we also had an hra. i am surprised that we are talking about an amendment when there is a minority of people that have abused this. we follow the hra. it is in the employee handbook. they are given time to use it. after they terminate with us, they get 90 days to use the funds. those funds are readily available for all of our employees. the majority of our employees, after they leave us, go to a full-time position. in effect, my employees leave us and they will be double dipping. this amendment is unfair to us who have complied and have the good spirit of the hra. supervisor campos: thank you. next speaker please. >> my name is adam levin. i run several pizza parlors in the city. we cannot pass on any of the health care costs in additional fees. just an example of one store that does not make enough to pass on -- to take on additional expenses. one-third of the crew is full time, two-thirds is part time. in the past, before the city passed its mandate, full-time employees got health insurance, dental, pa

we encourage everyone of our employees to use their hra's. i just want to put my 2 cents in and say that if there were more incentives or tax breaks for small business owners to provide full health insurance to their employees, instead of something like an hra, i think that would be money well spent . i also want you to think about the jobs that will be lost by closing the profit margin for small restaurateurs with the passage of this amendment. supervisor campos: thank you. next speaker please. >> good afternoon. i am the senior director of benefits, compliance, and compensation for camden hotels and restaurants. i want to thank you for your time in allowing us to speak today. also, clarifying some of this legislation for everybody. i would also like to say that we offer an hra, in addition to comprehensive benefits that we offered to full-time employees. we do not charge surcharges at our restaurants, so we are not pocketing money as an added profit. our employees receive notice of eligibility together with the claim form and authorization

hra's, but most of us do not know about it or do not know how to access it. for a lot of us who do have money, the employers keep it at the end of the year because they do not let us know about it, or they make it complicated for us to access it, especially when our first language is not english. for example, where i work, they told us about our account. when i asked them how to access it, all they told us was to call this number, and then they would help us figure it out. >> [speaking spanish] >> i had to pay some costs out of my own pocket. when i inquired about these accounts, i was told that i no longer had the money. >> despite all this, my restaurant continues to charge customers this feat. -- fee. some customers ask what it is for, and it is for health care, even though we do not have it, and even some customers refuse to pay the fee. thank you for listening. supervisor campos: thank you. next speaker please. i have a few more names to read. [reading names] >> good morning. my name is edwin escobar. this loophole is unjust and unfair. i am a restaurant

difference between the amount allocated to hra's and the amount being expended in 2010. that is what essentially the legislation will require employers to essentially spend once it goes into effect, and that is where the economic impact starts. hra's expenditures are not even evenly distributed across san francisco employers. it has confirmed that they are concentrated in a few industries -- in particular, food services -- restaurants and bars and also the hotel industry and the retail trade industry, with fairly minor amounts of employers primarily rely on them in other industries of the economy. in terms of how this affects the economy, like many pieces of legislation, the ultimate economic impact is a trade-off. in this case, a trade off between higher costs on the employers, which is essentially higher labor costs, with the resulting benefit being the benefits of higher health care spending, both tangible and intangible, or quantifiable and un-quantifiable. in terms of the impact on costs, by essentially increasing the amount that an employer must pay annually on beh

through my research, historically, hra's have been used as a consumer health care plan model. these are often offered in tandem with a health spending account. however, although hra's are often offered in tandem with high-tech plants, it is possible to provide these without coverage for catastrophic illnesses. you have also pointed out, controlled by employers since they can decide what they want to cover and whether they want to keep the money or roll it over to employers the following year. i also had the opportunity to speak to several employee benefit experts who said outside of san francisco, hra's are not offered without a health insurance plan. they were shocked when i mentioned that this was happening in san francisco. with more research, i found several benefits, brokers within and outside san francisco were targeting san francisco employers to sell the stand- alone hra. i have some evidence here that will show -- supervisor campos: do you have a copy of that? >thank you. next speaker please. i am going to read a few names. >> committee members, i am the senior pastor

first of all, only 10% of hra's nationally do not have a rollover capacity. this is really an allied air. on the front end, the reason to allow funds to roll over from year to year is the prevention issue. the fact that employees are not currently using the hra's is not a good argument. fact is that the national health care reform debate was fundamentally about moving towards a culture of coverage, a culture of prevention and primary care. people who are not used to having health insurance and young people used to being healthy do not tend to see primary and preventive care. it is no more a reason to stop providing them access to that care than when the city started to do recycling and people were not feeling their bins -- not filling their bins. you do a mass of publication effort -- a massive public education effort to normalize the behavior. on the back end, the reason we need the rollover is the medical debt issue. medical debt is a huge and growing issue in this country. bankruptcies in california went up 14% in 2010 alone. we are now at 1.5 million bank

hra's are helpful to pay out-of- pocket expenses that healthy people have. they are not the best solution for paying for catastrophic expenses that everyone eventually has. i guess i would simply make that point. that the insurance allows people to -- everyone contributes for the few that need it when they need it because everyone eventually will. supervisor chiu: i would certainly agree with that point. i think we would all agree that health insurance is by far the better way to take care of send franciscans, as opposed to money to deal with the emergency after the fact. ok, thank you. supervisor campos: mr. egan, thank you very much for your hard work. i know that you had to spend a lot of time working on this, and we really appreciate your professionalism and the thoroughness with which you approach the task at hand. so, thank you very much. >> thank you, supervisors. i have to run to a meeting in five minutes, but i will come back if there are any further follow-up questions. supervisor campos: great, thank you. colleagues, unless you had any specific th

even if they had hra that did not zero out at the end of the year, it would not even come close. i would also like to say, as one of the restaurants turning a $1 per person surcharge, it offends me that there are so many restaurants that are putting a percentage on to the bills that we are paying and thanot providg the service. it is fraudulent and misleading. i love when people ask me, what is this $1 for? i can say that everyone has full health insurance, benefits and a 401k match. [applause] we have full benefits. i would just like to thank you, supervisor campos. i would love to see the day when the playing field is leveled and every restauranteur -- i also want to appreciate everybody who comes to my restaurants, for writing everybody with full benefits. supervisor campos: one thing that i keep hearing, it is impossible for restaurants and businesses to comply with this and still survive. what is your reaction to that? how do you do it? >> when i waited tables, i believe restaurateur's had the hardest job ever. that is not true. it is the dishwashers. i think you can do good

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 or

the hra's are not working as currently presented, and i thank you for your time. supervisor campos: thank you. is there any other member of the public who has not spoken who would like to speak? seeing none, public comment is closed. again, thank you to everyone on both sides of the issue has spoken about this. i know that president chiu and i know supervisor farrell -- ashley, he is on the rules committee, which is starting now -- actually, he is on the rules committee, which is starting now. i do not want to belabor this, but one thing that is important going forward is that we had a discussion about the legal parameters we have, and i think that is something that should have been appropriately at the board of supervisors so that the entirety of the board can hear in a closed session some of the legal issues implicated, so with that in mind, i make a move that we forward this without a recommendation to the full board. supervisor farrell. supervisor farrell: thank you, supervisor, and thank you to everyone who came out today on both sides of the aisle. obviously

supervisor campos: so to the extent that these hra's are being used in a specific way, to create these loopholes, the way that they are being used as of 2014, that would not meet federal law. >> that is right. employers using hra's today, those impacted by the federal rules in 2014, the stand-alone programs will be insufficient under the federal standards. as a result, those employers will be required to make changes in their programs. this slide is a quick example of precisely what we are dealing with, in terms of the issue that has arisen. the lot is currently interpreted such that when an employer allocates money to one of these health reimbursement accounts, the allocation count toward their expenditure. an employer who is required to provide $2,000 in spending on behalf of the worker allocates that money, over the course of a year. an employee may access only 20% of that. at the end of the year, the worker loses access to the remaining money. essentially, the employer retains the money, but they are credited with making a $2,000 expenditure when they have only made a $400 expendit

we let our people use hra for anything they want. they have got a debit card. the insurance company sends them on a quarterly basis how much they have in their accounts. some of those people only work five hours a week in san francisco but they put me over the threshold. i am considered a large business. i do not have the dollars to put up francois -- up front. >> thank you. >> we have been doing business for 25 years where a small company with slow growth. we have six stores. we cannot charge 4%, so we comply completely with the regulations. we informed our people every quarter, and i am here to give a face to what this all means. this would cost us an extra quarter of a million dollars. the last thing is the city constantly creates legislation that is incentivize those -- dis incentivizes. we are actually at the 100- employee number, and the first thing we have to do is to retreat from that. this legislation -- what it does is it takes jobs away from san franciscans in a real way, and i am here to represent that. 40 jobs will be lost. i can guarantee that. >>

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 reimburs

if you give some of them an hra that allows them to go out of your plan to pay for insurance premiums, that counts against her 75% threshold, which undermines your group plan. i am certainly not 25. you can tell by looking at me. if i was a 25-year-old employee, my group plan is more expensive than if i go out and buy it myself, because my group plan and my employer has has to cover the older workers, the people who are sick. that premium is higher. it is better for me to go by my own insurance plan, because it is cheaper. that means my employer might not hit the 75% threshold. they lose their group insurance threshold and all those employees lose that insurance. that is a real aspect of whenever your employer provides group insurance. they are trying to incentivize people to participate in that program. otherwise it undermines their ability to have the group insurance plan. it is an important distinction that did not get brought out in the reports, why employers have to structure benefits that way. i also want to clarify issues around some of the numbers expressed today. there was th

there is a slightly higher number of employers who utilize hra's, but a subset are reimbursed at 100%, so they do not retain or keep money at the end of a given year, which is what we are dealing with today. that represents just under a quarter of the covered employers would be affected by the issue we're dealing with today, who have money come back to them that they are credited for spending. when you consider the number of employers who are exempted, the 705 employers represent just 1.37% of all the san francisco employers. the final chart is a bit complicated, but we simply tried to break down the impact a little bit to indicate that the amount of money that went un- reimbursed for small employers was comparatively smaller. i think quite clearly because they have fewer employees and thus, the number of people they have and the dollars allocated to these reimbursement plans are smaller. you will see for the smallest employers covered in the range, the average amount of un- reimbursed allocations in a given year is just under $20,000. the number is a bit larger for employers in the 5

sang to the child in old lull hra byes. a boy has come and laughter has come. a son has come and beauty has come. then the child gurgled and replied even now i can hear the music in his voice. suddenly wind spirits swished in turning and made the baby happily, we'll dance through the tall grass as you and i forever free. he is taken, he is taken aboard the ship and the elements go out and look for him and they do find him in, win finds him in south carolina in charleston, earth went looking for him. after earth fire, she could not get passed the fire. water follow it had ship and wind was able to go across and follow and find him. it was after many years that wind was able to find him. i'll read that last part. [inaudible] all living in the americas, i saw the taken shackled to the land from sun up to sun down working tobacco, sugar cane and rice. i listen to them tell stories different but strangely familiar. now prayer rabbit. i stopped by kitchens and watched our women with cook yams, rice, oh kra and beans. our children had not forgotten. and i rejoice, led

understand what i have to make available to my employees under the ordinance, and what i used sonathe hra was for the tax benefit. you get 100% use of your money without it going to the employment tax system, so they can use it for another benefit if they need to use it, up because they work fewer than 20 hours a week or because they do not qualify for a health care plan. the other thing is there is no expiration. they earn it per hour. it is clear there is no expiration. i would like everybody to look at the language that employers can use that is susceptible to the city. we need notification. we need what are covered expenditures. i have of list. are believed the employment community can use a list of the it -- i believe the employer can use a list of covered expenditures. isn't that a comprehensive guide under the tax current, we need more regulation requirements. we need a determination of what happens when an employee leaves your employee. i know you have agreed to talk about these issues, and you would say we need this. particularly the smaller businesses and people conducting langu