San Francisco’s Health Care Security Ordinance (HCSO)
For employers with covered employees working in San Francisco, the requirement outlined by HCSO is clear: You must spend a defined amount on healthcare for each eligible employee. Compliance is mandatory. How you choose to spend that money is up to you.
At Evolved Benefits, we provide affordable HCSO solutions so you can meet requirements while creating a usable, accessible experience for employees and a manageable process for employers.
Current Health Care Expenditure Rates for 2025 / 2026
| Employer Size | Number of Workers | 2025 Expenditure Rate | 2026 Expenditure Rate |
|---|---|---|---|
| Large | All employers with 100 or more workers | $3.85 per hour | $4.11 per hour |
| Medium |
Businesses with 20 to 99 workers Nonprofits with 50 to 99 workers |
$2.56 per hour | $2.74 per hour |
| Small |
Businesses with 0 to 19 workers Nonprofits with 0 to 49 workers |
Exempt | Exempt |
What Does HCSO Require?
The Health Care Security Ordinance requires certain employers operating in San Francisco to make healthcare expenditures on behalf of their covered employees. Execution can vary widely depending on how the plan is structured.
HCSO requirements include:
Who is Covered by the SF-HCSO?
Minimum Health Care Expenditure depends on the size of the employer. It is calculated by multiplying “hours paid” by the rate listed annually by the CA State and City of San Francisco.
“Hours paid” includes hours an employee is paid for work, as well as paid vacation, PTO, and sick leave as long as the hours are worked in San Francisco.
Covered Employees
Non-Covered Employees
Employer Options for SF-HCSO
Pay for Major Medical
High monthly cost, typically $200–$300 per employee.
Part-time and seasonal employees still require additional solutions to meet city requirements.
Pay The City
Funds are allocated to a reimbursement account with limited access to care.
Employees pay upfront and wait for reimbursement, with unused funds reverting back over time.
Enroll in Evolved Benefits Plan
ACA-compliant MEC plan with office visits, telemedicine, RX, hospital care, and dental.
Nationwide network with strong local access and a more usable employee experience.
HCSO vs Competitors vs Evolved Benefits Plans
Evolved Benefits, powered by SBMA’s Gold Standard Benefits Administration, brings clarity and consistency to HCSO compliance. Employers are supported through a centralized system that handles eligibility, enrollment, ID cards, and ongoing reporting, reducing administrative burden while keeping everything aligned. The result is a smoother experience for both employers and employees across the San Francisco workforce.
| Feature | City of San Francisco | Competitor | Evolved Benefits |
|---|---|---|---|
| Virtual Health | ✕ | ✕ | ✓ |
| Single Point Administrator | ✕ | ✕ | ✓ |
| Unlimited Co-Pays | ✕ | ✕ | ✓ |
| Dental / Vision | ✕ | ✕ | ✓ |
| Prescription Co-Pay | ✓ | ✕ | ✓ |
| ACA Compliance | ✕ | ✓ | ✓ |
| CA Individual Mandate Compliance | ✕ | ✓ | ✓ |
| Hospitalization | ✕ | ✓ | ✓ |
| Provider Network | ✕ | ✓ | ✓ |
| Nationwide Network | ✕ | ✓ | ✓ |
Frequently Asked Questions About San Francisco HCSO
What is the San Francisco Health Care Security Ordinance (HCSO)?
The HCSO is a local law that requires certain employers with employees working in San Francisco to spend a minimum amount on healthcare for each eligible employee. The required spend is based on hours worked and employer size.
Which employers are required to comply with HCSO?
Eligibility is based on hours worked in San Francisco, not where the employee lives. Employers must comply if they:
- Have employees working in San Francisco
- Meet minimum employee thresholds
- Have employees who work a set number of hours within the city
What counts as an HCSO healthcare expenditure?
Employers can meet the requirement by:
- Offering qualifying health insurance plans
- Contributing to reimbursement arrangements
- Using approved healthcare programs that meet the spend requirement
The key is that the spend must meet or exceed the required hourly amount.
Does HCSO replace ACA requirements?
No. HCSO is a local requirement and operates alongside federal ACA rules. Employers still need to meet ACA standards, including offering Minimum Essential Coverage (MEC) to avoid federal penalties.
Can MEC plans satisfy HCSO requirements?
Yes, when structured correctly. MEC plans can be designed to meet both ACA requirements and HCSO spend requirements while providing employees with access to preventive and routine care.
What happens if an employer does not comply with HCSO?
Employers may face penalties, back payments, and administrative actions if they do not meet the required healthcare spend or fail to track and report accurately.
What is the “City Option” under HCSO?
The City Option is a program administered by San Francisco where employer contributions are placed into a medical reimbursement account. Employees can use those funds for eligible healthcare expenses within the program’s structure.
Can employees outside San Francisco use HCSO benefits?
HCSO eligibility is tied to hours worked within San Francisco. Access to certain programs, like the City Option, may be limited based on location, while employer-sponsored plans can provide broader access.
How do employers track HCSO compliance?
Employers must track:
- Hours worked within San Francisco
- Employee eligibility
- Healthcare spend per employee
- Required reporting and documentation
Centralized administration systems help simplify this process.
How can employers simplify HCSO administration?
Employers can reduce manual work, improves accuracy, and streamline compliance by using a benefits platform that integrates:
- Eligibility tracking
- Enrollment and onboarding
- Payroll coordination
- Reporting and documentation
What kind of healthcare benefits can be offered under an HCSO plan?
Plan structure depends on how the plan is designed to meet both compliance and workforce needs.
- Office visits and primary care
- Telemedicine
- Prescription support
- Lab and diagnostic services
- Hospital-related coverage
- Dental and vision options
Why do employers choose structured HCSO plans over the City Option?
Many employers prefer structured plans because they create a more consistent benefits experience across the workforce.
- Broader provider access
- More predictable employee experience
- Integrated administration
- Clear alignment with ACA compliance
How do brokers support employers with HCSO compliance?
Brokers help employers by guiding both the setup and ongoing management of the plan.
- Understand eligibility and spend requirements
- Select appropriate plan structures
- Align HCSO with ACA compliance strategies
- Implement and manage benefits over time
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