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.

Unforeseen Effect of Supreme Court Decision on Government Contractors?

Discussion and analysis has just begun regarding of the impact the Supreme Court’s recent decision to uphold federal healthcare reform. We want to share this excellent blog post by Anthony Critelli of DelTek, Inc. regarding a possible unforeseen effect the ruling will have on government contractors.

The Contractors Plan will continue to bring you updates on developments and analysis regarding the Supreme Court ruling. Check here for updates, and also on our Facebook page.

Supreme Court Decision Impact on Government Contractors

With the U.S. Supreme Court’s recent decision to uphold the federal health care reform bill, it makes more sense than ever for companies bidding and working on government contracts to use the fringe portion of the prevailing wage to provide major medical coverage for their employees. For contractors working on projects subject to prevailing wage, the funds to purchase coverage for employees are right there – included in the fringe.

Starting in 2014, employers with more than 50 full-time employees will be required to provide health insurance for their workers. Companies that fail to comply will face penalties.

In other words, paying the fringe as additional cash wages will soon carry even more serious negative financial consequences.  Fringe dollars used to provide bona fide benefits are not subject to payroll assessments such as FICA, FUTA, SUTA and- in some states – workers compensation. Employers who choose to pay the fringe as additional cash wages miss out on these savings, which are significant over the life of a contract.  Starting in 2014, employers who do not provide health insurance for their workers will also be penalized.  That’s a huge double whammy, and it makes the decision to use the fringe portion of the wage to provide benefits for workers even more compelling.

Even though penalties don’t kick in until 2014, the time to start working toward complying with health reform is now.  The longer companies wait to find coverage for their workers, the harder it will be to find.

Even prevailing wage contractors with fewer than 50 employees should seriously consider using the fringe to provide health insurance for their hourly workers.  The savings on payroll burden can be passed on as leaner, more competitive bids – and that means increased chances of winning contracts. Choosing to offer health insurance also makes sense from an employee relations standpoint. Your employees won’t have to seek insurance from an exchange, which will be a relief for many. And it also means your employees avoid being penalized on an individual basis if they do not have health insurance. In 2014, the fee is  $285 per family or 1% of income, whichever is greater. By 2016, it increases to $2,085 per family or 2.5% of income, whichever is greater. Individuals will pay penalties of $95 in 2014. That amount will climb to $625 in 2016.

At The Contractors Plan, we’ve specialized in providing quality benefits for prevailing wage workers for more than 30 years. We’re prepared to help government contractors with their health insurance needs, and we welcome your questions.  Please watch for further information on health care reform and its impact here on our blog.