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How Much Do Health Benefits Cost Per Employee

Retirement And Employee Stock Purchase Plan

How much do employee benefits cost?

Employers will typically match their employees contributions to their retirement fund up to a certain point. The most common percentage employees will put towards their retirement is 2-6% of their salary.

Additionally, if you sponsor and manage your employees retirement plans, theyll be able to get considerably better returns and save more in tax-free or tax-advantaged accounts.

However, retirement plans arent the only way to take care of your employees future. Many employers, especially startups, will offer their employees an option to purchase a certain amount of stocks at very reduced prices .

If your company is successful and manages to go public, this could allow employees to make a very nice profit once they end up selling their stocks.

How Much Do Employers Pay For Health Insurance

Whether youre exploring cost-effective health plans for your organization, researching health reimbursement arrangements for the first time, or looking into health stipends, a common question business owners have is, how much does health insurance cost per employee?

Rising healthcare costs can make organizations second-guess offering an employer-sponsored health plan. However, the cost of losing employees by not offering health benefits can surpass the cost of supporting your employees well-being, so offering a comprehensive health benefit is vital.

This article will break down the average employer health insurance cost per employee and the average cost of employer-sponsored health insurance. Well also explain how you can use an HRA or health stipend to control your budget.

Use the table contents below to jump to a specific section:

Why Speak To Us

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We all deserve a first class service when it comes to things as important as protecting our health and our finances. Below are just a few reasons why it makes sense to talk to us.

  • There is no fee for our service
  • We are award winning independent insurance advisers who work with all the leading UK insurers
  • Youll speak to a dedicated expert from start to finish

Recommended Reading: Social Security Retirement Benefits Calculator

Compare Company Health Insurance Quotes & Get Expert Advice

Not everyone has time or the expertise to do all of the work involved in taking out an insurance policy for a group of people.

We work with all the UKs leading insurers and understand all the T& Cs. We have processes in place to make setting up a new company health insurance scheme is as hassle free as possible.

Individual Health Insurance Premiums On The Exchanges

Employee Health Insurance Costs Barely Increased This Year

The federal insurance plan marketplace at HealthCare.gov, aka Obamacare, is alive and well in 2021, despite years of its political foes’ efforts to kill it. It offers plans from about 175 companies. Some 12 states and the District of Columbia operate their own health exchanges, which basically mirror the federal site but focus on plans available to their residents. People in these areas sign up through their state, rather than the federal exchange.

Each available plan offers four levels of coverage, each with its own price. In order of price from highest to lowest, they are labeled platinum, gold, silver, and bronze. The benchmark plan is the second-lowest-cost silver plan available through the health insurance exchange in a given area, and it can vary even within the state where you live. It’s called the benchmark plan because it’s the plan the government usesalong with your incometo determine your premium subsidy, if any.

The good news is prices are going down a bit. According to the Centers for Medicare & Medicaid Services , the average premium for the second-lowest-cost silver plan decreased by 4% on HealthCare.gov from 2019 to 2020 for a 27-year-old. Six states experienced double-digit percentage declines in average second-lowest-cost silver plan premiums for 27-year-olds, including Delaware , Nebraska , North Dakota , Montana , Oklahoma , and Utah .

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The Cost Of Employee Benefits

The average cost of benefits per employee was $12.06 per hour for civilian workers, $20.50 per hour for state and local workers, and $10.76 per hour in the private industry.

Before we dive into the cost of different popular benefits, its helpful to understand the cost of an average package. The United States Bureau of Labor Statistics found that in June 2021, the average cost of benefits per employee was $12.06 per hour for civilian workers, $20.50 per hour for state and local workers, and $10.76 per hour in the private industry.


How Much Does Small

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  • $7,813 for single coverage, of which employers contributed $6,485, or 83%.
  • $21,804 for family coverage, of which employers contributed $13,737, or 63%.

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State And Local Government Workers

Not surprisingly, state and local governments spend a bit more than the public and private sectors. The average employer-paid portion of all insurance types is $5.82, or about 11.8% of compensation.

  • Government-funded education and health services typically spend about $6.07 per hour per employee .
  • Likewise, the trend continues for government-funded colleges and universities, which spend a bit more $6.42 per hour per employee . Perhaps in part because of a strong union, primary and secondary education institutions spend about $7.42 , which is about 11.4%.
  • The lowest end of the government worker spectrum is in hospitals, where $5.10 is spent per hour per employee, but still makes up 11.1%of compensation.

Employer Vs Employee Contributions To Health Insurance

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In 2019, employers contributed an average of:

  • $5,946 for single coverage. Employees contributed $1,242.
  • $14,461 for family coverage. Employees contributed $6,015.

The numbers above reflect all plan types, but theres a fair amount of variety between each plan type:

  • For HMOs, the average employer contributed $6,180 for single coverage, while employees contributed $1,058. For family coverage, the split was $14,668 and $6,009, respectively.
  • For PPOs, the average employer contributed $6,222 for single coverage, while employees contributed $1,454. For family coverage, the split was $15,045 and $6,945, respectively.
  • For POSs, the average employer contribution was $6,112 for single coverage, while the employee contribution was $1,072. For family coverage, the split was $12,894 and $6,945, respectively.
  • For an HDHP with a savings option, the average employer contribution was $5,341 for single coverage, while the employee contribution was $1,071. For family coverage, the split was $14,114 and $4,866, respectively.

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So What Are Good Benefits For Employees

Or rather, what employee benefits do people value the most? The easy answer is that employees value all benefits. But, budgets are limited and companies need to find the benefits mix that will have the most positive impact, while also not breaking the bank.

To do this, first be sure to learn what benefits you need to offer by law. This could be national or state law. Make a list and decide if you can extend some of those benefits. For example, in France, employees are guaranteed three to five days of bereavement leave. You could decide to extend this leave if you find that your employees need it.

Then, take a look at surveys to help you determine voluntary benefits your company should offer. Glassdoors Benefits Review survey in the US investigated the correlation between certain benefits and job satisfaction. A correlation of 1 means the benefit is a good predictor of employee satisfaction, while 0 shows no correlation. Heres the list of employee benefits with correlations of more than 0.5:

Another recent survey by a benefits provider identifies the three most popular non-insurance benefits:

  • Paid family leave
  • Flexible/ remote work
  • Professional development
  • You can also look at employee benefits examples from big companies with high employee ratings. You may not be able to afford all these benefits, but they can certainly give you ideas.

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    Average Cost Of Employer

    According to researchpublished by the Kaiser Family Foundation in 2019, the average cost ofemployer-sponsored health insurance for annual premiums was $7,188 forsingle coverage and $20,576 for family coverage. The reportalso found that the average annual deductible amount for single coverage was $1,655 forcovered workers.

    Overall, despite growth in premiums over time, the average cost of employer-sponsored health insurance has remained relatively stable in the health insurance market.

    Employer-sponsored coverage is health insurance offeredthrough your job. Also known as employer-provided health insurance, this mayinclude coverage for current workers, as well as retirees. Typically, youremployer may offer a choice of group health plans to eligible workers and coverspart of the premium cost. Employer-provided health insurance remains the mostcommon type of health coverage in the U.S., according to the KaiserFamily Foundation.

    Source:Kaiser Family Foundation 2019 Employer Health Benefits Survey

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    Shop Around With An Insurance Agent Or Broker

    With so many different options, understanding and ultimately choosing the right health insurance plan can be confusing, Stahl said. The key is to work with an agent who is unbiased and can show you all the options.

    These options may include group health-sharing plans, traditional group plans, ACA marketplace plans or even level-funded plans, which provide rebates at the end of the year if employees have made few health insurance claims.

    By having the opportunity to learn and compare from multiple carriers, you can be sure you are getting the best benefits structure with the best rates available, Stahl said.

    How Much Does Health Insurance Cost For Employers

    The Most Desirable Employee Benefits

    According to Kaiser Family Foundation research, in 2021, the average annual employer healthcare insurance cost was $7,739 for single coverage, up 4% from the previous year, and $22,221 for family coverage, also up 4% from 2020. Survey data also showed that 58% of small firms offered their employees coverage while 99% of large firms offered coverage, averaging a total of 59% of all companies offering their employees some sort of health coverage. Exact costs depend on a variety of factors, such as the state where the business is located or whether the insurance plan is an HMO or PPO.

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    What Percent Of Health Insurance Is Paid By Employers

    When youre considering a new health insurance program, your organization’s contribution strategy is an important decision. In simple terms, how much will employees pitch in for coverage, and what percentage will be paid by the employer?

    With traditional group health insurance plans, the organization must contribute a minimum percentage, leaving the employees to pay the remaining amount, usually through a payroll deduction. So just what percent do employers typically pay in the United States?

    Across the country, a Kaiser Family Foundation survey found that the average percent of health insurance paid by employers is 83% for single coverage and 73% for family coverage. Lets dive into these stats a little deeper.

    Health Insurance Costs Can Vary Dramatically Based On The Plan You Choose Here’s What To Expect In 2022 And How To Select The Best Plan Financially For Your Business And Your Employees

    Employee health insurance benefits are a must-have for many workers. Nearly 50% of Americans receive health insurance benefits through an employer, according to eHealth and the Kaiser Family Foundation . While people without employer-sponsored insurance have the option to find health benefits through health insurance marketplaces or federal programs, the cost of private health insurance has gone up, leaving many Americans without viable options. This means that the insurance benefits an employer offers as part of their compensation management program and how the costs of that insurance are shared with the employee, directly impact a businesss ability to hire and retain the right people.

    Below, weve broken down the current state of health insurance costs in the U.S., including how to keep expenditures down and what health insurance prices in 2022 mean for employers.

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    What Are Employee Benefits

    Before we get into the nitty-gritty of employee benefits , lets define the term:

    Employee benefits are any kind of tangible or intangible compensation given to employees apart from base wages or base salaries.

    This employee benefits definition points to examples of job benefits such as insurance , stock options and cell phone plans. But, employee benefits can be much more than these, from training opportunities to startup perks .

    Basically, any kind of non-wage gain attached to an employees position can be classified as an employee benefit, be it mandatory or voluntarily given by an employer.

    What Factors Impact The Cost Of Health Insurance

    How much do employers pay for health insurance?

    While the costs we just described are averages, there are many factors that go into calculating your companys actual premium costs. The 9 biggest components of your premium are:

  • Age: The average age of your group is probably the most significant factor impacting your premiums. Generally speaking, the base rate is based on a 21-year-old, with rates going higher for those who are older. However, these increased rates cant exceed a 3:1 ratio. That means the rate for a 64-year-old cant be more than three times that of a 21-year-old.
  • State Mandates: Insurance in some states costs more because of state laws that require employer-sponsored insurance to include certain coverage. For example, many states mandate fertility and reproductive health benefits.
  • Group Size: The total number of people in your group which includes covered family members can impact your cost. For example, the larger your group, the lower your rate will likely be because your health risk is distributed among more people, which can offset the costs of those with a disproportionately higher number of claims.
  • Health Care Inflation Factor: This component of your premium is based on the cost of healthcare services used by all members. The number of total claims and how costly they are will determine adjustments to your premium each year, meaning, medical issues that lead to frequent or costly visits may drive it up.
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    Employee Health Insurance Premiums

    If you work for a large company, health insurance might cost as much as a new car, according to the 2020 Employer Health Benefits Survey from the Kaiser Family Foundation. Kaiser found that average annual premiums for family coverage were $21,342 in 2020, which was nearly identical to the base manufacturer’s suggested retail price of a 2022 Honda Civic$22,715.

    Workers contributed an average of $5,588 toward the annual cost, which means employers picked up 73% of the premium bill. For a single worker in 2020, the average premium was $7,470. Of that, workers paid $1,243, or 17%.

    Kaiser included health maintenance organizations , PPOs, point-of-service plans , and high-deductible health plans with savings options in arriving at the average premium figures. It found that PPOs were the most common plan type, insuring 47% of covered employees. HDHP/SOs covered 31% of insured workers.

    Average Employee Premiums in 2020
    Employee Share

    Of course, whatever employers spend on their workers’ health insurance leaves less money for wages and salaries. So workers are actually shouldering more of their premiums than these numbers show. In fact, one reason wages may not have risen much over the past two decades is because health costs have risen so much.

    Which type of plan employees choose affects their premiums, deductibles, choice of healthcare providers and hospitals, and whether they can have a health savings account , among many choices.

    How To Reduce The Cost Of Employee Benefits Programs Without Sacrificing Quality

    The first thing to consider when trying to keep costs down is what coverage youll want to include in your program. Be sure to analyze your program regularly and ask for employee feedback, because often, there are expensive perks that your employees dont really want or use.

    Additionally, it could be a good idea to share some of the costs with your employees by allowing them to contribute. Insurance companies will typically require employees to pay a minimum amount of the premium.

    Inviting employees to contribute is beneficial in two ways. Firstly, youll be able to get them a group deal on the coverage they couldnt get as individuals. Secondly, suppose the employees have a financial stake in the plan. In that case, there will be less abuse and frivolous claims, ultimately reducing the cost for everyone.

    However, once you agree on the percentage your employees will contribute, you should stick to it for at least a year. Insurers will see frequent changes as a sign of instability, and it may reflect poorly on your premiums.

    Once youve decided on what benefits and policies you want to have in your plan, its a good idea to look into reducing their costs.

    Additionally, wellness plans are becoming a crucial part of any good employee benefits plan. Creating and offering services to encourage employees to stay healthy can keep your insurance costs low.

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    Why Are Benefits Important

    Benefits are anything your company can provide, on top of the compensation, to keep your workers happy, and feel valued. Providing benefits your employees will appreciate will keep them from leaving, reduce turnover and training costs, and attract the best possible talent. Moreover, employees might simply not accept your job offer at all if you dont provide benefits, or leave if another company provides a better package: In our survey, 28% of respondents left a job because of a poor benefits package. So its in your best interest to crunch the numbers, speak to your team, and determine the best benefits package for your people.

    Benefits can be very confusing and can come with a hefty price tag. Zenefits has put together many resources to cover various benefits, including an extensive guide here to help you make the right decision.

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