SAN FRANCISCO —When a Chinese-American restaurant worker submitted a reimbursement form to his boss after a visit to his doctor, he was told he couldn’t get reimbursed because his health plan “only covers certain types of care.”
Another Chinese-American worker was told by his boss that if he agreed to not seek reimbursement for medical expenses, the employer would “reward” him with a $30 kickback every month, according to Shaw San Liu, an organizer with Chinese Progressive Association, a grassroots organization that works with immigrants and low-wage workers.
The two scenarios described by Liu are not all that unique, as was obvious from the 30 or so workers who showed up at San Francisco City Hall yesterday to support an amendment that would stop employers from taking advantage of a loophole in a city ordinance that requires businesses to provide health care for their employees.
The Health Care Security Ordinance (HCSO) was implemented by the city in 2009, creating a mandate for businesses with more than 20 employees to provide them with some level of healthcare, or access to healthcare.
Some small businesses opted to comply by putting money into a Health Reimbursement Account (HRA) – a flex-plan that their employees can draw from during the year to pay for certain health care services.
According to the city’s Office of Labor Standards Enforcement, in 2010, the vast majority (90 percent) of San Francisco employers provided their employees with traditional health care plans; only 3 percent enrolled their employees in Healthy San Francisco, a sliding-scale public program; and the rest (7 percent) provided their employees with the HRA plan.
For every hour an employee works, the company puts $1.37 into their HRA, which translates to about $2,000 a year for a full-time employee.
But a loophole in the law has inadvertently created a financial incentive for employers to restrict employee access to the HRA accounts, according to the San Francisco Labor Council. By placing arbitrary restrictions on employee use of the HRA funds, employers can reclaim more than 80 percent of the money they put into those accounts at the end of each year, explained Ramneek Saini, community services director with the San Francisco Labor Council.
Many of these businesses, such as restaurants, are also levying surcharges on customers to pay for the employee health care expenditures. At least one restaurant owner, Jennifer Piallat, of Zazie Restaurant, was able to purchase regular health insurance for her eligible employees through surcharge fees.
“The problem is that most of these accounts are set up with ‘use-it-or-lose it’ provisions,” explained Supervisor David Campos, who yesterday proposed an amendment to plug the HRA loophole. “The employers are credited with making the expenditures, but the balances in the accounts are wiped-out at the end of every year (or when the worker quits or gets fired) and the employers keep the money.”
Some employers, said Liu, don’t even tell their employees that they are eligible for the HRA plan, especially if the employee is an immigrant and has language barriers.
“There is a financial incentive for employers not to let their employees know about the flex-plan,” Saini said, noting that last year, of the $62 million deposited into the plan, $50 million went back to employers and only $12 million was accessed by employees.
The Campos amendment would close the “don’t-get-sick-in-January” loophole, as Campos calls it, by clarifying that employers are only credited for satisfying their Employer Spending Requirement if they actually spend the money on their employees’ health care. In other words, the amendment requires funds placed into the HRAs to rollover from year to year so employees can have meaningful protection if they fall ill or are injured. It also allows employees to save for or pay medical bills over time or to use the funds to purchase their own insurance.
The 3-member Board of Supervisors Government Audit and Oversight Committee, comprising of Supervisors Campos, David Chiu and Mark Ferrel, voted 2-1 to hold the amendment for further review. But Campos is optimistic he can get four other supervisors to vote for the amendment when the full board meets July 26.
An estimated 60,000 city residents were uninsured at the time the HCSO program officially began, in July 2007. An unsuccessful legal challenge by the Golden Gate Restaurant Association, which represents restaurants statewide, delayed its implementation until January 2009.
It has now covered about 75 percent of the city’s uninsured at a cost of roughly $120 million a year, including city money, state grants, employer contributions and participants’ fees. The average monthly cost per person is $280.
At yesterday’s hearing, at least a dozen businesses showed up at City Hall to oppose the Campos amendment, saying it will hurt them. But supporters of the amendment – many of them immigrant workers – far outnumbered them.
“Last year, I had to spend a lot of money when I got sick,” said Raciel Esperanza, a waiter at a San Francisco restaurant, and a supporter of the amendment. “I couldn’t get reimbursed for my out-of-pocket expenses, which is a hardship for me. I also wasn’t allowed to use the funds for dental, vision, or even to purchase my own insurance.”
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