What Is Employee Contribution?
If you have a health insurance plan through your employer, it's likely that you have to pay for at least a portion of your premiums. Your employee contribution is the portion of the premium that you have to pay to a health insurance provider for your coverage, but contributions are normally taken out automatically by your employer.
If you're making a contribution as an employee to a healthcare plan, it usually means that you're getting a discount on a plan. However, if your contribution is a large percentage of your premiums, you may be better off finding a plan that's not offered by your employer. Many organizations have healthcare plans that are offered by only one provider. Unless the plan offered is stellar or the employer is making a significant contribution, you may be able to find a cheaper health insurance plan or one that better suits you and your family's needs.
How Employee Contribution Works
In the majority of cases, contributions from employees are taken out of the employee's paycheck after their taxes have been deducted. Deductions are generally automatic, but they may be spread out in different ways depending on the health insurance plan, the employer’s preference, or employee's preferences.
For instance, a contribution may be taken out of the first paycheck of every month, which means the employee will pay a lump sum every month for their contribution. Alternatively, contributions from employees may be split up so a percentage is taken out of each paycheck, which means they will pay less money more often.
Your Employer contribution, on the other hand, is the dollar amount your employer pays towards your policy. This is usually a significant percentage of an employee's premiums, and most companies that do make payments to employee insurance costs contribute more than 50% of the employee's premiums. However, while many employers contribute to the premiums for an employee's health insurance, not all employers cover the premiums for family members or dependents.
Are Employees Required to Contribute to Health Insurance?
There are some employers that still pay 100% of their employees' healthcare, but a survey conducted by Fortune found that this perk is becoming increasingly rare. Employees have no legal obligation to pay any portion of their premium if the employer is willing to cover the full amount, but the employee is still responsible for any deductibles or copays associated with health insurance claims.
If your employer has health care available through the company, as an employee you are not required to opt into the plans that they offer. While these plans tend to be less expensive, you have the ability to search for your own health insurance, and forgo your employee contribution.
How Much Do Employees Contribute to Health Insurance?
The Kaiser Family Foundation compared healthcare data from across the nation, and determined that employers still pay the majority of their employees' premiums, while employees pay a small percentage of their premiums.
The average employee’s contribution is dependent on a few factors. These include the health insurance plan’s requirements, company size, how many people will be on the plan to name a few. According to a study conducted by the Kaiser Family Foundation, the average employer contributes the following:
|Small Employers (3-199)||Large Employers (200+)||All Employers|
|Single Coverage||16% or $1,021||18% or $1,176||18% or $1,129|
|Family Coverage||36% or $6,597||26% or $4,719||29% or $5,277|