What Is Employer Contribution?
Employer contribution refers to the dollar amount your employer will pays towards your health insurance coverage. The employer contribution is paid only if your employer offers health coverage through your work, and you opt in to the employer subsidized health insurance plan. In general, the part of your health coverage an employer will cover is a percentage of the health insurance premium, and does not cover your out-of-pocket expenses, such as deductible and copayments.
Without a substantial employer contribution, you may find that it's cheaper to obtain your own insurance policy outside of what is offered by your employer. There are a number of insurance providers that offer affordable plans, and many may be cheaper or a better fit than one that is offered through an employer without a discounted premium.
Make sure to do some research about other health insurance options that are available to you either through the health insurance marketplace, or through private health insurance companies.
Example of How Employer Contribution Works
Let's say that your health insurance premium totals $6,000 annually. If your employer contribution is 50%, your employer will end up paying $3,000 of your annual premium, leaving you with the remaining $3,000.
The remaining balance of your premium is referred to as employee contribution, and your employee contribution will normally be Infographic deducted from your paycheck. So, assuming you're paid twice a month or bi weekly, you would see a deduction of $125 per check.
Are Employers Required to Contribute to Health Insurance?
Under the Affordable Care Act, employers with more than 50 employees are required to offer health insurance. This is known as the employer mandate. Failure to offer health insurance will typically result in a tax penalty. This tax penalty can often cost more than if the company were to offer subsidized health insurance to their employee, and is one of the many pieces of legislation that attempts to make healthcare more affordable to all.
While some employers may be interested in contributions because they are concerned about the well-being of their employees, there are also potential financial benefits for organizations. If employers contribute at least half of the cost of employee premiums, they can obtain significant tax write-offs through the Affordable Care Act.
How Much Do Employers Contribute to Health Insurance?
Most health plans require employers to pay at least 50% of the premium cost for each employee. Some employers pay significantly more than this amount, but it's up to the employer's discretion.
The Kaiser Family Foundation conducted a study for the average employer contribution towards their employee’s health coverage. This study is broken down as follows:
|Small Employers (3-199)||Large Employers (200+)||All Employers|
|Single Coverage||84% or $5,414||82% or $5,259||82% or $5,306|
|Family Coverage||64% or $11,545||74% or $13,423||71% or $12,865|