If you pride yourself as being a responsible employer, then you should be aware of the changes made by the Affordable Care Act (ACA) regarding the way fringe benefits should be offered to employees. If you are unaware of these changes, you better consult a fringe benefit specialist as soon as possible to understand how you can utilize these changes to benefit your organization.
If you are searching for more information on fringe benefits, don't worry we got your back! In this article, we will discuss the various advantages of fringe benefits and how they work under the terms of the ACA.
Fringe Benefits: What are they?
As the name suggests, fringe benefits are benefits granted to employees by their employers. Some of these fringe benefits are exempted from taxes but under a specific set of conditions. Even though the employer voluntarily provides most of these benefits, there are particular benefits that employers are expected to provide their employees.
Some of the benefits you are obliged to give your employees include comprehensive retirement plans, health insurance cover, paid leaves (just to mention a few). The Davis-Bacon Act/Related Acts (DBRA) and the Service Contract Act (SCA) require federal contractors and employers to include fringe benefits such as the ones stated above in their employee wages.
Fringe Benefits under the Affordable Care Act (ACA)
As stated earlier, it is imperative for all employers to provide their employees with fringe benefits, as required by the SCA and DBRA. Many employers prefer to offer their employees with fringe benefits in the form of cash as an added fraction of their salary. Other employees prefer to disburse these benefits in the form of retirement plans or health care coverage.
The ACA implicitly states that employers who have a labor force of more than 50 full-time employees to ensure a portion of employee fringe benefits is in the form of health coverage. It is important to note that the ACA charges fines to all those employers who do not provide coverage to their employees or those who do not pay the required minimum coverage. Therefore, it is necessary to pay your employees their fringe benefits if you are not willing to pay fines of up to $2000-$3000 per employee (For every employee after the first 30 employees).
If your Employees are less than 25 in number, including health coverage as part of your employees’ fringe benefits then becomes optional. This option is highly beneficial to your employees since they will qualify for employer tax credits as long as their average annual wages are less than $50000.
We are not going to lie to you, complying with SCA and DBRA under the terms of the ACA can be a tricky affair. However, we encourage all employers to seek guidance before deciding on how to disburse fringe benefits to their employees.
If you are stuck on deciding whether to provide your employees' health coverage or to risk the penalties, it is advisable to have a detailed conversation with a fringe benefit specialist. Contact ZupnickAssociates.com to understand more on how fringe benefits work under the terms of the ACA and ways on how you can effectively deal with it as an employer.