Average Cost Of Employer-Sponsored Health Insurance [2023]: What Percentage Of Health Insurance Do Employers Pay?

Research Summary. Affordability remains a big concern for companies and employees alike, as health insurance premiums have increased much faster than overall income or salaries. And, although insurance is widely available among larger companies, only about half of the small-to-medium-sized businesses offer coverage to their employees.

To find out more about the average cost of employee health insurance, we’ve gathered all of the most essential facts and trends. According to our research:

• In 2021, the average health insurance premium through employers was $7,739 for single coverage and $22,221 for family coverage.

• Employers pay for 78% of single coverage employee health insurance plans and 66% of family coverage plans, on average.

• Roughly 155 million people have employer-based coverage as of 2021.

• Health care is typically one of the most expensive benefits for employers to provide, constituting 7.8% of total compensation for civilian workers in September 2022.

• The average premium for family coverage has increased 22% over the last five years and 55% over the previous ten years.

• 40% of non-elderly adults said that they or a family member had difficulty affording employer-based health insurance or health care or had problems paying medical bills.

• Medium-to-large firms are more likely to cover additional health care services such as telemedicine and those provided in retail clinics. However, smaller firms that offer health insurance also offer additional coverages like dental, vision, 401(k), life insurance, and paid family leave.

For further analysis, we broke down the data in the following ways:
Average Cost | Afforability | HMOs, PPOs, and Other Plans | Coverage

General Employer-Sponsored Health Insurance Statistics

Employer-sponsored healthcare coverage is an essential perceived benefit among employees, which is the top reason why many companies offer it. Additional reasons include boosted productivity and tax benefits.

However, the percentage of firms offering employer-sponsored health insurance varies widely by the number of employees, with smaller businesses less likely to provide access to coverage than their larger counterparts.

• Employer-sponsored, also known as employer-provided health insurance, is coverage provided through a job to eligible workers.

  In most instances, an employer offers different group health plans, and employees are responsible for covering part of the premium cost. This is currently the most common type of health coverage in the U.S.

• Roughly 155 million people have employer-based coverage as of 2021.

• Companies began using healthcare during WWII as a means to attract talent, particularly women.

• Offering health insurance may be one way to stand out from other employers while contributing to a company’s recruiting strategy and employee benefits package.

• The top reasons why employers offer health insurance to employees include:

  • To hire and retain the best workers (66%)

  • Moral responsibility (43%)

  • Encourages productivity (27%)

  • Workers can’t afford coverage on their own (26%)

  • Tax benefits (11%)

• 89% of workers are employed by a firm that offers health benefits to at least some workers.

• 56% of firms offer health benefits to at least some of their workers.

• If you operate a small business with less than 50 full-time employees, you are not required to offer group health insurance. However, if your company offers health coverage to employees, you are typically required to pay for at least 50% of employee premiums.

Average Cost of Company Health Insurance Statistics

Among the benefits provided by businesses to their employees, employer-sponsored health insurance remains the most expensive. Coverage is also costly for employees, as premiums, deductibles, copays, and coinsurance amounts have increased dramatically over the past decade.

Furthermore, most plans require employees to pay for a significant portion of their coverage premiums.

• Health care is typically one of the most expensive benefits for employers to provide, constituting 7.8% of total compensation for civilian workers in September 2022.

• Average employer-provided health insurance costs have increased modestly over the previous year. The average single premium increased by 4%, and the average family premium increased by 5%.

• The average premium for family coverage has increased 22% over the last five years and 55% over the previous ten years.

• In 2021, the average annual premiums for employer-sponsored health insurance were $7,739 for single coverage and $22,221 for family coverage.

• Between 2010 and 2020, the average employee contribution to health insurance increased from $3,997 to $5,588 a year, an increase of almost 40%.

• During this same time, the average employer contribution increased from $9,773 to $15,574, or about 55%.

• 31% of covered small firm employees had their employer pay the entire premium for their single coverage.

• 35% of covered small firm employees were enrolled in a plan where they contribute more than one-half of the premium for family coverage.

• 83% of covered workers have a general annual deductible for single coverage that must be met before the plan pays for most services.

• Over the past five years, the percentage of covered workers with a general annual deductible of $2,000 or more for single coverage has grown from 18% to 28%.

• The average copayments are $25 for primary care and $40 for specialty care.

• The average coinsurance rate for hospital admission is 20%, and the average copayment is $326 per hospital admission.

• Average individual deductibles have increased by 24% between 2015 and 2018.

• The average single coverage annual deductible among covered workers with a deductible has increased 25% over the last five years and 79% over the last ten years.

• The average copayments are $26 for primary care and $42 for specialty care. The average coinsurance rates are 18% for primary care and 19% for specialty care.

• 65% of covered workers have coinsurance, and 13% have a copayment for hospital admissions. The average coinsurance rate for hospital admission is 20%, and the average copayment is $311 per hospital admission.

Employer-Sponsored Health Insurance Affordability Statistics

Because of high—and continuously increasing—health insurance premiums, many covered individuals express concerns about affording coverage generally and paying for prescription medications specifically.

The situation is similar among employers, nearly half of whom state they’re “very concerned” about their continued ability to offer employee health benefits.

• 94% of all civilian workers who participated in their employer’s medical plans in March 2020 had to contribute part of the premium for family coverage.

• Middle-income workers spent an average of 6.8% of their income on employer premium contributions in 2018.

• The average premium for family coverage has increased 22% over the last five years and 54% over the previous ten years, significantly more than workers’ wages or inflation.

• 63% say an increase of 15% or less in monthly premiums will make their current plan unaffordable.

• The cost of prescription drugs is one of the most significant challenges facing employers and families.

• About 50% said they or a family member had skipped or postponed getting health care or prescriptions due to costs in the past 12 months.

• 40% of non-elderly adults said that they or a family member had difficulty affording employer-based health insurance or health care or had problems paying medical bills.

• The top two most important factors for small employers when choosing a group health plan are affordable monthly premiums and out-of-pocket costs.

• 41% of small businesses are “very concerned” about their continued ability to offer employee health benefits, 42% are “somewhat concerned,” and 17% are not concerned.

• 39% of small businesses are “very concerned” about employees’ ability to afford premiums and deductibles, 38% are “somewhat concerned,” and 23% are not concerned.

• For employers, the most important factors when choosing a health plan include:

  • Affordable monthly premiums for employees (34%)

  • Affordable copays and deductibles (30%)

  • Affordable monthly premiums for employers (11%)

  • Strong medical provider networks (10%)

  • Getting key medical benefits (9%)

  • Other (6%)

• 53% of employers say that sponsoring a health plan has not prevented them from offering raises or hiring additional workers. However, 30% report that offering coverage has made it harder for them to increase employee wages or hire additional workers.

Employer-Sponsored Health Insurance Statistics Related to HMOs, PPOs, and Other Plans

Point of Service (POS) plans are the most common among employer-sponsored health insurance coverage. However, HMOs typically require slightly lower employer and employee contributions, whether for individual or family plans.

• For HMOs, the average employer contribution is an average of $6,071 for single coverage, with individual employees contributing $1,212 per year. When it comes to families, employers contribute $15,520, and employees cover $5,289.

• When it comes to PPOs, employers contribute an average of $6,546, and single employees contribute $1,335 per year. For family coverage, employers contribute $16,231, and employees contribute $6,017.

• POS (Point of Service) plans account for 47% of all small business plans. HMO (Health Maintenance Organization) plans account for 26%, PPO (Preferred Provider Organization) plans account for 15%, and EPO (Exclusive Provider Organization) plans account for 12%.

• For all plan types, employers provide an average of $6,227 toward single coverage, and employees pay $1,243. For family coverage, employers contribute $15,754, and employees contribute $5,588.

Employer-Sponsored Health Insurance Coverage Statistics

Most employers are satisfied with the breadth of their health insurance network and the choice of provider networks available to employees. Large and small firms typically offer plans that cover additional health benefits like health risk assessments, smoking cessation, weight management, or behavioral or lifestyle coaching.

• Among employers offering health benefits, 51% say that the network for their plan with the largest enrollment is ‘very broad,’ 42% say it is ‘somewhat broad,’ and 6% say it is ‘somewhat narrow.’

• 45% of employers offering health benefits report being ‘very satisfied’ with the choice of provider networks available to them, and 38% report being ‘satisfied.’ However, only 22% of these firms report being ‘very satisfied’ with the cost of provider networks available, while 39% report being ‘satisfied.’

• Among those offering health benefits, 42% of small firms and 60% of large firms provide workers the opportunity to complete a health risk assessment.

• 53% of small firms and 81% of large firms offer a program in smoking cessation, weight management, or behavioral or lifestyle coaching. Among large firms offering at least one of these programs, 44% offer their workers an incentive to participate in or complete the program.

• 85% of firms with 50 or more employees who offer health benefits cover telemedicine health care services in their largest health plan.

• 76% of large firms offering health benefits cover health care services received in retail clinics, such as those in pharmacies, supermarkets, and retail stores, in their largest health plan.

• Most small businesses offering employee health coverage also offer additional benefits such as:

  • Dental (52%)

  • Vision (41%)

  • 401(k) (24%)

  • Life insurance (14%)

  • Paid family leave (13%)

Average Health Insurance Cost Through Employer FAQ

1. What is the average cost of health insurance through an employer?

   The average annual cost of health insurance premiums through an employer is $7,739 for single coverage and $22,221 for family coverage. The average employer contributes an average of $6,227 for a single coverage plan and $15,754 to family coverage.

   This leaves employees paying an average of $1,243 for a year of single coverage or $5,588 for a year of family coverage through their employer-sponsored health insurance.

2. What percentage of health insurance do employers pay?

   Employers pay for 78% of single coverage employee health insurance plans, and 66% of family coverage plans. This works out to employers paying an average of $475.69 a month per individual employee and $1,174 a month per family.

3. Is employer-sponsored health insurance cheaper?

   Yes, employer-sponsored health insurance is cheaper. While the cost of the plans themselves might not change much, the fact that employers cover around 78% of the premiums means that employer-sponsored health insurance almost always works out to be less expensive than buying an individual plan.

   The downside to employer-sponsored health insurance is that you’re limited to certain plan options.

4. Do employees pay for employer-sponsored health insurance?

   Yes, employees pay for employer-sponsored health insurance. While these plans are employer-sponsored, your employer does not typically cover the entirety of your premiums. On average, an employee will pay about 1/5 the price of premiums, which is usually deducted directly from their paychecks.

   Additionally, employees are still responsible for making copayments and reaching their deductible before insurance covers services.

5. Can I get a premium tax credit if my employer offers insurance?

   No, you cannot get a premium tax credit if your employer offers insurance in most circumstances. However, if the employer-sponsored coverage is too expensive or does not meet the minimum value standard, you may be eligible for a premium tax credit.

   “Too expensive” is defined as more than 9.83% of an individual’s household income and not meeting the “minimum value standard” means that the plan won’t cover at least 60% of the total cost of benefits that you expect to incur.

   If at least one of these things is true, you may qualify for a premium tax credit even if you are offered health insurance through your job. Speak to a certified accountant to learn more.

Conclusion

While health insurance coverage is a popular way for employers to attract the most talented employees, affordability remains a top concern among both employers and employees. This concern applies to general policy premiums, deductibles, copays, and coinsurance, and specific coverages like prescription medications.

Based on past trends, health care coverage is expected to become increasingly unaffordable for businesses of all sizes, as well as the employees covered under different plans. Fortunately, plans are changing with the times, as many now provide telemedicine and retail health care services coverage.

Sources

1. eHealth Insurance. Average Cost of Employer-Sponsored Health Insurance. Accessed on 8/9/21.

2. eHealth. Small Businesses Health Insurance: Costs, Trends and Insights 2018 (Published April 2019). Accessed on 8/9/21.

3. Kaiser Family Foundation. 2019 Employer Health Benefits Survey. Accessed on 8/9/21.

4. Kaiser Family Foundation. 2020 Employer Health Benefits Survey – Summary of Findings. Accessed on 8/9/21.

5. U.S. Bureau of Labor Statistics. Average employee medical premium $6,797 for family coverage in 2020. Accessed on 8/9/21.

6. U.S. Bureau of Labor Statistics. Medical care premiums in the United States, March 2020. Accessed on 8/9/21.

7. Harvard Business Review. Are Employer-Sponsored Health Plans on Their Way Out? Accessed on 8/9/21.

8. The Commonwealth Fund. Trends in Employer Health Care Coverage, 2008–2018: Higher Costs for Workers and Their Families. Accessed on 8/10/21.

9. eHealth. Employer-Sponsored Health Insurance Statistics: What The Data Tells Us. Accessed on 2/23/2023.

10. U.S. Bureau of Labor Statistics. Employer Costs for Employee Compensation – September 2022. Accessed on 2/23/2023.

Author

Chris Kolmar

Chris Kolmar is a co-founder of Zippia and the editor-in-chief of the Zippia career advice blog. He has hired over 50 people in his career, been hired five times, and wants to help you land your next job. His research has been featured on the New York Times, Thrillist, VOX, The Atlantic, and a host of local news. More recently, he's been quoted on USA Today, BusinessInsider, and CNBC.