Supervisor Campos seeks to close HRA "loophole" in San Francisco health care law

San Francisco ' Supervisor David Campos on July 14 proposed an amendment to the city's Health Care Security Ordinance that would tighten the definition of employer "spending" so only amounts actually paid or irrevocably committed to pay for employee health care would satisfy the law's employer spending requirement. The measure targets stand-alone health reimbursement accounts (HRAs) that, the sponsor and city staff say, have been credited as employer spending although employees rarely access the funds.

"This loophole is problematic for many reasons," Campos told the Government Audit and Oversight Committee, saying the change is intended to protect workers, consumers and taxpayers and to level the playing field for businesses that already provide insurance. He asked the committee to forward the item to the full board for action.

The Office of Labor Standards and Enforcement presented data showing that in 2010 employers allocated about $62,000,000 to reimbursement plans but only about $12,000,000 was actually reimbursed to employees that year, leaving roughly $50,000,000 retained by a subset of employers, according to OLSE analyst Matt Goldberg. Goldberg also said the average annual utilization rate for these HRAs was about 20 percent, compared with…