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Government contractors: Does health care reform apply to me? What now?

By Adam Bonsky - executive vice president of government markets for Fringe Benefit Group

Healthcare reform is here to stay. 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 (which can range from $2,000-3,000 per employee) 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 that 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 (also called the Affordable Care Act or ACA). 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 retirement plans or 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.

Some contractors may believe the fringe to be "the employee's money" but this is not so! The fringe is an employer contribution; therefore, the employer is in the driver's seat when it comes to deciding how to allocate 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 ACA 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?

Contractors can no longer afford to wait on implementing the new mandates. It's time to start figuring out how to price in the additional costs for bids you have already won and those you are bidding on right now. What if your company currently has less than 50 full-time employees, but the project you just won will take it over 50? Now what? There are many, many questions around implementing the ACA. Fortunately, The Contractors Plan powered by Fringe Benefit Group, is prepared to help government contractors understand the new legislation and how to comply with the multitude of new requirements. Fringe Benefit Group has specialized in providing quality benefits for prevailing wage workers for more than 30 years and we are fully prepared to help contactors navigate the maze of health care reform.