ABC’s New ‘Smart Return Account’ Can Keep You in Compliance with New State Regs


If you’ve bid on a state project lately, you’ve either received, or should be receiving, an affidavit to sign regarding employee health insurance.

What’s all this about an affidavit? In July 1, 2019 Senate Bill 433 “Payment of Employee Healthcare Expenses,” took effect. It requires any contractor, and any and all subcontractors, working on a state project to attest to providing one of the following:

  1. The firm pays aggregate employee health expenses of at least 5% of the aggregate social security wages paid; or
  2. The firm pays 50% or more of the required premium necessary to obtain employee coverage by a credible health insurance plan

Prior to July 1, 2020, the following option is also available:

  1. The firm pays some portion of the employee health care expenses under a contract with a credible health care insurance plan or through a collective bargaining agreement. You assert you’ll meet the requirements of Option 1 or 2 above upon contract renewal.

“Most contractors don’t even know about this bill until they receive the affidavit,” says Dick Asher, of ABC Greater Baltimore.

Even if you offer health insurance to your employees, you may be stuck, says Asher. “When the federal tax relief bill was passed, it eliminated the mandate for health insurance.” That’s created an unforeseen problem.

You may have employees who want to opt out of purchasing health insurance altogether, says Asher. “Many contractors have employees who want to keep more in take home pay, so they turn down healthcare, even with a generous employer contribution.” Having employers on state-funded projects who choose to forego health insurance automatically puts you in non-compliance of SB 433.

The good news is that ABC Greater Baltimore has a quick, inexpensive fix for this health insurance quandary. Our new “Benefit Advantage Plan” helps our members provide additional health and retirement benefits for those contractors doing public work. One of the tools in this benefit package is the Smart Return Account, or SRA, which functions as a qualified health care plan meeting the definition of “Credible Health Insurance Plan” as spelled out in SB 433.

With an SRA account, the employer contributes a certain dollar amount per hour for every hour the employee works on the state job. The employee then gets a Visa card loaded with that contribution which they can then use for qualified medical expenses only.

“It doesn’t cost the employee anything because the money to fund the SRA comes out of the fringe portion of the wage, which the employer is using to fund health insurance,” says Asher. “With this tool, all the employees on the state job site will be covered and the employer meets the qualification test.”

Opening an SRA costs employers a one-time fee of $200 to establish the plan. The monthly administrative fee of $10 per employee is included in the hourly contribution and is a credit against the fringe, therefore there is no additional cost to administer the plan.

What’s not a quick fix: While the final regulations aren’t yet written, it’s also anticipated that general contractors would be responsible for all subcontractors complying with the new regulation, says Asher.

For more information on SB 433 and how your company and subcontractors can sign up for ABC’s Smart Return Account, contact Dick Asher at