Does the PPACA Apply to Me?

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Supreme Court upheld the law (PPACA) this summer, and historically legislation which affects social reform has not been repealed.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?

Morningstar Report Gives Top Ratings to Manning & Napier Target Date Funds

When Morningstar released its Target Date Fund Family Reports for the quarter ending June 30th, the announcement included great news for The Contractors Plan and Manning & Napier, a major fund company utilized by The Contractors Plan for over 13 years.

The first piece of good news is that Morningstar included Manning & Napier’s target-date funds in its review for the first time. Only 25 target date fund families are reviewed. The second and more important piece of good news is that Morningstar gave Manning & Napier’s Target-Date series of funds a “Top” rating. This is particularly important given the economic environment we’ve seen over the past few years.

According to those in the industry, Morningstar does an intensive and thorough analysis of the funds it rates. While returns are certainly a part of the formula used to rate the funds, Morningstar also looks at factors such as the underlying investment philosophy, the people who are managing the funds, and  how the funds have performed over a full market cycle rather than just a few years. In the review, Morningstar states: “. . . over the firm’s long history they’ve demonstrated a strong record, and their investment personnel are some of the longest-tenured in the business. The underlying Pro-Blend funds all receive Morningstar Analyst Ratings of Gold, and the target-date series now earns a top rating as well.”

Please follow the link below to view the June 30, 2012 Morningstar analyst report. Keep in mind the article covers the Target Date’s Mutual Funds which are publicly traded rather than the Collective Investment Trusts which are available through The Contractors Plan.

Please click on the link below to view the article and all corresponding disclaimers.

Manning & Napier Target Date Fund Series Report

Are You Ready for an Audit?

Recently we became a partner with The Construction Connection, an online network for businesses and individuals in the construction industry. Yesterday they posted a blog I wrote about being ready for a compliance audit. You can read it here.

We’re very excited about this partnership and look forward to getting the word out to even more government contractors about the valuable solutions and services we provide.

SIMPLE Plans Don’t Work for Prevailing Wage Jobs

Are you a government contractor working on prevailing wage jobs? If you have a SIMPLE plan, you should know that SIMPLE plans cannot be used effectively for prevailing wage jobs, and cannot be used in conjunction with a prevailing wage plan.

Changes to a SIMPLE Plan must be made by November 1st, so if you plan to terminate your plan you should start the process now. IRS rules require that employees be notified of the termination of a SIMPLE plan 60 days before the enrollment period for 2013.

For more information on SIMPLE plans and the reasons they’re not a good fit for government contractors, visit our website.

USDOL Taking Even Tougher Stance to Ensure Prevailing Wage Compliance

A recent news release from the USDOL reveals that the agency is taking new measures to ensure that general contractors and their subs comply with federal prevailing wage law. Mike Rogers, Chief Compliance Officer for The Contractors Plan, says, “Ensuring that subs comply with Davis-Bacon has always been the responsibility of the GC. The measures the DOL took against Lettire Construction Corporation recently demonstrate that failure to take this responsibility seriously can have severe consequences for all parties involved.”

Rogers says the fact that the DOL required that Lettire hire a monitor approved by its Wage and Hour Department is unusual, but given the breadth of the violations found on the Hobbs and Ciena projects in New York state, not overly punitive. “Another interesting part of this investigation is that the DOL is requiring Lettire to ‘assess bids submitted by its subcontractors on federal prevailing wage projects to ensure that the bid amounts are adequate to ensure financial compliance with the law’. To my knowledge this has not previously been required of any GC.”

The DOL’s news release regarding its consent findings and order against Lettire Construction Corporation and its president, Nicholas Lettire, can be found here.

What Will You Do When Mini-Med Plans Don’t Comply?

In the past, many government contractors have offered their workers mini-med programs in an effort to both contain costs and offer their workers some level of insurance coverage.  However, the PPACA requires that in order to comply, medical plans must not have an annual limit or maximum dollar amount of coverage beginning in 2014. These rules apply to mini-med plans which are offered by employers as an alternative to major medical insurance.

While the HHS has granted waivers to some existing mini-med plans, this is only to minimize disruption in coverage for workers who now have this type of plan. The Office of Consumer Information and Insurance Oversight (OCIIO) has issued a memo which requires that a notice be placed at the front of plan materials, which informs employees that the plan does not meet the minimum standards of the Patient Protection and Affordable Care Act.

Penalties for non-compliance are steep, and – in our opinion – there’s no reason to get your company in a situation where it’s subject to them. By taking steps now to find and implement major medical for your workers, you can eliminate worries over compliance and fines. Since prevailing wage contracts include funds specifically intended to provide fringe benefits such as medical insurance, using this money as the law intended just makes sense. Workers will no longer have the argument that they don’t want medical coverage – they will be required to have it.  Faced with the choice between having to visit an exchange, apply for subsidies, and navigate regulations themselves or having coverage provided by their employers, it’s a pretty safe bet most would prefer the latter option.

Have questions about preparing to comply with PPACA? We can help. We offer major medical insurance through several well-known providers and networks, and we understand the specific needs of the government contractor market. Bona fide benefits plans for prevailing wage contractors are what we’ve specialized in for over 30 years, and we’re still leading the industry as we look for opportunities to assist government contractors with benefits, compliance, and saving money.

The Western Washington Chapter of ABC Features our Blog on PPACA

The Western Washington Chapter of the Associated Builders and Contractors recently posted our blog regarding how the PPACA affects government contractors. Check it out here.

Partnering with The Contractors Plan also gives you access to a full range of bona fide benefits to maximize your payroll savings, as well as complete administration of your benefits programs and compliance assistance that is unmatched by any other prevailing wage benefits provider.  To learn more about how we can help your company save money and prepare for the PPACA provisions that take effect in less than 18 months, email us today or give us a call at 1-800-328-1519.

Penalties vs. Premiums for Government Contractors

With the Supreme Court’s recent decision to uphold healthcare reform, many employers have been analyzing whether it’s more advantageous to pay the costs of providing medical insurance for their workers or to pay the penalties that will begin to be assessed in 2014 if they do not offer medical insurance.

For government contractors, choosing the penalty option makes absolutely no sense from a bottom line perspective.  Government contractors who choose to pay out the fringe portion of the prevailing wage to their workers in cash, rather than providing medical insurance, are already missing out on significant savings on payroll burden. When the fringe is used to offer bona fide benefits for workers on Davis-Bacon or SCA contracts, those dollars are not subject to costs such as FICA, FUTA and SUTA and, in most states, Workers Compensation. Over the life of a contract, this can add up to hundreds of thousands of dollars saved.

When you add those unrealized savings to the imminent penalties for not providing medical insurance for your prevailing wage workers, you can almost hear the profits draining away. Starting in 2014 contractors with 50 or more FTEs (based on the number of workers who put in 30 hours per week on average) will be fined $2,000 per employee if they do not comply with this provision of the PPACA.  Some analysts expect this amount to be adjusted upward to help alleviate the costs the federal government will incur to implement the PPACA.

Even contractors with fewer than 50 employees should seriously consider offering medical insurance for their prevailing wage workers. For smaller employers, when you add savings on payroll burden to savings that can be realized from tax credits for those offering medical insurance, once again there isn’t much of an argument to be made for NOT using the fringe to provide major medical coverage.

Have questions about how the PPACA will impact your business? Not sure where to start? Contact us. We’ve specialized in providing bona fide benefits for government contractors for more than 30 years. We have health insurance options available from major providers like United Healthcare and Kaiser Permanente.  And since our product is held in trust, you become part of a larger risk pool, which can be a huge advantage when it comes to affordability.

Partnering with The Contractors Plan also gives you access to a full range of bona fide benefits to maximize your payroll savings, as well as complete administration of your benefits programs and compliance assistance that is unmatched by any other prevailing wage benefits provider.  To learn more about how we can help your company save money and prepare for the PPACA provisions that take effect in less than 18 months, email us today or give us a call at 1-800-328-1519.

Become a Credible Employer: Why it’s Important in Light of Healthcare Reform

If you think you have plenty of time to get in compliance with the Patient Protection and Affordable Care Act, think again.

If you’re not currently offering medical insurance for your workers, you’ll face some challenges when shopping for coverage. The reason is that health insurance providers look at a group’s history when setting rates for coverage. Employers who have more than 100 employees and don’t have claims history will probably find it difficult – and more expensive – to find health insurance coverage. Companies with fewer than 100 employees who are not currently offering health insurance will not have rate history for providers to consider when setting premium.

Take action now to become what insurance companies refer to as a “credible employer”.  One of the advantages of working with The Contractors Plan is that our plan is held in trust, so your company becomes part of a larger pool for rating purposes. This has significant advantages and usually results in a more affordable premium.

Fines for non-compliance start in 2014, which isn’t that far away.  Contact The Contractors Plan for more information on how to start positioning your company to comply with PPACA today. The longer you wait, the more difficult it will be to obtain coverage, and it’s likely costs will be higher as well.

We’ll be posting more information about health care reform and its impact on government contractors on our blog. If you have questions, please give us a call or email info@thecontractorsplan.com.

Recent Case Clarifies Jurisdiction Over Disputes

Many contractors have no doubt found compliance with the provisions of the Davis-Bacon and Service Contract Acts confusing at one time or another. Most feel that following the terms and wage determinations in the contract is a logical start to compliance with the laws.

However a recent case involving jurisdiction over various aspects of the laws and their implementation is evidence that mistakes are sometimes made on the part of the awarding agency.  The reason this case is significant is that it clarifies which agency has jurisdiction over resolving disputes in such an occurrence.

In this instance, Caddell Construction learned that a second-tier subcontractor had been paying a lower wage than required for the job classification of its workers. Caddell then notified its subcontractor of the error and, as well, as its decision to withhold further payment to the subcontractor until copies of restitution checks to the affected employees were provided.

The second-tier sub responded that the contract failed to clearly specify a wage determination for its workers, and that it had used the classification provided when they sought clarification from the agency.  The subcontractor, Circle C, then filed a claim with Caddell for the difference between the wages that had been paid and the correct prevailing wage.
Caddell Construction, following procedures outlined in the Contract Disputes Act, submitted a claim with the contracting officer – which was denied.  Caddell then appealed to the Armed Services Board of Contract Appeals. The government moved for dismissal of the appeal, arguing that jurisdiction for this type of labor dispute lay with the US Department of Labor.

The Board denied the motion, finding that in fact the ASBCA does have jurisdiction to hear disputes regarding wage issues “where there was an alleged mistake (mutual or unilateral) as to the applicability of the Davis-Bacon Act to appellant’s employees.” Since the claim was the result of incorrect wage information being provided to bidders prior to bids being submitted, the Board concluded that the claim fell within its jurisdiction.

The takeaway from this case is that, in general, disputes regarding contract issues – including alleged mistakes in bid specifications – fall under the jurisdiction of the contracting agency and oversight board. Authority over disputes regarding labor issues, including the correct rate of pay and benefits for a particular wage determination, rests with the US Department of Labor.