Fringe benefits are required to be provided separate from and in addition to the specified minimum hourly rate provided on the wage determination. As such, any increase in the H&W rate would be addressed separately from the basic, hourly wage determination rate. Based on the information you provided, it appears the contractor is entitled to the separate increase in the H&W rate despite the combined rates falling within the combined minimum WD rate. You may find the U.S. Dept. of Labor's FAQ section on fringe benefits helpful.