The Cost of Family Health Insurance Reimbursement

Written by: Christina Merhar
Originally published on March 14, 2016. Last updated March 16, 2016.

Nationwide, firms are adopting employer-funded family health insurance as an The Cost of Family Health Insurance Reimbursementalternative to traditional employer health benefits. One of the primary reasons for mass adoption by smaller firms is cost savings. As detailed in a new report, employers using Zane Benefits’ software realized cost savings of 57 percent, on average, compared to average group health insurance costs. This article outlines the cost of family health insurance reimbursement and trends in employer allowances and utilization. 

Note - For additional background or to access the complete data set, click here to download the full study, “The Employer-Funded Individual Health Insurance Annual Report 2016.”

What is Family Health Insurance?

In this article, family health insurance is defined as a health insurance policy purchased by an individual to cover him or herself, and family members. Family health insurance is purchased through the public Marketplaces or on the private market (ex: through a broker, insurance company, or online). For those purchasing coverage on the public Marketplaces (ex:, federal subsidies are available to those who meet certain income limits.

If you are a small business employer, or work for a small business, there is a good chance you purchase your own family insurance. That is because today, only about a 50 percent of small and medium-sized employers offer employees an employer health insurance policy. Instead, many small employers offer a benefits program to reimburse employees for eligible family health insurance policies.

Related - Who is Adopting Employer-Funded Individual Health Insurance?

The Cost of Family Health Insurance Reimbursement

As we wrote about in detail last week, the report provides a detailed, nationwide profile of how employers and employees are using employer-funded family health insurance today. The findings are based on a sample of 2,200 employers and 10,500 participants using Zane Benefits’ software during the 2015 calendar year. So, what about the cost of family health insurance?

According to the report:

  • The average employer-funded allowance offered is $426 per month, per employee. This average includes all states and family sizes.
  • The average employee utilization amount of the allowance, among all states and family sizes, is $380 per month, per employee (an 89% utilization rate). As such, the actual employer contribution toward health benefits averages $380 per month, per employee.
  • Compared with offering traditional group health insurance coverage, employers using employer-funded family health insurance save an average of 57% on comparable, comprehensive health benefits. This gives small business employers the ability to afford and, in many cases, improve their employee benefits offering.

For state-by-state cost and utilization breakdown, download the full report here.

Average Employer Allowance By Family Size

According to the report, the average allowance is $426 per month, per employee. Broken down by family size, the average employer allowances are:

  • Single: $290 per month
  • Single with children: $367 per month
  • Married: $463 per month
  • Married with children: $581 per month

Employer-Funded Individual Health Insurance Annual Report 2016


Employers all over the nation are implementing employer-funded individual health insurance solutions as an alternative to traditional group health insurance benefits. With this type of benefits model, the employer has complete control over the amount of allowances offered to employees. On average, the report found the average employee allowance to be $426 per month, per employee - with varying allowance amounts based on family status.

What questions do you have about the cost of employer-funded family health insurance? Download the full report here, or leave a question below.

Originally published on March 14, 2016. Last updated March 16, 2016.


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