What percent of health insurance is paid by employers? The answer varies based on location and the type of coverage in question. According to the KFF 2023 Employer Health Benefits Survey, the average annual health insurance premium for a single person is $8,435, while a family plan costs $23,968. Small firms often incur higher costs than larger ones due to the nature of cost-sharing in group plans.
When selecting the right level of health coverage for your business, it is important to understand how costs are divided in employer-sponsored plans. This will help you develop a cost-effective solution that supports your workers while ensuring expenses stay reasonable for your organization.
Employees pay for health insurance through premiums. Employers pay by covering a portion of their total health insurance premium, which averages 73-83%.
Benefits of Employee Contributions
Employees lower the cost of providing health insurance as a benefit through their premium contributions. In group plans, the cost-sharing model helps lower insurance providers’ risks while making coverage more affordable for employers and employees.
Another benefit to employee contributions is increased healthcare utilization. By contributing toward their own premiums, employees become financially invested in their health insurance. The awareness of this cost encourages them to take advantage of benefits they have available; this can prompt them to seek medical treatment when they need it and be proactive with preventive services.
Employers who want to maximize the value of their own contributions adopt a cost-sharing model to encourage greater employee healthcare engagement.
Benefits of Employer Contributions
Employer contributions have overarching benefits for any organization. Generous contributions to employee health insurance can:
- Attract and retain top talent
- Demonstrate commitment to employee well-being
- Provide financial stability for employees
- Reduce absenteeism
- Improve productivity by ensuring employees stay healthy
Employees often consider health insurance one of the most important job benefits a company can offer. According to a poll by the U.S. Chamber of Commerce, 96% of employees view health insurance as extremely or very important to them. Additionally, 89% of employees stated they would prefer to obtain health insurance through an employer than by other means.
While businesses with over 50 full-time employees are legally obligated to offer health coverage, many small firms do so as well. Providing health insurance or medical reimbursement demonstrates care and concern for your employee’s well-being. By expanding workers’ benefits beyond wages, employers lay the groundwork for a healthy company culture.
Finding the Right Balance
While employer-sponsored health insurance has many benefits, it also comes at a high cost to businesses. Finding the right balance between employee and employer contributions can be achieved through several strategies, including:
- Conduct a cost-benefit analysis. Weigh the pros and cons of each plan you consider to determine the return on investment (ROI) of contributions. You can also consider how much your contribution can be adjusted to keep costs manageable for employees while still saving your company money.
- Offer different plan options with varying contribution levels. Having various contribution levels allows employees to customize their plans, potentially saving employers more on coverage. When given the opportunity, some employees may opt for higher premiums for a lower deductible, which can reduce costs for the company.
- Communicate openly with employees about contributions and benefits. Have educational meetings to discuss coverage options, payment structures, and benefits available to employees that help them make the most informed decision for their needs. This can help avoid employees taking on coverage that exceeds their needs and incurs unnecessarily high costs.
Legal and Regulatory Considerations in Florida
Although Florida doesn’t mandate health insurance, the Affordable Care Act mandates all American employers with over 50 full-time employees must offer some type of coverage. Health insurance must include essential benefits, including mental healthcare and maternity care.
When calculating costs for affordable coverage, it is important to ensure compliance with the Florida Minimum Wage Act. This act mandates all employers to pay non-exempt workers at least $11 per hour with annual increases of $1 per hour through 2026.
While the focus is often on employers when it comes to cost-savings, it’s important to consider how premiums will affect employees, too. Those with lower incomes may need additional coverage from their employer to actually afford health insurance. Offering lower-income employees high-premium plans can ultimately lead to a lack of coverage that puts workers’ well-being at risk.
Businesses should consider how they will balance payroll and benefits together and create a comprehensive benefits package that gives their employees flexibility and peace of mind.
Conclusion
Health insurance in business leverages cost-sharing of annual premiums to give employees and employers a better balance in their budgets. Comparing options and considering individual employee needs will help you find the right plan for your organization. Contact us today to get started.
