at the end of 2013 and moving into 2014. and so, first of all, the hcso requires that funds contributed to a health reimbursement account be available to the covered employee for a minimum

of 24 months and that does not change, and so what has changed is the federal rule is that governor these accounts and so the affordable care act provides that new contribution to stand alone medical hra, are not permitted after january first, 2014. and so, that is one provision and the other new provision that is relevant and in this instance is having a stand alone, medical balance makes an employee ineligible for tax credits if they purchased health insurance, through coverage california and, through the exchange, and so that is going to effect employees, who are eligible for federal subsidies, on the exchange, which is employees whose household income is between 138 and 400 percent of the federal poverty line and to just give you a sense of what that means in real terms for a family of three, that is a

household income between $26,951 and $78,921 and so the people in that household income range could be affected by this policy. >> okay. so, we, our office, started getting questions, and about what the options are for employers. and who have these hras and 23e fung they still have money in these hras at the end of 2013 and what are the options for the employees in terms of using these accounts are regarding their eligibility for federal subsidies. and so, in this little chart, we have tempted to show, sort of what the options are. and so if you have a stand alone hra allocations that remain available to the employees for hours prior to january first of 2014, there

are two options, the upper track is that the employee opt out of the hra. and that means that if they opt out, there are two things to note first is that the employee immediately becomes eligible for federal subsidies on coverage california and so if they are in that pool between 138 percent and 400 percent of the federal poverty level, then once they opt out of the hra they become eligible for the federal subsidies and the second thing to note is that if an employee opts out of the hra, before those funds have been available for that full 24-month period that is required, the employer has to make equivalent healthcare expenditures on that employee's behave and the reason for that is that because they require that the funds be available able for 24 months if the employee opts out and then the

funds were not available for that full 24-month period and so the employer needs to find a different way to make those healthcare expenditures and so for example, if an employer made a contribution $1,000 contribution for an employee in july of 2013, and then, none of those funds were used and the employee opts out in january of 2014, then, the employer has to find a different way to make healthcare expenditures of $1,000 for that employee, for that remaining hra balance. okay and then the second option is that the employee would not opt out of the hra. the stand alone medical hra to be specific. and in that case, the employee is ineligible for the federal subsidis that we talked about, however, the employee may still

purchase health insurance. if it allows to seek reimbursement for the healthcare premiums they could buy the health insurance on the exchange at an unsubsidized rate and seek the reimbursement for the health insurance premiums from the employer's hra and so that is an option and so it has to be available for a minimum of 24 months from the date of the contribution. >> so that is or covers the basic faqs there are more details on that issue remaining hra balances in the faq and we are happy to answer the questions, if you have questions about that. >> i also wanted to bring your

attention to the fact that they will be conducting rule making, and fairly soon, and at this point, to codify it and to clarify a few other out standing issues in the hso and in that process, we will be soliciting public comment and we hope to hear from all stake holders including those of you in this room and the interests that you represent and we hope that you will sign up for the hcso e-mail list which is available on our website. and we will also be in touch with richie about that process to make sure that you are all aware of that as we move forward. >> commissioner dwight? >> hi, yeah, do i have a question for you, doing back to the other slide with the chart because i am a little bit confused, if they choose not to opt out they can use their

funds available to buy california coverage? i thought that once you sign up you are not eligible for those funds? it seems a little... did i miss something? >> so if they don't opt out, they still have the hra, and they can get health insurance through coverage california, and what they are not eligible for is the federal subsidies. so they would have to pay about it. >> the full rate. >> the full rate, yeah. >> that is what i want to hear. >> okay. and then the next question was if they do opt out, and you say that they have funds available, and in their hra. and the employer must have that balance equivalent in some healthcare and how does the employer do that? >> and any valid healthcare expenditure is an option, so some of the options that i know i have heard the employers say that they are claiming to use. and include contributing to the

state option, or paying for health insurance premiums, medical, dental or vision, or, you know, any other valid healthcare expenditure. so, is the, under the california, so they are, what was it, the other benefits for vision, ben tal and they would have the access to that. >> i guess if they have their hr funds that were contributed to it, would they just be transferred over to use for dental, vision? >> if you are referring specifically to the issue of transferring from a medical stand alone medical hra for an accepted benefits. >> yeah. >> that is an issue that has not specifically been addressed >> okay, okay. >> so it is going to be a completely separate account going forward in 2014? but they can't use. >> i think that that is an outstanding question that we may be able to addressed.

>> okay. in the future. >> okay. >> commissioner dwight? >> yeah, i am not going to... okay. >> do you want to take any more questions before we take public comment? >> i do have one more slide,. >> okay. >> the rule making and then the last thing that i wanted to mention is just that the annual reporting requirement, which is relevant to the small business, remains in effect, and there is the annual reporting firm that is due by april 30th of this year and the osc will be posting the form in early march on the website and we will be notifying the businesses by mail and by e-mail. so, you can look out for that as well. >> okay. >> and it should be fairly similar to last year's report but we may ask a couple of additional questions about hras. >> okay, commissioner dooley? >> i wanted to ask when the city option website will be

updated to reflect that a business can utilize the city's mra, for san francisco, employees. >> i will let coline speak to that. >> we are in the process of doing that right now. so we are, and we contract with the san francisco health plan to do all of our administration of the city option, and we are working with them to update the website to reflect the accurate information. >> and commissioner dwight? >> okay. just want, and two quick questions, and yeah, just to make regards to the mra and in compliance with the affordable care act, and the mra did not change at all to comply and it was okay, exactly the way that it was. >> my understanding and i am going to get into the legal territory and i am not a lawyer, and the difference is that the city option is a public benefit program and so it funnels the person into the thing that they are eligible for and so, the city mra is a

public benefit program, which is why it is treated differently than the stand alone health reimbursement account. >> all right. and then i would just want to know, from that is there a quick, like a bullet point listed for the employ ears and because i feel like the small business committee is dark in this area about what to tell the employees and like your contributions stopped, you know, as of january first, 14 and you know, there was just something out there that is just, straight forward for employees, or employers to let the employees know what is going on >> that is a great question, but i think that there are many, resources about the affordable care act in general, that are fairly straight forward that maybe we can point or pass along to regina, we are actually working on something specifically about hras, and

that we are working on with dph, that hopefully it will be fairly straight forward. that we can provide to you, that will pass it on. >> there is also a section in our faqs that is specifically for the employees. >> okay. >> any more commissioner questions before we go into public comment? >> okay, seeing none, i would like to open it up now to public comment. and item number 6, do we have any members of the public who would like to make a comment? >> welcome. >> good evening, >> tim, san francisco calm ber of commerce and thank you for taking the time on this subject and we have been spending months working with the health department and on the sc on this and we appreciate their hard work as we all tried to understand the implications of the affordable care act and its impacts in this transition year on the employers and because

the employer mandate catches up with us next january. and the limitations on reimbursement, and they are available. to employers, and under the healthcare spending ordinance in san francisco. this is a huge problem, it is a huge problem for small businesses, with 20 or more employees, who don't provide insurance or have a large part time workforce because the number one way that those thousand employers have attempted to comply with the spending requirements is to create health reimbursement accounts, and those health reimbursement accounts are drastically limited to the affordable care act that you have heard. there is probably 80 million dollars of rollover money that ends up not being spent every 24 months. that 80 million dollars, is not from 27,000 employers. and or 10,000 employers, that

80 million dollars is on the books of 1,000 employers. and 80,000 dollars per employer, on average, i would guess. and that is because the average employee is actually looking for dental and vision care under the hras and that is where most draw downs occur. and not in the general medical care area, because a lot of these people are young, and these people that ought to be getting insurance under coverage california or should have been insured any way. and we are confronting a huge job in business bottom line crisis. and if hras the limited hras that are allowed, are not going to be allowed in san francisco, and the proposal in the faq, which is going to have to go over into a rule making process, i guess for the next few months, is going to limit employers to only credited 20 hours of dollar amounts per

week towards an accepted benefits dental, vision, hra which means that other money is going to have to be spent other ways, which is not reimbursable, if it goes to the city mra, where it is a 50 or 60 percent draw down, and it is not 100 percent. but you spend 100 cents on the dollar, when the money goes from your pocket to the city mra. and whether that is the goal and i mean that we went through this battle, two months, or two years ago. and we had a piece of legislation be, or we had some compromised legislation signed by the mayor that created the 24 month rollover but still gave the employees, or the employers the opportunity to select a cost effective method for complying with the city ordinance and we need your help on this matter in the coming months, thank you. >> great. >> thank you very much. >> next speaker please? >> good evening, the small

business network and the accounts merchants and i would like to focus on a lot. and how is this going to put san francisco small businesses to an advantage to all of the competitors and whether they are the peninsula or the rest of the state or the country and a lot of this is how are they going to catch the employers that are not doing this or the employers who do not even know about it. and a lot of it is employees will make a complaint. and if the city is going to buy a whole bunch of microphones and they put it out to bid and somebody in mississippi decides to sell it to them, do those employees at that company selling this to the city, get the same things that we have to give to our employees? i don't think so. and i think that it is hard to catch. the caters who are down stairs now at city hall, are they going to be mandated to do this, and how is anybody going to catch that, it puts us at a very much disadvantage here in

the city for small businesses. i think that that is something that we have to really look into. thank you. >> great, thank you. >> next speaker, please? >> scott how, town insurance. and i think that one of the things that is significant is that most small businesses will probably most small businesses are using 35 or 40 hours aca requires, 30 hours, and dropping it down to 20 hours, and i understand the obligation, but saying that the accepted benefits will only go up to 20 hours, and i don't fully understand why that is required, the other aspect is that i am not clear, if you go into the accepted benefits, and i believe that it says, that you can use over 20 hours if the employee actually files for

additional payments on dental or vision. and i seem to hear from the city in this, and maybe i misunderstood, but i seem to hear from the city that the employer is supposed to true up every quaut and her i don't know how they do that, and if you have it go into for a year or even two years to determine whether the employer is going to use it. so i think that there is some real questions there. commissioner white, i applaud you for your question about how the employer is going to comply, there is so much confusion out there right now, with the employees. and the employers, and the employees, for that matter, and on how to comply and i am also a little concerned about the administration of all of this. and with the multiple hra and how to comply and what the time limits are, but i really think that it is important that the city put out something to clearly identify how to comply. thank you. >> thank you. >> thank you. >> any other speakers?

>> seeing none, public comment is closed. commissioners, this was agenda as an action item in case there was any specific action, you are not required to take any action. so, eventually the commission is going to put forward a list of recommendations and relationship to the report, and guidance and to the city? terms of you know the direction that we are going in, participating in, more further development of perhaps, with the faqs and so, you are welcome to provide some sense of that, you know, through your comments and direction to the city tonight. and then we can take that information and as we start

working on a formalized letter of recommendations, that it will be good for christian and i and also for other city family to hear what you are thinking, and you are thinking, and your thoughts, and where you have confusion, and where, the things of that sort, but, there is, and you do not, and it is agenda as an action item, but, i did not anticipate that you would be taking any formal action tonight. but it was there just in case. commissioner dwight? >> personally, well, first of all, thank you all for your presentations and for coming out tonight, personally, i would like to let this information percolate a little bit. and also as an employer that is in the gap between 20 and 50, i would like to go back and talk to my benefits consultants and understand kind of where we are and so i can get the real world's view of this. and because i think that