Companies evaluating employer-funded individual health insurance (aka “defined contribution”) often ask how much to offer as a benefit. An advantage of defined contribution is the employer may set any contribution amount to employees’ healthcare. That being said, most employers want to know they are offering employees a competitive benefits package. So, how much do other companies provide?
According to a new annual report by Zane Benefits, the average monthly healthcare allowance offered is $426 per month, per employee. Of course, what employers offer varies by region, industry, employee class, and family status. This article takes a closer look at trends in benefit package design from a sample of 2,200 employers using a Zane Benefits defined contribution benefit solution during the 2015 calendar year.
Note - To download the full study, “The Employer-Funded Individual Health Insurance Annual Report 2016,” click here.
Trends in Employer-Funded Healthcare Allowances
With defined contribution health benefit plans, allowances are set by the employer, so there are no minimum or maximum contribution requirements. This not only allows employers to control costs, but gives them the ability to adjust allowances according to the needs and expectations of each employee.
Nationwide, the average allowance offered to employees is currently $426 per month. Allowance averages also vary by family status, region and state.
Allowances by Family Size
According the annual report, the average national employer allowances by family size are:
Single: $290 per month
Single + Children: $367 per month
Married: $463 per month
Married + Children: $581 per month
Allowances by Region
According the annual report, the average employer allowances by region (for all family sizes) are:
Midwest: $415 per month
Northeast: $441 per month
South: $383 per month
West: $407 per month
Tip: For average allowances by state, download the full PDF here.
Trends in Adoption by Industry
Defined contribution and individual health insurance solutions are being adopted by firms nationwide as a preferred alternative to traditional employer health benefits. The Zane Benefits data, however, identifies key trends:
Employers using the defined contribution solution are predominantly small employers—those with 1-49 employees.
The most prominent industries represented in the study are healthcare (16% of employers), manufacturing (13%), non-profit organizations (11%), consulting firms (8%), and construction (8%).
Employers studied are spread out across the nation with 11% from the East, 21% from the Midwest, 38% from the South, and 30% from the West.
Tip: For more detailed trends by industry and location, download the full PDF here.
As companies evaluate and implement a defined contribution benefits package, identifying how much to offer employees is a key decision. Understanding national and regional trends can be a helpful input, as can working with a defined contribution provider to complete budget and plan design worksheets.
Why questions do you have about designing a defined contribution benefits package? Leave a comment below and we’d be happy to help answer.