2026 San Francisco HCSO Expenditure Rates

San Francisco’s Office of Labor Standards Enforcement (“OLSE”) has released the 2026 Health Care Security Ordinance (“HCSO”) employer expenditure rates. Covered employers must now meet updated minimum per-hour health care spending thresholds for employees working in the city. See the updated table below and what it means for planning and compliance.

2026 HCSO Required Health Care Expenditure Rates

Who’s Covered by the HCSO?

Covered employers include for-profit businesses with 20 or more employees (anywhere) or nonprofits with 50 or more employees, as long as the employer has at least one worker in San Francisco and holds a valid business registration certificate.

Covered employees must:

• Earn at least the minimum wage,
• Be employed for more than 90 calendar days,
• Work at least 8 hours per week in San Francisco, and
• Not fall under one of the exemption categories.

Exemptions

Starting in 2026, managerial, supervisory and confidential Employees that earn more than $128,861 per year (or $61.95/hour) are exempt.

Employer Action Items

• Assess your eligibility as a covered employer under the HCSO.
• Pinpoint covered employees, including tracking remote and hybrid work that occurs within San Francisco’s boundaries.
• Calculate your expenditures using the updated rates:
  • For insured plans, ensure your contributions meet or exceed the hourly threshold.
  • For employees who waive coverage without completing a valid waiver form, or whose employer contributions don’t meet the requirement, you must submit the difference to the SF City Option (often via individual Medical Reimbursement Accounts) typically on a quarterly basis.
  • If you offer self-funded plans, calculate annual actual claims versus required expenditures; any shortfall must be “topped off” by the end of February of the following year.

Reminders & Due Dates

• Posting: Display the official HCSO poster in all employees’ workplaces. A 2026 version will likely be released by December—post it by January 1, 2026.
• Annual Reporting Form: Submit the HCSO ARF, which also covers the Fair Chance Ordinance. The form should be available by early April and is due April 30, 2026 (or nearest business day).
• Recordkeeping: Retain records for at least four years, including pay statements, health plan expenditures, and waiver forms.

Additional Comments

With the 2026 HCSO rates increasing about 7%, employers should act now to integrate these changes across benefits strategies, from insurance budgeting to City Option contributions and internal tracking of hours worked within San Francisco.

Stay compliant and avoid penalties: ensure spend meets the new thresholds, posters are displayed, annual reporting is timely, and accurate records are kept. The HCSO isn’t just another policy, it’s a critical aspect of benefits compliance for employers operating in San Francisco.

Administrative Guidance

• Section A: Overview
• Section B: Covered Employers
• Section C: Covered Employees
• Section D: Calculating Health Care Expenditures
• Section E: Making Health Care Expenditures
• Section F: Revocable and Irrevocable Health Care Expenditures
• Section G: Contributing to the SF City Option
• Section H: Employer Notice-Posting Requirement
• Section I: Employer Recordkeeping Requirements
• Section J: Employer Reporting Requirements
• Section K: Health Surcharges

Other Resources

• Health Care Security Ordinance
• HCSO Employee Voluntary Waiver Form