DOL Announces Updated SCA Health & Welfare Rates for 2026
The U.S. Department of Labor (DOL) has announced updated Health & Welfare (H&W) fringe rates for Service Contract Act (SCA)-covered contracts. Because the H&W fringe plays a critical role in funding employee benefits and influencing contract pricing, these annual adjustments are important for contractors to monitor and understand.
As benefit costs continue to rise, aligning benefit strategies with available fringe dollars can help contractors manage costs, reduce financial exposure, and remain competitive during contract bids, renewals, and option periods.
2026 SCA Health & Welfare Rates
The DOL has announced the following H&W rates for SCA-covered employees:
- $5.92 per hour (previously $5.55)
- $5.42 per hour for EO 13706 contracts (previously $5.09)
- $2.51 per hour for Hawaii Prepaid Healthcare Act (HPHCA) employees
- $2.01 per hour for HPHCA employees on EO 13706 contracts
Effective August 10, 2026, the Wage and Hour Division (WHD) will begin posting the updated H&W rates on applicable Wage Determinations.
When Do Contractors Implement the New Rates?
A common misconception is that contractors should immediately begin applying the new fringe rate once it is announced. However, implementation is tied to the Wage Determination applicable to the contract.
Contractors must use the H&W rate listed on the Wage Determination that applies on:
- The anniversary date of a multi-year contract, or
- The beginning of a contract option period
In addition, contractors should only implement the updated rate after receiving formal notification from their Contracting Officer.
Why This Matters
The annual H&W fringe adjustment can have a meaningful impact on contract performance and pricing strategy.
Key considerations include:
- Evaluating whether current benefit offerings remain aligned with available fringe dollars
- Understanding the potential impact on labor costs and contract pricing
- Reviewing bid strategies and future proposals
- Assessing financial exposure associated with rising healthcare and benefit costs
- Planning for option period renewals and contract modifications
For many contractors, these annual changes create opportunities to optimize benefits programs while maintaining compliance with federal labor requirements.
How The Boon Group and GSA National Can Help
Understanding how H&W rate changes affect your organization requires more than simply reviewing the updated numbers. Contractors should consider the broader impact on benefits funding, proposal development, pricing strategies, and long-term contract profitability.
The Boon Group and GSA National work with government contractors across the country to navigate SCA compliance requirements and develop benefit strategies designed to maximize available fringe dollars.
If you have questions about the new 2026 H&W rates or would like assistance evaluating the impact on your contracts, proposals, benefits program, or pricing strategy, our team is here to help.
Contact The Boon Group and GSA National to discuss how these changes may affect your organization.
On July 13th, the U.S. Department of Defense Chief Information Officer Kirsten Davies signed out a memo to suspend the November 10, 2026, deadline for Phase 2 of the Department’s Cybersecurity...
On March 26, 2026, Executive Order 14398 (Addressing DEI Discrimination by Federal Contractors) marked a meaningful shift in how compliance is evaluated in federal procurement. Together with new...
On March 26, 2026, Executive Order 14398 (Addressing DEI Discrimination by Federal Contractors) marked a meaningful shift in how compliance is evaluated in federal procurement. Together with new...