San Francisco contractor-lessee health plan standards, pay rates updated 

September 5, 2025

San Francisco contractors and lessees (and their subcontractors and subtenants) may have to provide covered employees with health coverage meeting minimum standards or make an alternative payment under the Health Care Accountability Ordinance (HCAO). The Department of Public Health (DPH) has announced 2026 minimum standards for covered employees’ health coverage starting on Jan. 1, 2026, and alternative payment fee increases effective July 1, 2025. Minimum standards and alternative payments also apply for covered employees at the San Francisco International Airport (SFO) under the Healthy Airport Ordinance (HAO), which amended the HCAO in 2020. Finally, covered service contractors and airport tenants are subject to minimum compensation rates and time-off requirements under the city’s Minimum Compensation Ordinance (MCO).

The Office of Labor Standards Enforcement (OLSE) enforces all three ordinances. HCAO requirements have different effective dates to keep in mind:

• 2025 health plan standards — Jan. 1, 2025
• Rate adjustment for alternative payments — July 1, 2025
• 2026 health plan standards — Jan. 1, 2026

For specifics on the 2025 requirements, see OLSE’s 2025 minimum standards document.

An employer may have HCAO compliance obligations if it has an HCAO-covered contract with San Francisco city and county or an HCAO-covered lease at SFO or the Port of San Francisco. These obligations also apply to subcontractors and subtenants and are set forth in the terms of the applicable contract or lease. The contract or lease must be for at least $25,000 annually ($50,000 for nonprofit employers). Covered employers include for-profit employers with more than 20 employees anywhere in the world (more than 50 employees for nonprofit employers).

A covered employee includes any employee working at least 20 hours a week for a covered employer anywhere in the United States under the employer’s contract or lease with San Francisco. San Francisco contractors and tenants must offer minimum health benefits at no cost to covered employees under the HCAO and HAO.

HCAO requirements should not be confused with San Francisco’s Health Care Security Ordinance (HCSO). For detailed information on the HCSO and compliance requirements, see San Francisco hikes 2026 Health Care Expenditure rates (Aug. 12, 2025).

The DPH-issued HCAO minimum standards require plans to cover all services listed in California’s current essential health benefit (EHB) benchmark plan (CA benchmark plan). The standards apply to self-only coverage and do not require dental or vision benefits. The 2026 HCAO minimum standards reflect changes in only two categories, most notably the annual self-only out-of-pocket maximum (OOPM), which will be $10,600, per ACA FAQ Part 71. Employers must also conspicuously display an OLSE poster at each San Francisco worksite.

Employers must annually obtain covered employees’ signed acknowledgment of receiving and understanding the HCAO Know Your Rights notice (updated on July 1, 2024). Employees may waive their coverage rights by signing an approved waiver form. Employers must retain signed notices and waivers for four years after the applicable contract expires. All notices and posters must be available in English, Spanish, Chinese and any other language spoken by at least 5% of employees at the workplace or job site. Templates are also available in Filipino.

Besides covering EHBs, a contractor's health plan must comply with these 16 standards :

All gold- and platinum-level plans offered on the ACA’s HealthCare.gov platform and plans with an actuarial value of at least 76% are compliant if they meet requirements #1, #5 and #8 through #16 above. Employers may offer other health plan options but must include at least one option that meets HCAO standards available at no cost to covered employees. A compliant plan option may be self-funded or fully insured.

DPH has revised the FAQs and common clarifications document addressing key issues, including:

• The alternative payment described below does not count as insurance and is not a direct benefit to San Francisco employees.
• Employers with coverage written in another state should seek an insurance rider for the San Francisco-required services not covered or obtain a compliant plan written in California.
• Any quantity limits on coverage must meet the specifications in the CA benchmark plan. For example, the CA benchmark plan does not have quantity limits on bariatric services.
• The HCAO does not require pediatric dental or vision coverage. However, adult routine eye exams must be covered.

HCAO-covered employers that do not provide minimum benefits must pay the DPH an additional hourly amount for employees covered under a San Francisco contract (e.g., with the city, the San Francisco Airport or the San Bruno Jail). For covered employees under a contract outside of the city and county of San Francisco, employers must make these payments directly to the employees. The payment is capped and changes annually for inflation, effective July 1. The current rate is $7.50 per hour with a weekly maximum of $300.

Employers should remit these amounts along with the HCAO payment option form. Employers selecting this option need not collect waivers from covered employees.

The HAO amended the HCAO in 2020 to include employers and employees covered by SFO’s Quality Standards Program, which provides comprehensive safety and security rules for the airport. Covered employers must provide health plan coverage meeting these standards:

• The employer pays 100% of the self-only portion of medical coverage.
• The plan option is actuarially equivalent to a platinum-level plan on HealthCare.gov (i.e., at least 90%), allowing for a de minimis variation permitted under the ACA rules.
• The plan option coverage includes benefits in the CA benchmark plan, including pediatric dental and vision benefits (which can be on a stand-alone basis). Beyond that, no other cost-sharing requirements apply.
• Coverage must be available to the following dependents: spouses or registered domestic partners and the covered employee’s children (including any legally adopted child, recognized natural child, stepchild, foster child or minor legal ward).

Alternatively, employers may contribute to the City Option program. The current City Option contribution rate (effective July 1, 2025 – June 30, 2026) is $12.15 per hour, subject to a $486 weekly maximum.

Besides the health coverage requirements, a separate set of standards for minimum compensation and time off may also apply. The MCO covers most service contractors, as well as tenants at SFO. The law generally requires covered employers to provide their covered employees:

• The minimum MCO hourly wage currently in effect
• 12 paid days off per year (or the cash equivalent) for vacation, sick leave or personal necessity (prorated for part-time employees)
• 10 unpaid days off per year (again, prorated for part-time employees)

Minimum hourly pay rates vary by employer type and change annually for inflation, effective July 1. Here are the rates currently in effect from July 1, 2025, through June 30, 2026:

Covered employers should evaluate whether they and their workers are covered by the HCAO, HAO and/or MCO by reviewing their San Franciso city and county contracts and leases. If subject to HCAO, covered employers need to ensure appropriate coverage, payments, notice and other compliance requirements for 2025 and the changes that become effective on Jan. 1, 2026. Other tasks include evaluating plan designs against HCAO standards, especially for employers sponsoring a self-funded plan (or a fully insured plan issued in another state). Those employers should review the CA benchmark plan, which includes coverage of services that might normally be excluded (for example, bariatric surgery, acupuncture and temporomandibular joint disorders). Employers are encouraged to reach out to DPH for any questions about compliant plan designs.

An employer that has determined that it is not subject to the HCAO, MCO or HAO should also review HCSO requirements to determine if those standards may apply to its San Francisco workforce.

• ACA FAQ Part 71 (July 30, 2025)
• California's essential health benefit (EHB) benchmark plan (Centers for Medicare & Medicaid Services (CMS))
• Premium adjustment percentage, maximum annual limitation on cost sharing, reduced maximum annual limitation on cost sharing and required contribution percentage for the 2026 benefit year (CMS, Oct. 8, 2024)
• HCAO (OLSE)
• HAO (OLSE)
• MCO (OLSE)
• San Francisco labor laws for city contractors (OLSE)
• HCAO minimum standards: FAQs and common clarifications (DPH, Aug. 19, 2025)
• HCAO payment option form (OLSE, June 23, 2025)
• HCAO Know Your Rights notice — July 1, 2025 (OLSE, May 28, 2025)
• HCAO minimum standards, effective Jan. 1, 2026 (DPH, Aug. 19, 2025)
• HCAO Notice to Employees poster — July 1, 2025 (OLSE, May 27, 2025)
• HCAO Waiver Form (OLSE, June 20, 2019)
• MCO Know Your Rights notice — July 1, 2025 (OLSE, June 20, 2025)
• MCO Notice to Employees poster — July 1, 2025 (OLSE, June 20, 2025)

• San Francisco hikes 2026 Health Care Expenditure rates (Aug. 12, 2025)