Even if your business doesn’t have enough full time equivalent employees (or “FTEs”) to fall subject to the ACA’s employer mandate, there are still many compelling reasons to “Walk This Way!”
We know, we know. You’ve had 2-3 years of listening to the media, government spokespeople, and benefits advisers “talk this way” about health care reform and deadlines for compliance. Give us just 5 minutes and we’ll give you 4 great reasons to cover your prevailing wage workers.
Why Comply with ACA
- Cost Savings. The funds to pay for health insurance for your workers are right there, in the wage determination on prevailing wage jobs. If you aren’t already using fringe dollars to provide health insurance for your workers, you’re missing out on significant savings on your payroll burden. Now, with ACA and the requirement for every individual to have health insurance, there’s more incentive than ever to use fringe benefit dollars as intended.An expense you may not have considered is the cost of replacing experienced workers. The job market for construction workers has turned around and jobs are more plentiful. Rather than trying to purchase health insurance on their own, or navigate the exchange maze, the best workers are likely to look for an employer that will provide health insurance.Given the wages most construction workers earn, particularly on Davis-Bacon jobs, it’s unlikely many will qualify for subsidies. And those who purchase through an exchange will potentially pay higher costs for their premiums. Employers who sponsor a plan are likely to get better rates, reducing the costs to your employees.
- Tax Advantages. If workers purchase health insurance on their own, they pay for it with post-tax dollars. Employer-paid insurance is the only way for employees to leverage pre-tax dollars to pay their insurance premiums, so why not use fringe dollars for this purpose? It results in savings both for your workers and for your business.
- Competitive Advantage. Smaller companies are competing for jobs against large companies which are required to comply with ACA (or pay significant penalties). These companies will likely be using fringe dollars to pay for health insurance premiums – and possibly for other bona fide benefits – and as a result they’ll seeing a significant reduction in their payroll burden. That means the bids they submit will be leaner, putting companies that continue to pay fringe dollars as additional cash wages at a serious disadvantage.
- Individual Mandate. While it’s true that smaller employers are not legally required to provide health insurance under ACA, every individual in the U.S. is now required to have health insurance. Those who are unfamiliar with health insurance, the terminology used, and the process of comparing various plans can easily be overwhelmed. Again, there’s no longer a shortage of work in the construction industry, and the most skilled laborers won’t have difficulty finding an employer or union that will offer health insurance for both the worker and his or her family.
Using prevailing wage fringe benefit dollars as they were intended – to provide benefits for workers – just makes sense from a bottom-line perspective. Even without ACA, passing up significant savings on payroll burden by continuing to pay the fringe as additional cash wages just doesn’t add up. It’s an unnecessary expense, and the savings can be realized in the form of leaner bids or increased profits. That’s huge in today’s environment of fewer public works jobs. Then there are the tax advantages to both the employee and employer. And finally, the time and cost of replacing good workers can be exasperating to a small business.
Offering ACA-compliant health care is a win-win that saves you money – immediately. If you have questions about ACA or need assistance, please give us a call or send us an email. The Contractors Plan is here to help government contractors navigate the health insurance maze. We’re a one-stop shop for purchasing coverage, administering benefits, and helping to keep you compliant with the many laws and regulations that apply to prevailing wage workers.
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