The Affordable Care Act: It’s Real, It’s Here, It’s Time to Act

Penalties for noncompliance with the ACA begin in just over six months. There’s no question that the time to act is now, but many contractors are unsure about where to start.

Offering health insurance coverage to your workers is a smart business decision on many levels, even for employers who may not be subject to provisions of the ACA. If you’re already using fringe dollars to provide retirement plans for your workers, adding health insurance to their benefits package maximizes your savings on payroll costs. Dollars used to provide bona fide benefits are not subject to FICA, FUTA, SUTA, and in most states, workers’ compensation insurance.

Government contractors should be asking themselves four critical questions as the January 1, 2014, deadline approaches:

1.       Does the Affordable Care Act apply to me?

2.       Is my current plan compliant? (if you currently offer coverage)

3,       If I don’t comply, can I afford the double hit to my bottom line?

4,       Is reducing my employees to part-time status really a good idea?

Not sure about the answers? The Contractors Plan can help you develop a PPACA strategy that works for your company. Give us a call to get started.

Makes Cents to Comply with the Affordable Care Act

Regardless of whether you support or oppose the Affordable Care Act, you and your employees are probably thinking about how it’s going to change your lives.  Construction businesses rely greatly on their human capital. If inexperienced or careless workers make mistakes, and the work has to be redone, “cheap labor” quickly becomes expensive. Employee turnover has cost implications too – it takes time and resources to train new employees.

How does healthcare reform play into this? In just over six months, every individual in the U.S. will be required to have health insurance.  The best and most highly skilled workers are likely to look for employers who offer health insurance.

The Affordable Care Act will affect large and small businesses.  Companies with 50 or more full time employee equivalents (FTEs) will be subject to penalties if they fail to provide health insurance. Some large employers are considering reducing the number of full-time employees on their payroll so they don’t have to comply.  But workers who are willing to settle for part-time work may lack critical skills, and may not be as loyal to their employers. Some large employers are considering simply paying the penalties. For government contractors who work on prevailing wage jobs, this makes no sense. The fringe portion of the wage is intended to be used to provide benefits for workers, and doing so results in significant savings on payroll burden. That translates into tax savings for both you and your workers.

Employers with fewer than 50 FTEs should not ignore the implications of the mandate for all individuals to have health care. Failure to offer health insurance for your employees can have serious consequences for your “human capital.”

1. Most people in the workforce are just one serious illness away from financial hardship and medical debt. Should one of your workers or their family members become ill, and lack health insurance, the financial stress is sure to affect their morale and productivity.

2. Failure to offer health insurance is an invitation to employee turnover. The most skilled and experienced workers are likely to seek an employer that offers coverage, particularly if the alternative is having to navigate the marketplace and/or exchanges on their own. A recent draft of the “E-Z” form being developed by the U.S. Department of Health and Human Services  to determine if a person qualifies for subsidies is 21 pages long.

3. Smaller government contractors will be competing for public works contracts with large companies that are subject to the mandate. Large employers that use fringe dollars to provide health insurance will realize significant savings on payroll burden, which in turn makes their bids more competitive. How will you gain an edge to keep your workers employed and your business profitable?

There are tax credits available for smaller employers who offer health insurance coverage which meets minimum standards under the Affordable Care Act. To find out if your business qualifies, view the calculator on the IRS website.

At The Contractors Plan, we’ve focused on providing benefits for government contractors, and keeping contractors in compliance with applicable laws, for more than 30 years. We can help you devise a strategy that helps you use the ACA and fringe benefit dollars to the advantage of both your company and your employees. Contact us to learn how we can help you meet ACA deadlines and save on payroll burden.

What Does the Affordable Care Act Mean for Smaller Contractors?

It might seem like most of the recent discussion around Health Care Reform has focused on larger employers. This may be true, given that employers with 50 or more FTEs will face penalties if they fail to comply with the Affordable Care act by January 1, 2014.

However employers with fewer than 50 FTEs should not ignore the implications of the mandate for all individuals to have health care. There are several potential consequences that will definitely impact employers of all sizes. (Read more)

1. Most people in the workforce are just one serious illness away from financial hardship and medical debt. Should one of your workers or their family members become ill, and lack health insurance, the financial stress is sure to affect their morale and productivity.
2. Failure to offer health insurance is an invitation to employee turnover. The most skilled and experienced workers are likely to seek an employer that offers coverage, particularly if the alternative is having to navigate the marketplace and/or exchanges on their own. A recent draft of the “E-Z” form being developed by HHS to determine whether a person even qualifies for subsidies is 21 pages long.
3. Smaller government contractors will be competing for public works contracts with large companies that are subject to the mandate. Large employers that use fringe dollars to provide health insurance will realize significant savings on payroll burden, which in turn makes their bids more competitive. How will you gain an edge?

There are tax credits available for smaller employers who offer health insurance coverage which meets minimum standards under the Affordable Care Act. To find out if your business qualifies, view the calculator on the IRS website.

The Contractors Plan can help you devise a strategy that helps you use the Affordable Care Act and fringe benefit dollars to the advantage of both your company and your employees. For more information, contact us: This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

Washington State Issues Policy Memorandum on Fringe Benefit Contributions

The Washington State Department of Labor & Industries (L&I) recently issued a policy memorandum explaining how contractors should calculate credit for fringe benefit contributions made during periods of prevailing wage covered work.

This important memo reiterates Washington’s existing definitions of prevailing wage, usual benefits, and annualization.  L&I states that its long-time position is “consistent with the approach adopted by many other states and by the U.S. DOL with respect to most plans, that contributions made to a fringe benefit plan for public works should be based on the effective annual rate of contributions for all hours, public and private, worked during the year by the employee.”

Most importantly, L&I clarifies the State’s position on annualization in regards to contributions made to retirement plans.  L&I states, “For defined contribution pension plans that provide for a higher hourly rate of contributions to be made for prevailing wage covered work than for non-covered work, the higher rate paid for covered work will be fully credited toward satisfaction of the required prevailing wage rate only if the plan provides for immediate participation and an immediate or essentially immediate vesting schedule (e.g., 100% vesting after an employee works 500 or fewer hours).”

In terms of contributions to retirement plans, L&I’s enforcement position in the past has not been crystal clear to all contractors working in Washington so this clarification is critical from a compliance perspective as well as an important recognition of the importance of retirement savings.

During the development of this memo L&I reached out to stakeholders and sought to develop a position that is clear, consistent, and in the bast interest of employees.  A copy of the memorandum can be viewed at http://www.lni.wa.gov/TradesLicensing/PrevWage/files/Policies/BenefitsCalculationPolicy.pdf