Roughly 160,000 people have never logged into accounts to access their employee health benefits overseen by the city, leaving more than $240 million in unused funds on the table. In May, this money will be absorbed by the city.
San Francisco’s Health Care Security Ordinance (HCSO), passed in 2006, mandates that employers in San Francisco or at San Francisco International Airport with 20 or more workers must spend a minimum amount on health care for employees that work more than eight hours per week. Employers may either provide health benefits through their company, or contribute to a medical reimbursement account (MRA) overseen by the city called SF City Option (SFCO).
These accounts are attached to the worker via their Social Security number and can be used to reimburse health-related expenses including insurance premiums, co-pays, and prescription or over-the-counter medicine. They belong to the worker and can be used on expenses even after the worker has left that role or moved out of San Francisco.
However, it appears that 160,000 workers, according to Department of Public Health data, do not realize that their employer started an MRA, let alone how to access it. As a result, their accounts have been sitting dormant, leaving millions of dollars on the table that can be put towards anything from dental care to Theraguns.
On May 21, accounts that have been inactive for three or more years will be closed and have their funds transferred to the city’s general fund. The department’s vendor, the San Francisco Health Plan (SFHP), has been notifying those with inactive or never-activated accounts by mail every six months since September 2023, the Department of Public Health media desk told Gazetteer SF. The agency also said it’s working on a social media campaign to maximize the utilization of the funds.
Since the program began in 2008, more than 5,465 employers have opted to utilize SFCO, contributing nearly $2.2 billion in health expenses reimbursement to more than 493,000 employees. Roughly $1.83 billion has either been paid out or resides in active employee MRAs, the agency said. Contributions are mandated across industries including food, hospitality, retail, and service.
California law requires three full years of inactivity before such funds can be declared abandoned. The green light comes at an opportune time as the city faces a historic $877 million deficit and pressure from the federal government to right-size its budget. The initial transfer of $240 million that could get absorbed by the city includes more than a decade of accumulated balances becoming eligible at the same time.
The question businesses owners and advocacy groups are asking is: Why not return the money to the establishments that paid into the funds?
“We believe the way this program was designed was flawed, as it put the burden of the implementation of the tax on small businesses without really serving employees that it was intended to benefit,” Small Business Forward’s Steering Committee, an advocacy group consisting of small business owners, told Gazetteer. “It is unfortunate that the money collected from this tax has not been used for its intended purposes, resulting in the millions of dollars leftover in inactive SF MRA accounts.”
Businesses with 20 to 99 workers or nonprofits with 50 to 99 workers must contribute $2.74 per hour, or $4.11 per hour for all employers with over 100 workers. That easily adds up to hundreds of dollars a week, and thousands per year.
Many restaurants are unable to absorb the cost outright and add surcharges to customer bills, which can inflate the pretax subtotal and increase sales tax and tip depending on where it’s line item-ed. Some establishments, such as Andytown Coffee, bake the surcharge into their menu prices, while others, including Good Good Social Club, add a 6% surcharge to offset the cost of employee health benefits.
Employers that don’t comply are audited by San Francisco’s Office of Labor Standards Enforcement. Last year, the city ruled that Verve Coffee must pay more than $180,000 to employees at the company’s Market Street cafe after failing to provide health benefits required by the HSCO. The settlement covered 33 current and former employees who were denied health care expenditures between July 2022 and June 2025. Some individuals received up to $20,000 from Verve.
Employees do not need to spend any of the money; accounts just need to be claimed by the May deadline. This can be done by calling SFCO Customer Services, emailing info@sfcityoption.org to verify their accounts, or enrolling online. The city has set up an MRA Funds Finder tool to determine if employees have funds sitting with the city.