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Does the PPACA Apply to Me?

November 2, 2012 Written by: Written by Paul Gaudet, Director of Group Benefits, Government Markets


Regardless of the outcome of the presidential election, it’s likely that healthcare reform is here to stay. The U.S. Supreme Court upheld the law (PPACA) this summer, and historically legislation which affects social reform has not been repealed.  The short answer to “Does healthcare reform apply to me?” is: YES.

Large Employers:

Employers with 50 or more full-time equivalent employees are required to provide health insurance for their workers or face fines beginning in 2014.

Small Employers:

On prevailing wage jobs, large contractors with the mandate for coverage will have a lower payroll burden than small contractors because they are using the fringe to pay for health insurance. And don’t overlook the importance of attracting and retaining talented workers – they will be looking for jobs which provide health insurance.

Individuals:

All individuals are required to have health insurance beginning in 2014. Those who do not will face penalties which will be included on their income tax returns.

Plus, providing benefits to your employees is the right thing to do. Coverage provided with fringe dollars is paid with pre-tax money and employees who are not covered at work must be underwritten on their own and pay potentially higher rates with their after tax dollars. You have fringe dollars specifically earmarked to provide benefits and significant payroll and insurance costs savings when you do.

You have just over a year to get into compliance with PPACA. The good news? As a government contractor working on prevailing wage jobs, the funds to cover providing health insurance for your workers are already there – included in the wage determinations!  In addition to avoiding penalties, when you use the fringe portion of the prevailing wage to provide benefits like health insurance for your employees, these dollars are not subject to payroll burden.  This can result in significant savings over the life of a project.

The fringe is an employer contribution; therefore, the employer is in the driver’s seat when it comes to deciding how to disburse it. Letting employees know that the decision to use the fringe for health insurance is a healthcare reform requirement may ease their objections to not receiving the fringe as cash.

There is no doubt that the PPACA and all of its new regulations add a whole new level of complexity for government contractors who already have to worry about prevailing wage laws. Paying fines in addition to the expense of paying fringes as additional cash wages is a double hit on your bottom line. Can you afford to take that hit? If other bidders are benefiting from savings on payroll burden and you’re not, will your bids be competitive?