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.