Contractors seek answers on ACA implications for business

Friday - 7/26/2013, 6:10am EDT

On the Federal Drive, Alan Chvotkin discusses how the Affordable Care Act could affect government contractors.

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By Melissa Dawkins
Special to Federal News Radio

Government contractors are trying to figure out exactly how the Patient Protection and Affordable Care Act will impact contract pricing and price evaluation decisions.

"There will be issues relating to allowable costs. There will be issues related to how to bid on future contracts when the Affordable Care Act comes into play," said Professional Services Council Vice President and General Counsel Alan Chvotkin in an interview on the Federal Drive with Tom Temin and Emily Kopp. "Companies are starting to bid now for work that will have to be performed after the effective date, and it's certainly unclear whether the government will allow modifications to those pricing rules after the Affordable Care Act goes into effect."

The Professional Services Council, a national trade association of the government professional and technical services industry, hosted a panel discussion to explore how the provisions of ACA apply to industry.

"The Affordable Care Act was not written with government contractors in mind," Chvotkin said.

While the ACA doesn't treat government contracts differently from other non- contracting businesses, Chvotkin said the legislation has unique implications for contractors.

"The Affordable Care Act imposes some other requirements — some minimum thresholds — for those in order to qualify or to be subject to what is called the 'play or pay' requirements. And so, again, the companies will be evaluating the requirements of the Affordable Care Act and seeing how they relate to what their ongoing business is," he said. "Once they make that decision, if they are in this 'pay' area rather than this 'play' arena, that decision has implications in the government contracts. Is that an allowable cost? Will the government reimburse those as a business expense in government contracts? Is it a penalty that is normally unallowable? These are some of the minutia in the government contracts that could amount to hundreds of thousands or millions of dollars for companies."

One change under the ACA likely to impact contractors is the new "full-time" threshold for employees. Under ACA, a "full-time worker" is an employee who logs 30 or more hours per week, as opposed to 40. The change raises questions regarding whether some employees working fewer hours will be exempt from certain statues, Chvotkin said.

"We've been supportive of taking the number of hours back up to 40 from 30 primarily because we're looking for consistency and uniformity. It's hard to create additional systems to track 30 hours, or 29.5 hours, as some companies are considering," he said. "Beyond that, we've not engaged either in the enactment of the law or in its ongoing work. We recognize it has much broader implications."

Chvotkin said he suspects all of the Profession Services Council members provide some form of health care for employees, but the size and scope of coverage depends on the individual business.

Melissa Dawkins is an intern for Federal News Radio

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