What You Need to Know about the Affordable Care Act
Complying with the Affordable Care Act
The Affordable Care Act requires companies with more than 50 full-time employees to provide health insurance coverage to their workers. Should companies fail to follow the terms set by the Affordable Care Act, they can face fines of up to $3000 per employee annually. For this reason, businesses from all over the country have been scrambling to find affordable health insurance coverage for them and their workers. Time is of the essence in this issue, as health insurance rates will only climb up as the demand grows.
In order to ensure that the coverage remains fair and affordable, the Affordable Care Act has set a minimum standard when it comes to the provided health insurance to workers. The first standard is that employers must pay a minimum of 60% of the costs of the health insurance. The second standard is that the contribution of employees must not exceed 9.5% of the household income of the employee.
Does the Affordable Care Act Apply to Your Company?
As previously mentioned, the Affordable Care Act is a mandate that applies to businesses with 50 or more full-time workers. However, there are certain nuances that must be clarified when it comes to the application of the ACA.
For companies with less than 50 employees
If you have less than 50 employees, the Affordable Care Act mandate does not technically apply to your business at the moment. However, it is wise to look at the health insurance coverage in the long term. As a company, there is always room for growth and development.
As your company grows bigger, the number of your employees will significantly increase. It is better to invest on a health insurance coverage now, when rates are relatively stable and more affordable. Another benefit to seeking coverage now is the fact that there are tax deductions and credits for employer and fringe contributions.
For companies with 50 or more employees
If you have 50 or more employees, then you are required to provide health insurance coverage to your workers, with the minimum standards stated above. Failure to do so will mean stiff penalties for companies, paying $3000 per full time employee receiving a government healthcare subsidy and $2000 per full time employee minus the first 30. It should be noted that fringe dollars cannot be used to pay for these penalties, and these are not tax deductible.
Right now, the most strategic thing to do is to provide coverage to your employees, no matter the number of employees you have at the moment. Doing so will lessen your payroll burden, entitle you to tax deductions for employer contributions, and can help you become more profitable as a company.
Dodge Fines and Reduce Your Payroll Burden
Some companies have been calculating the total cost of fines as they measure up to the cost of providing health insurance to their workers. However, there simply is no comparison when it comes to the benefits of giving out health insurance coverage to employees. You not only avoid penalties, but you also save on payroll burdens and taxes.
Non-compliance penalties are costly.
Companies that fail to comply with the Affordable Care Act mandate are going to be slapped with fines ranging from $2000-$3000 per employee. Depending on the number of employees you have, it can cost you a minimum amount of $100 000.
Paying the fringe as cash costs more.
The truth is, it definitely costs more if you pay the fringe portion of the prevailing wage as cash wages. Companies lose a significant amount of savings on payroll burden when cash wages are used instead of a benefits plan. The reduced payroll burden is due to the exemption from FICA, SUTA, FUTA, general liability insurance, and workers compensation insurance assessments on fringe benefits. This could help companies save hundreds of thousands of dollars over the life of a contract.
Strategize Your ACA Plan Now!
Now more than ever, contractors who are affected by the Affordable Care Act should focus on crafting a smart benefits plan strategy. The government is going to be highly critical when it comes to compliance with the prevailing wage law, and the same amount of scrutiny will also be applied on the healthcare reform. As the ACA is a mandate to companies with more than 50 employees, government agencies will use the compliance as a requirement before being allowed in the bidding process. In order to get more jobs, following the terms of the ACA is highly advised.
Seek Assistance from Fringe Benefits Specialists with Years of Experience in the Field!
The Affordable Care Act is a complicated subject, and not all benefits providers can meet the rigorous requirements of assisting government contractors. Still confused about the impact of the Affordable Care Act on your Service Contract Act or Davis-Bacon Act compliance? Ensure that all your bases are covered with the ACA. You need to contact an experienced and reliable benefits provider now. Call ARCHER JORDAN at +1 888-745-0754 today!