Signed into law on March 23, 2010, the Affordable Care Act (ACA) was designed to extend essential health coverage to millions of uninsured Americans. The law was enacted in two parts: The Patient Protection and Affordable Care Act (PPACA). One of the key provisions of the law is the employer mandate, a requirement that employers with at least 50 employees offer health coverage to full-time or full-time equivalent (FTE) employees or face hefty penalties for noncompliance. General and government contractor’s insurance requirements must comply with the ACA and its provisions.
Planning a Health Insurance Compliance Strategy
Government contractors who bid and perform duties for public work jobs should develop a benefits strategy that meets PPACA requirements. The Department of Labor and other government agencies have established more stringent regulations for government contractors to ensure that employees receive the benefits that they are entitled to under federal law.
The importance of compliance exceeds the avoidance of costly fines alone. Today, government contractors are often required to prove that they are in compliance before they can bid on a government contract.
Who Has to Comply with the PPACA?
The PPACA applies to small, medium-sized and large businesses alike if they have 50 or more full-time employees. Under the ACA, a full-time employee refers to any worker that averages 30 or more hours per workweek or 130 or more hours per month.
When calculating the number of full-time employees, employers must include full-time equivalent employees. Employers are not required to include seasonal workers or employees with TRICARE or VA health coverage when calculating full-time equivalency.
Businesses with more than 50 full-time or FTE employees are not required to provide their workers with health insurance; however, there are incentives to do so. Small employers with fewer than 25 FTE employees may be eligible to receive a small business health care tax credit for providing employees with health coverage.
What are the Penalties for Noncompliance?
Under the ACA, employers must report the value of their employer-provided health benefits to the Internal Revenue Service (IRS) annually. Government contractors who fail to comply with the PPACA may face serious penalties that impact their finances and disrupt their ability to bid on further work.
Employers may face a penalty of up to $1,000 for failure to provide a summary of benefits and coverage (SBC), along with an excise tax of $100 per day, per individual. The monthly penalty for applicable employers that do not offer coverage to full-time employees and their dependents is equal to the number of full-time employees, minus 30, and multiplied by 1/12 of $2,000.
What Is the 90-Day Employer Waiting Period?
The ACA requires companies offering health insurance to make coverage available to employees within a 90-day period after they start. Employees should be made aware of when their health insurance plan begins to avoid a lapse in coverage. While 90 days is the maximum amount of time that employers can wait before activating their employees’ health benefits, it is best to begin coverage within one month after the new hire starts.
Companies that do not currently offer health insurance must carefully research health insurance providers and select a provider that is familiar with the industry. Working with an experienced benefits provider that knows the laws surrounding prevailing wage jobs can help businesses make a more informed decision about their health care coverage.
Will the PPACA Impact Future Growth?
It can be challenging to determine how health insurance coverage will impact a business in the future. A small business not currently subject to the provisions of the ACA may choose to bid on a project months or years down the line, and if the project requires the hiring of more workers, the business may surpass the 50 FTE threshold and be required to offer health insurance.
Ultimately, the PPACA will continue to provide significant benefits to many applicable employers and their workers. Smaller firms have seen an increase in offer rates under the ACA and companies of all sizes have experienced savings on premium contributions.
What are the ACA Reporting Requirements?
Employers subject to the provisions of the PPACA are required to report to the IRS annually about health care coverage offered to full-time or FTE employees. The IRS then uses this information to administer employer-shared responsibility provisions and premium tax credits.
Businesses are also responsible for providing employees with a statement that includes the same health care coverage information provided to the IRS. This data can also be used by employees to determine if they are eligible to claim the premium tax credit on their individual income tax returns.
Why Should a Business Work with a Benefits Consultant?
A benefits consultant can also play a major role in helping their business clients remain in compliance with the most current health insurance regulations. Business health insurance provisions can be highly complex and are always changing and evolving. A benefits consultant can assist clients with compliance issues to avoid costly fines and penalties.
Reach Out to an Experienced Benefits Consultant
Government contractors that work on projects that are funded by taxpayer dollars are often subjected to a much higher level of scrutiny compared to businesses in other industries. These companies must ensure that they remain in compliance with all applicable health insurance laws and regulations to avoid the reputational backlash that a noncompliance claim could cause for a company and its employees.
An effective plan design, coupled with guidance from a knowledgeable benefits consultant, can help government contractors meet PPACA requirements. To learn more about health insurance compliance for government contractors or to speak with an experienced benefits consultant, contact the professionals at Business Benefits Group today.