What’s the ideal employer-to-employee contribution split for premiums?

There is no single formula that fits every business. The goal is to keep coverage affordable for employees and sustainable for the employer. Most organizations contribute 70 to 80 percent of employee-only premiums and 60 to 70 percent for dependents, adjusting based on workforce needs and compliance requirements.

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Follow common benchmarks, then tailor for your workforce
National averages show that employers typically cover:

• 70 to 80 percent of premiums for employee-only coverage
• 60 to 70 percent for dependent or family coverage

This balance keeps benefits competitive while promoting shared responsibility for dependent costs.

Tip: If your workforce includes lower-wage or hourly employees, consider contributing more to maintain affordability and meet ACA standards.

Ensure ACA affordability
Under the Affordable Care Act (ACA), coverage is considered affordable if the employee’s share of the lowest-cost, employee-only premium does not exceed 8.39 percent of their household income (2024 limit).

Best practice: Use one of the IRS safe harbors (W-2, Rate of Pay, or Federal Poverty Line) each year to confirm affordability and avoid penalties.

Adjust contribution strategy by employee class
Employers may vary contributions for different employment classes, such as full-time, part-time, or salaried employees, as long as those distinctions are legitimate and applied consistently.

Example structure:

• Full-time employees: 75 to 80 percent employer contribution
• Part-time employees: 50 to 60 percent employer contribution
• MEC or limited plans: flat-dollar contribution for affordability

Important: Maintain consistency within each class to comply with ACA and ERISA requirements.

Consider fixed contributions or ICHRA models for predictability
An Individual Coverage Health Reimbursement Arrangement (ICHRA) allows employers to set a defined, tax-free contribution toward employees’ individual health insurance premiums. This gives employees flexibility while stabilizing employer costs.

Example: Contributing $350 per month for full-time employees and $200 per month for part-time staff can provide affordable, compliant coverage across classes.

Invest in access, not just insurance
Redirecting even a small portion of premium dollars toward built-in primary care can increase engagement and reduce long-term costs.Impact: Fewer emergency room visits, better health outcomes, and more predictable renewals.

Vitable helps employers maximize the value of every benefits dollar. By pairing any contribution model with Vitable’s $0 primary care, mental health, and prescription access (virtual or in home), you can deliver high-value care employees will actually use without raising total costs.

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• Benchmark: 70 to 80 percent employer contribution for employee-only coverage.
• Keep coverage affordable under ACA limits.
• Use fixed contributions or ICHRA for predictability.
• Pair with Vitable’s $0 care for real, everyday value.

With the right balance and structure, you can stay compliant, manage costs, and improve employee satisfaction.

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