"Government contractors who use a cash-in-lieu approach for their [Service Contract Act (SCA)] employees may find it costs more than they expect to satisfy the ACA's 'affordability' requirement since the cash-in-lieu payments do not count as employer-provided health coverage under the ACA. Although the cash-in-lieu payments satisfy the employer's fringe benefit obligations under the SCA, no similar credit is given to the employer for such payments under the ACA. Moreover, whatever portion of a cash-in-lieu payment is applied to pay the premium cost for employer-provided group health coverage will count as an employee cost, not employer cost. As a result, government contractors could face significantly increased costs unless they reconsider the popular cash-in-lieu approach to fringe benefits."

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