How much does health insurance cost with a job

Updated Sep 15, 2022

How much should your employees pay for health insurance? [2022 UPDATED]

From the insurance plan your company chooses to your employees’ health conditions, many factors affect how much employees pay for health insurance. Before detailing these items, let’s take a look at some facts that reflect, on average, what these payments look like in the U.S. This data is from the 2020 National Compensation Survey (NCS) by the U.S. Bureau of Labor Statistics (BLS):

• The average cost for healthcare per employee-hour worked was $2.64 for private industry workers.
• 86% of workers participated in medical care plans with an employee contribution requirement, where employees paid $138.76, and employers paid $459.70 per month.
• 72% of workers participating in single coverage medical plans with contribution requirements had a flat-dollar premium, and the median amount was $120.06.

Kaiser Family Foundation (KFF), a reputable organization that generates trusted information on national health issues, reported in their 2021 Employer Health Benefits Survey: “In 2021, the average annual premiums for employer-sponsored health insurance are $7,739 for single coverage and $22,221 for family coverage.” 

In terms of premiums, the report found that most covered workers contribute to the cost of the premium for their coverage (17% of the premium for single coverage and 28% of the premium for family coverage, on average). 

Specifically, for covered employees at small firms, the average premium for single coverage is $7,813 and $21,804 for family coverage. “The average annual dollar amounts contributed by covered workers for 2021 are $1,299 for single coverage and $5,969 for family coverage,” the report continues.

When it comes to deductibles, the KFF report says, “Among covered workers with a general annual deductible, the average deductible amount for single coverage is $1,669.”

With this comprehensive scope, you may now have an idea of how much employees have to pay for health insurance, but, as we initially mentioned, many other variables affect the final dollar amount for both employee and employer. Let’s take a closer look.

Related: How much does small business health insurance cost in 2022?

Why does health insurance cost vary so much?

Health insurance is a complex subject. We know even some of the basic terms can be confusing. If your employee asks, “How much do I have to pay as an employee for health insurance?” you need to consider some of the following criteria.

Your company’s budget

Especially if you’re a small or mid-sized company offering health benefits for the first time, allocating a part of your budget to pay for these packages is fundamental, not only to retain the talent you already have but also to attract new employees.

As we mentioned before, this item is one of the highest expenses your company will incur. You need to be aware of how much is a good starting point for you.

From there, you must decide what percentage of employee premiums you are capable of paying. You should also estimate how many employees will use their health insurance and if it will only cover them or their dependents as well. This will largely define how much the employee will end up paying.

It is also recommended that you listen to what your beneficiaries have to say regarding the cost of the portion of the plan they are willing to pay and the type of services they want to be covered.

Related: What is a self-funded medical plan?

Plan type

The plan type refers mainly to whether it is fully-funded, level-funded, or self-funded. 

Level-funded plans tend to be more favorable for small and mid-sized businesses with overall healthy employees because rates end up being lower, as the company funds the plan directly. These are also easier to budget for because the employer pays a fixed amount and receives reimbursements on any unused amount.

These plans are tax-exempt for some federal and state taxes and allow for additional savings in administrative costs and claims management expenses, among others. Both employers and employees can deduct premium costs from their taxes.

There may be many options for the employee to choose from within a plan type, depending on the deductible amount, the out-of-pocket maximum cost, and the reimbursement percentage after the deductible.

Location

Your company’s location determines how much the employee has to pay for health insurance. Every state has its local rules and regulations, living costs, and medical offerings.

Personal variables

The employee will pay different amounts if they choose a plan to cover themselves individually or to include a spouse or a larger family group. Age also has an impact on the final dollar amount to pay. Younger people will usually pay lower premiums than older individuals because they typically have fewer health conditions and see doctors less frequently, resulting in fewer claims.

Lastly, lifestyle plays a role in costs. Obese employees, for instance, can expect to pay a higher premium, as they are more prone to illness and make more claims than a healthier person. Similarly, tobacco use can significantly increase how much an employee ends up paying for health insurance.

Offering health benefits: A competitive advantage [2022 UPDATED]

Hiring is a challenge in 2022.

According to The New York Times, “As the United States emerges from the pandemic, employers have been desperate to hire. But while demand for goods and services has rebounded, the supply of labor has fallen short, holding back the economy. More than two years after the Covid-19 recession officially ended, some sectors haven’t found the workers they need to operate at capacity.”

Recruiters are competing to gain the attention of a talent pool that is “millions short of where it would have been had it continued to grow at its prepandemic rate.”

One of the best recruiting tools in a competitive labor market is an attractive health benefits package. Good health benefits are a magnet for top staff at any company and will also help you retain committed employees. Although healthcare is of the most expensive benefits, it is undoubtedly an investment into your company’s future.

Related: Advantages of healthcare benefits for recruiting, retention and performance

What is attractive in a health plan benefits list?

Employees and candidates will take a detailed look at the health plan your company offers and consider it either beneficial for them or not. Here are some criteria they will more than likely evaluate:

Medical network

Most applicants and current collaborators will consider the medical network they will have access to as an asset. Can they go to the same providers they have used in the past, or will they have a limited network to choose from? A plan that requires employees to select a provider from an established carrier network vs. a plan that gives them the freedom to choose any provider will significantly impact how much employees pay for health insurance.

Dental and vision

While not automatically included in a health insurance plan, dental and vision services are still considered by most to be a necessity. They can be added into most plans or paid for separately. A health plan is much more captivating when it includes comprehensive care. 

Mental health

Especially post-pandemic, mental health has become a mainstream concern for people of all ages. Services from behavioral health coaches, licensed therapists, and psychiatrists have increased in popularity. According to a recent survey from Sana Benefits, 43% of small and medium-sized businesses currently provide mental health coverage to employees. A health plan covering these mental health services could be vital for employees and candidates who may be struggling.

Physical wellness

Health maintenance is not only about treating illnesses but also about preventing them. Engaging in routine physical activity is a great way to keep a vibrant lifestyle and sustain many health indicators at the proper levels. Does the insurance plan you offer cover options for the person to work out in various disciplines? Some plans offer perks and incentives to motivate members to engage in local wellness programs.

Virtual care

Reducing the need for a commute to visit a health practitioner might be a convenient option within a plan. People have become accustomed to using virtual doctors’ appointments to quickly and easily receive a medical diagnosis and prescription over the phone, computer, or mobile app. It also enables employees to take less time off of work for in-office doctors’ appointments. Does the health plan you are considering cover telemedicine appointments, and will your employees need to pay the same copay to see a virtual provider?

Maternity care 

Medical and wellness needs for pregnant employees could start months before the actual pregnancy occurs and could extend until the baby is a few months old (when the person who gave birth comes back to work). Hence, comprehensive maternity coverage may be desirable for some of your employees or candidates.

In the end, your potential and current workforce will make their own cost-benefit-based decisions when presented with a health insurance plan. They want to save as much money as possible, but they also want to be confident that their health and wellness are in good hands.

Sana offers level-funded health plans to small businesses that include valuable wellness benefits while also saving you hassles, money, and hidden fees. Learn more about how we make healthcare affordable, accessible, and understandable.