- While every business needs to be aware of the changes in healthcare law because of the Affordable Care Act (ACA), government contractors have a few additional challenges facing them in meeting ACA compliance.
- Let's start with the basics. As of January 1st, 2016, any company with 50 or more full-time employees is required to show proof that they attempted to provide the minimal amount of health care coverage according to ACA regulations. Not doing so can result in violations and fines.
- However, much like pulling a small thread can lead to a large tear, a seemingly small ACA violation can launch a full-blown Department of Labor (DOL) audit. If a contractor messes up just one of these new laws they now run the risk of having the government look at their contract wages, benefits, and anything else they want.
Cash Fringes = Disadvantage
- A DOL audit could be very costly, but it's not actually the scariest part of Obamacare for contractors. Cash fringes are. Contractors typically make up any difference in the minimum fringe rate they're supposed to provide by lumping it into their wages (i.e cash fringe).
- Cash fringes are an expensive practice. Adding more to wages also means more tax burden. There's also the fact that cash-in-lieu of benefits can be a violation of ACA regulations.
Dangers of Cash Fringes
- For example, let's say you provide cash fringe instead of benefits. One of your employees decides to purchases health care coverage on their own. You could be found in non-compliance for not providing the correct minimal amount of health care coverage under ACA guidelines.
- As mentioned, a small ACA violation can open the doors for a full DOL investigation / audit. You could be looking at a handful of violations and multiple fines. You don't want to be broadsided by being non-compliant.
The Burden of ACA Compliance
- Contractors will have to add new staff, and/or training costs to bring them up to speed with new ACA regulations. Even with added overhead of doing those things, there is no guarantee that you employees will handle ACA correctly.
- There's pretty much two options:
- Invest the time and money to train your own people on how to correctly report on the ACA.
- Hire a subcontractor who will do it for you and place the burden on them.
- Either way, it's important to understand the domino-like effect an ACA violation can have on your government contracting business.
- At Axim Fringe Solutions Group, we can take over all the necessary ACA reporting and tracking requirements while guaranteeing DOL compliance. We're so confident in our ability to keep you compliant that we'll pay 100% of any fine you incur.
- Three Common Service Contract Act Compliance (SCA) Stumbling Blocks
- How Cash-in-lieu Opt-Outs Increase Costs for Federal Contractors
- The Government Contractor’s Guide to Service Contract Act (SCA) Compliance
- How “No Change” to the SCA Health & Welfare Benefit Rate Impacts Government Contractors
- SCA Compliance Checklist Part 8: Fringe Benefits
- SCA Compliance Checklist Part 7: ACA Compliance
- SCA Compliance Checklist Part 6: Subcontractor Compliance
- SCA Compliance Checklist Part 5: Fringe Rate
- SCA Compliance Checklist Part 4: Base Wages
- SCA Compliance Checklist Part 3: Labor Categories