Nicole Canedo looks at her city-issued Medical Reimbursement Account page on her computer outside her Berkeley apartment. Canedo learned about her MRA through an employee union and now often helps other workers understand it. (Kevin N. Hume/S.F. Examiner)

Nicole Canedo looks at her city-issued Medical Reimbursement Account page on her computer outside her Berkeley apartment. Canedo learned about her MRA through an employee union and now often helps other workers understand it. (Kevin N. Hume/S.F. Examiner)

Millions left sitting in medical reimbursement accounts by city workers

Health officials looking at how to improve access, outreach as untapped funds reach $409M

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Sometime last year, Jade Trombino received an email from her employer related to a medical reimbursement account that she and her coworkers were eligible for.

At the time, she found it mystifying. If it weren’t for an explanation from a well-informed coworker, Trombino wouldn’t have known that the account could cover her out-of-pocket medical costs like glasses, therapy co-pays and other eligible bills.

But the Everlane employee still doesn’t know how much is in her name, hasn’t tapped into the fund known as City Option MRA, or even figured out how to log on to her online account.

“Honestly, I still don’t know what it is,” Trombino said. “It wasn’t really explained to us, definitely not by our manager. It’s just a bunch of words I didn’t quite get.”

Trombino is far from alone. Unassigned health funds collected by The City under a 2006 city law requiring medium and large employers to contribute toward their workers’ health care had reached a staggering $409 million as of this October, according to the Department of Public Health. The funds are contributed by employers, who must pay a certain amount on health care for each employee per hour worked under the law.

Despite a pandemic that has caused mass layoffs and loss of medical insurance for many people, that number is still up from $359 million in February, suggesting workers are not significantly tapping into the available funds. Of the roughly 183,000 workers the money belongs to, about 82 percent did not even apply to enroll in a program, according to a city audit released in October.

It’s likely many, like Trombino, either don’t know the accounts exist or understand how to use them.

‘It’s your money’

Some workers with accounts do make frequent use of the funds, like Trombino’s informative former coworker Nicole Canedo. She learned about the MRA program at her first job in The City at Walgreens, thanks to being part of a staff union.

When Canedo got to Everlane, she became the point person to help her coworkers and friends tap into benefits.

“I think it’s important that workers know about it,” Canedo said. “They cover so much. It’s your money, it’s not like it’s a gift. It’s something you earned.”

Canedo, who has since been laid off due to the pandemic and exhausted her City Option accounts, said the program gave her a financial cushion as a San Francisco State University student and prevented her from needing a second job.

But thousands of accounts sit idle.

Nicole Canedo, who has worked numerous retail jobs in San Francisco, said her San Francisco Medical Reimbursement Account has helped her with health care costs.<ins> (Kevin N. Hume/S.F. Examiner)</ins>

Nicole Canedo, who has worked numerous retail jobs in San Francisco, said her San Francisco Medical Reimbursement Account has helped her with health care costs. (Kevin N. Hume/S.F. Examiner)

The amount of unassigned funds, meaning the owners haven’t even taken the initial steps toward choosing a program and setting up an account, has particularly risen since 2016, when workers began getting a choice of programs rather than being automatically enrolled.

Eligible workers can choose a city-run MRA, a limited health care access program called Healthy SF, or a Covered MRA that goes toward a Covered California premium. About 99 percent of workers choose the regular MRA, which had $143 million in funds covering more than 107,000 people as of February.

Accounts that haven’t been touched in two or more years are deactivated; about 83,000 accounts worth nearly $60 million had been shut down as of February. Workers may still reactivate the accounts, which would otherwise see $2.75 charged in administrative fees each month.

DPH had claimed about $17.5 million from deactivated accounts as of February, according to the audit.

‘The program has to press pause’

The City will be implementing 22 audit recommendations by June 2022 that include developing more outreach and notification strategies to improve use of the program. One audit recommendation is to have formal written clarification around the legal ownership of deactivated accounts and to better inform users before deactivation.

But other recent efforts to increase access to MRA funds have faltered.

In an effort to help workers in a time of increased need, Mayor London Breed announced in April that money in all active accounts could be freed up for general basic needs outside health. However, due to unspecified legal constraints, that initiative was later scaled back to a $500 cash bonus for account holders with at least $100. That bonus was financed by funds taken from deactivated accounts.

The apparent inability to tap into the accounts during an emergency revived criticism of the program from business leaders, some of whom see it as an indirect tax. Businesses, particularly restaurants, often add a surcharge dubbed along the lines of “health mandate” when ringing up customers to cover the added labor cost.

Laurie Aaronson, who runs restaurant consultancy firm AOC SF, said she tends to steer clients away from the City Option MRA because of The City’s ability to reclaim unused funds — funds that several businesses struggled to pay even well before the pandemic.

“The more money The City takes from this program, the more they will never be able to amend it,” Aaronson said. “We want an efficient system. The program has to press pause.”

Companies may also choose a privately-managed health benefit as an alternative to City Option, but that often comes with less coverage and far less data. About 1,073 employers in 2017 still chose a private benefit rather than insurance or City Option to comply with the city mandate.

Until 2017, employers could also put the required amount into an account that reverted back to them after a certain period of inactivity. Use of that form of account has been phased out and plummeted to just 17 employers in 2017 from 734 employers in 2014, according to the latest Office of Labor Standards Enforcement report on the health care mandate.

Aaronson suggested creating a task force to examine the program and said The City should move away from a funding formula based on the hours worked by the employee.

Ben Bleiman, who used to pay into City Option as the former owner of several bars, said businesses under a certain gross receipts tax should be outright exempt to make the program more progressive.

Jay Cheng, policy director for the Chamber of Commerce, previously expressed frustration at the program’s lack of transparency and ability to release funds for general use. But after reading the audit, which affirmed sound fiscal management that reserved those funds for their intended purpose, he sounded more optimistic for the program’s future.

“It’s right to give the program a chance, people do need the health care dollars,” Cheng said. “Then we can ask the question of structural reform to the system. We don’t even know if structural reform is necessary, so few people are using it. There’s still opportunity to do good with that money.”

‘They should just tell you’

Exactly why so many workers have not even applied to claim the money remains a mystery to DPH. The audit acknowledges that it could be due to them being unaware their employer must make those contributions, confused by vague informational materials and applications, or unable to determine their own eligibility. Health officials will determine by the end of the year whether more resources are needed to expand outreach to boost enrollment, and build a dashboard to monitor effectiveness by June 2022.

“It is anticipated that what will be different in outreach/marketing after implementing the recommendation is the way in which we conduct existing outreach,” said Healthy SF program manager Alice Kurniadi in an email. “We are engaged in a process to better understand how to improve our materials, and more effectively reach and engage SF City Option employees.”

Supervisor Hillary Ronen has called for the funds to be more accessible through a debit card, which Kurniadi said is being considered but would take some time to put into effect.

Both Canedo and Trombino emphasized the need for employers to inform workers about the funds. Trombino said that making it a required notice to post in break rooms, like federal labor laws and the minimum wage, could make a difference.

Maria Moreno, a former restaurant worker and program coordinator for workers’ rights organization Restaurant Opportunities Center, agreed. After first talking to the Examiner a year ago, she remembered she could tap into her unused account privately managed by Administration Solutions and has since been reimbursed for dental care she avoided seeking due to the cost.

“I think it’s the responsibility of the employer to tell you something about it, not just give you a handbook, especially when we have so many people who just speak Spanish,” Moreno said. “They should just tell you when they hire you.”

For more information on City Option eligibility, go to sfcityoption.org, and sfgov.org/olse for more about the health mandate.

The Examiner is working on a story related to Healthy San Francisco. If you use the program currently or have in the past, we want to hear your story. To share your experience or ask questions about the project, email HealthySFproject@gmail.com or call/text (415) 295-6603 in either English or Spanish.

This article was produced with support from the USC Annenberg Center for Health Journalism’s 2019 Data Fellowship. The Center’s engagement editor, Danielle Fox, contributed engagement support to this article.

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