SCA Health and Welfare Benefit Rate

Every Service Contract Act wage determination carries, besides an hourly wage for each occupation, a separate health and welfare fringe benefit figure that the contractor must furnish on top of the wage. Unlike the wages, which are found locality by locality, the health and welfare figure is a single nationwide rate that the Wage and Hour Division revises once a year. This page explains where it comes from and how it is met. It does not state the rate: the current figure is printed on each determination and in the memorandum that announces it, both linked below, and this site does not copy figures from determinations.

A nationwide rate by regulation

Section 4.52 of 29 CFR records a decision the Secretary of Labor made in 1996. The Act calls for fringe benefits “prevailing in the locality”, but the Secretary found, using the variance authority in section 4(b) of the Act, that it was in the public interest to set the benefit component other than holidays and vacation at one national figure. Under 4.52(a) that figure is based on the sum of the benefit costs in the Bureau of Labor Statistics’ Employment Cost Index for all employees in private industry nationwide, excluding benefits required by law (Social Security, unemployment insurance and workers’ compensation) and excluding supplemental pay such as shift differentials, which count as wages. The regulation phased the rate in over four years from June 1997 and has since been applied as an annual update. Holiday and vacation benefits remain locality findings and are listed separately on the determination.

Two exceptions are in the section. Where a single fringe benefit rate is paid to a majority of workers in a class in a locality, typically under a collective bargaining agreement found to prevail, that rate governs instead (4.52(c)). And contracting agencies may request a variance from the national method for a particular industry, supported by survey data showing what benefits prevail there, which is withdrawn if the data are not kept current (4.52(e)).

The All Agency Memorandum

Each summer the Wage and Hour Division announces the new rate in an All Agency Memorandum (AAM), a numbered notice to contracting agencies published on SAM.gov’s wage determinations site. The memoranda for the health and welfare rate have appeared yearly: AAM 239 in June 2022, 243 in June 2023, 246 in July 2024, 250 in July 2025 and, most recently, AAM 252 dated August 10, 2026, each stating that the rate issued under 29 CFR 4.52 increases to the figure it names. How a new rate reaches a running contract follows the contract clause rather than the memorandum: under 29 CFR 4.6(b)(3), the wages and fringe benefits on a contract of more than one year are adjusted after the first year and at least every two years through new wage determinations. The memorandum, not this page, is the statement of what the rate is and when it applies.

Meeting the requirement

Subpart D of part 4 and Fact Sheet 67B set the compliance rules. The health and welfare obligation is separate from and in addition to the hourly wage: a contractor cannot pay a higher wage in place of the benefit, and must keep records that show benefit payments apart from wages (4.170). The obligation may be met with any combination of bona fide fringe benefits (insurance, pension contributions and the like, provided through a legally enforceable plan with contributions made irrevocably to a trustee or third party), with cash paid in lieu of benefits, or with both (4.171). Benefits required by law, and the contractor’s own administrative costs of providing benefits, do not count. Most determinations state the rate as an amount per hour, due for all hours paid including paid leave, up to 40 hours a week and 2,080 a year per employee; where the determination sets a per-hour amount, the contractor must satisfy it employee by employee rather than by averaging across the workforce (4.175). Some determinations instead state an average-cost rate, under which the contractor’s total benefit spending across all service employees is measured. Part-time and temporary employees receive a proportionate share (4.176).

An unfunded, self-insured plan is not ordinarily a bona fide benefit except for vacation and holiday pay, and requires the Administrator’s advance approval (4.171(b)).

What this means for a wage comparison

A Service Contract Act rate for an occupation is therefore larger than the hourly wage on the determination, by the health and welfare figure plus the holiday and vacation entitlements. The wage figures on this site’s occupation pages and state profiles are cash wages from the Bureau of Labor Statistics’ OEWS survey and include no benefit component. The structure of the Act is on the Service Contract Act basics page; the parallel Davis-Bacon rules, under which cash above the base rate can offset the benefit, are on Davis-Bacon fringe benefits.