What are Fringe Benefits and How Do They Work under the ACA?

Every employer should know the basics of fringe benefits.

The enactment of the Affordable Care Act (ACA) has made several changes to the way employers should provide fringe benefits to their employees. As responsible employers, it is your duty to know what these changes are, and how these will affect the way you run your business.

By consulting with a fringe benefit specialist or a group of experienced fringe benefit experts, you can decide the track that you want to take as an employer, and how you can use these changes for the benefit of your company.

In this article, we are going to discuss the basics about fringe benefits, and how they work under the terms of the ACA.

What are Fringe Benefits?

Fringe benefits are benefits given by employer to their employees, with some being tax exempt under a certain set of conditions. Fringe benefits are generally voluntarily provided by employers. However, there are particular fringe benefits that have become expected by employees from employers. These include health insurance, paid leaves, retirement plans, cash in lieu of benefits, and the like.

Under the Service Contract Act (SCA) and the Davis-Bacon Act/Related Acts (DBRA), employers and federal contractors must pay the prevailing wage to their employees, and must include fringe benefits like the ones stated above.

Fringe Benefits under the Affordable Care Act (ACA)

As previously mentioned, fringe benefits should be provided by employers to their employees under the terms of the SCA and DBRA. Although many employers choose to provide fringe benefits in the form of health coverage, retirement plans, and the like, there are others that prefer to pay the fringe portion of the prevailing wage in cash.

Under the ACA, employers with more than 50 full-time employees will be compelled to use the fringe portion of the prevailing wage for health coverage instead of providing cash in lieu of benefits to their employees. If you do not provide coverage to your employees, or you provide a health coverage that does not meet the minimum essential coverage, you will face fines that amount to $2000-$3000 per employee (minus the first 30 employees).

Employers with less than 25 employees can also opt to provide health coverage to their employees as part of their fringe benefits. By doing so, they can qualify for employer tax credits, as long as the average annual wages of their employees amount to less than $50000.

Consult Experienced Fringe Benefit Experts. Consult ARCHER with JORDAN.

Complying with the SCA and DBRA under the terms of the ACA is a complicated process. Employers are encouraged to seek assistance from a fringe benefit specialist or a group of fringe benefit experts before deciding what to do with the fringe portion of the prevailing wage of their employees.

On the issue of providing healthcare or risking penalties, an in-depth discussion should be done between an employer and a fringe benefit specialist. Contact ARCHER JORDAN now by calling +1 888-745-0754 to know more about how fringe benefits work under the terms of the ACA and how you can effectively deal with it as an employer. 

3 handbook cover images.

For Government Contractors

Our Contract Compliance
Handbook Series will help ensure your company is fully compliant and positioned to win and secure more bids!


AD & D
Affordable Care Act
AK Prevailing Wage
AL Prevailing Wage
AR Prevailing Wage
AZ Prevailing Wage
CA Prevailing Wag
CA Prevailing Wage
CA Prevailing Wage 401k
Call Centers
CO Prevailing Wage
Compliance Tips
Critical Illness
CT Prevailing Wage
Davis Bacon Act
DE Prevailing Wage
Department of Labor
Disability Insurance
Employee Benefits
Employee Training
Employer Tips
Farm Labor Plan
Fixed Indemnity
FL Prevailing Wage
Fringe Benefits
GA Prevailing Wage
Government Contracting
Government Contractors
Health and Welfare Wrap
Healthcare Benefits
HI Prevailing Wage
Hospitality Benefits
Hourly Seasonal Workers
Hourly Workforce
Human Resources
ID Prevailing Wage
IL Prevailing Wage
IN Prevailing Wage
IO Prevailing Wage
KS Prevailing Wage
KY Prevailing Wage
LA Prevailing Wage
Limited Medical
MA Prevailing Wage
Major Medical Insurance
McNamara-O’Hara Act
MD Prevailing Wage
ME Prevailing Wage
MI Prevailing Wage
MN Prevailing Wage
MO Prevailing Wage
MS Prevailing Wage
MT Prevailing Wage
NC Prevailing Wage
ND Prevailing Wage
NE Prevailing Wage
NH Prevailing Wage
NJ Prevailing Wage
NM Prevailing Wage
NSRMCA Members
NV Prevailing Wage
NY prevailing wage
OH Prevailing Wage
OK Prevailing Wage
OR Prevailing Wage
PA Prevailing Wage
Part Time Employees
Podcast Guest Appearances
Prevailing Wage
Prevailing Wage Workers
Restaurant Group Benefits
Retirement Plans
RI Prevailing Wage
SC Prevailing Wage
SCA Audits
SCA Compliance
SD Prevailing Wage
Seasonal Workers
Service Contract Act
Small Business
State Prevailing Wage
SUB Plan
Supplemental Benefits
Supplemental Unemployment
Third Party Administrator
TN Prevailing Wage
Trust Services
TX prevailing wage
UT Prevailing Wage
VA Prevailing Wage
Violations – SCA
Voluntary Benefits
WA Prevailing Wage
WI Prevailing Wage
Workplace Health
Workplace Safety
WV Prevailing Wage
WY Prevailing Wage