How much do mid-size companies pay for health care on behalf of their employees?

August 15, 2007 6:23 PM

How can I determine or calculate the average amount a company pays for healthcare/benefits for a single full-time employee?

I'm discussing the possibility of a merger of two positions with my current employer and I'm trying to calculate the cost savings of eliminating the need for an additional full-time employee. Are there statistics available on the web, or would I be able to calculate the amount of money a company pays in health care premiums and other benefit costs (monthly or annually) for the average full-time American worker? I realize there are probably many variables involved, so an average range is all I'm looking for. (If needed, this job is an Administrative position at a medium size, national financial institution that would pay in the range of $35-$45K, annually.) Also, would it be possible to contact our HR department directly, as in, would the company even disclose that information?

posted by Asherah to work & money (9 comments total)

I earn at the high end of your example, and work at a company that sounds comparable, and I'm looking at something that says my company pays $6000 annually for my medical, in addition to the $1000 that I pay in premiums. Email if you want more info.
posted by peep at 6:34 PM on August 15, 2007

This doesn't directly answer your question, but where I used to work, our pay stubs/HR portal indicated the amount paid by the employer and the amount paid by the employee. If you are trying to determine it for your company, the answer might already be in front of you. The national average percentage appears to be 19.4% according to 2005 US Commerce Dept data (source here, pdf, might have some other good stuff). So, if the employee earns $40K annually, the benefits might be $9,627. That's a total employee cost of $49,627 with 80.6% going to salary/wages and 19.4% going to benefits. YMMV of course, but it's probably a good starting point. I think you could just ask HR though.
posted by ml98tu at 7:49 PM on August 15, 2007

I can't see why it would hurt to ask HR. Medical insurance should not be at all related to the amount you make per year (life insurance would likely be, however, and certainly pensions). It will vary based on the size of the organization you work for, the type of coverage provided, and (likely) the amount the insurance company has paid out on your behalf.

If I were on our company's medical, I would pay half the premium, so I can figure it out. In addition, we get told that amount annually at open enrollment. And, recently the Company provided information that included the total amount of premiums paid, and the amount of claims paid out. this is called a "Summary Annual Report", and, according to the report, it has to be filed with the Employee Benefits Security Administration under ERISA. I'm not sure what requires our company to do that (we aren't public or anything), so you might specifically ask your HR people for that document. More information here. These documents should be available for medical, dental, life, and pension plans.
posted by dpx.mfx at 7:52 PM on August 15, 2007

I have often heard as a rule of thumb that the employer's expenses for a given employee are about evenly split between wages and overhead (insurance, office space, etc).
posted by hattifattener at 8:12 PM on August 15, 2007

According to the Department of Labor, as of June 2007, the average cost of benefits as a percentage of all compensation is 30% or $8.85 per hour. There is quite a bit of detail in this report about what benefits are included, and a breakdown of the cost of each specific benefit as a % of compensation and as an average hourly cost.

This is an average. I would guess managerial positions may be closer to the 35-40% range based on my experience of seeing bonuses and perks handed out.

DOL issues these reports regularly - quarterly, I think. You can find lots more benefits information on the DOL benefits page.
posted by madamjujujive at 10:42 PM on August 15, 2007

Also, I think your HR department may be willing to share the actual info or give you a working average.

Many large organizations now issue individual compensation & benefits reports annually to all employees - just to raise awareness because most employees have no idea of the true amount of their total compensation package. There are a lot of hidden things that cost a lot - workers comp, unemployment, social security, tax match, etc. I never appreciated these things all that much, but now that I am self-employed and either paying them myself or doing without, I see how they add up!
posted by madamjujujive at 10:50 PM on August 15, 2007

Blue Cross is ~$450/mo (single) where I work. Anyone paying their COBRA will be able to give you an exact figure of how much health bennies actually cost.

Back in 2002-2003, Blue Cross via COBRA was $330/mo to me.
posted by Heywood Mogroot at 11:14 PM on August 15, 2007

I'll second jujujive - the few places I've been, when budgeting for new positions, the rule of thumb was ~30% (OK, 28%, 30%, and 28%) on top of salary for benefits.
posted by niteHawk at 8:10 AM on August 16, 2007

Another good resource: 2006 Annual Employer Health Benefits Survey.
posted by rtha at 9:28 AM on August 16, 2007