What Percent of Health Insurance is Paid by Employers?

November 8, 2018

When evaluating a new or existing health insurance program, your company’s contribution strategy is an important consideration. In simple terms, how much will individual employees pitch in for coverage, and what percent of health insurance is paid by employers?

With company-provided health insurance, the employer must contribute a minimum percentage and employees pay the remaining amount, usually through a payroll deduction. So, just what percent do employers pay?

Across the country, Kaiser Family Foundation found the average percent of health insurance paid by employers is 82 percent for single coverage and 71 percent for family coverage. Let’s dive into these stats a little deeper.

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Employers Pay 82 Percent of Health Insurance for Single Coverage

In 2018, the average company-provided health insurance policy totaled $6,896 a year for single coverage. On average, employers paid 82 percent of the premium, or $5,655 a year. Employees paid the remaining 18 percent, or $1,241 a year.

For family coverage, the average policy totaled $19,616 a year with employers contributing, on average, 71 percent, or $13,927. Employees paid the remaining 29 percent or $5,689 a year.

Small Employers Contribute Significantly Less to Family Coverage

For small employers, however, the data tells a different story. According to the 2018 KFF/HRET survey, small employers (defined as employers with 3–199 employees) tend to contribute significantly less for family coverage.

For smaller employers:

  • The average policy for single coverage totaled $6,896 a year.
  • The average percent paid by employers for single coverage was 82 percent, or $5,655 a year.
  • The average policy for family coverage totaled $18,739 a year.
  • The average percent paid by employers for family coverage was 62 percent, or $11,618 a year.

Average Health Insurance Contribution Paid By Employers, By Employer Size

Small Employers
Large Employers
All Employers
Single Coverage
Family Coverage

Source - KFF/HRET

Why are small employers contributing less to family coverage? One speculation is cost.

Health insurance is expensive with costs increasing annually for 90 percent of companies. In an effort to sustain coverage and manage costs, increasing employee cost-sharing for family coverage is a common approach.

Alternative Contribution Strategies

As small employers grapple with health insurance contribution strategies and tight budgets, they often turn to alternative contribution strategies.

For example, instead of purchasing and paying for a company-provided health insurance policy, small employers are providing a health reimbursement arrangement (HRA)—an arrangement in which employers provide an allowance toward employees’ individually-purchased health insurance premiums. Because these arrangements allow employers to define their own contribution (up to federal limits), small businesses often find them a more affordable option.

Using a compliant HRA, smaller employers offer tax-free health benefits without having to deal with costs, participation requirements, or minimum contribution percentages associated with company-provided insurance.


When looking at what percent of health insurance is paid by employers, we see that there are differences between small and large employers. Across the nation, employers are contributing, on average, 82 percent for single coverage and 71 percent for family coverage. Small employers tend to pay about the same toward single coverage and significantly less (62 percent) of family coverage. Because of the high costs and contribution requirements of traditional company-provided health insurance policies, many small employers are taking a second look at individual health insurance and a reimbursement strategy.

Do you have questions about health insurance contribution strategies or small business health insurance? Leave a question below. We’ll help answer.

Wondering how much to give to your employees for benefits?
See what percent of employee health insurance employers provided in 2017.
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