Question 1

What is the average total healthcare cost per employee per year?

Accepted Answer

For 2025, median total healthcare cost per employee per year (PEPY) — including both employer and employee contributions — is approximately $14,500–$16,500 for employers with 100–499 employees and $12,500–$14,500 for employers with 500+ employees. Costs vary significantly by industry: healthcare and social assistance employers average 15–20% above median; technology and professional services employers average 10–15% below median.

Question 2

What is the employer vs. employee split for health plan costs?

Accepted Answer

For 2025, employers cover approximately 73% of single coverage premiums and 67% of family coverage premiums on average (KFF Employer Health Benefits Survey). The average employee contribution for single coverage is approximately $1,400/year; for family coverage, approximately $6,600/year. For self-funded plans, the employer bears the financial risk for claims, but employees contribute through payroll deductions.

Question 3

How do I calculate my total healthcare cost per employee per year?

Accepted Answer

Total PEPY = (total claims paid + stop-loss premium + TPA fees + other vendor fees − stop-loss recoveries) ÷ average number of covered employees. Use 12 months of data for a full-year calculation. Include all plan costs: medical claims, pharmacy claims, stop-loss premium, TPA administrative fees, and other vendor costs. Compare your result against the benchmarks on this page for your employer size and industry.

Question 4

What factors drive healthcare cost above benchmark?

Accepted Answer

Common drivers of above-benchmark healthcare costs: high chronic disease prevalence (diabetes, cardiovascular disease, obesity), aging workforce, high-cost specialty drug utilization, lack of cost-containment programs (no MSK vendor, no cancer navigation, no DPC), inefficient PBM contract (spread pricing, low rebate pass-through), high-cost geographic market, and plan design that does not incentivize cost-effective care.

Question 5

What cost-containment strategies have the biggest impact on cost per employee?

Accepted Answer

The highest-ROI cost-containment strategies: (1) PBM optimization — switching to a transparent PBM saves 10–25% on pharmacy costs; (2) Reference-based pricing — saves 15–30% on hospital costs; (3) Centers of excellence — saves 20–40% on targeted procedures; (4) MSK management — saves 15–25% on musculoskeletal costs; (5) Direct primary care — saves 15–30% on total costs when paired with HDHP; (6) Stop-loss optimization — competitive bidding saves 10–20% on stop-loss premium.

Cost Per Employee Benchmarks

Key benchmark figures

Data sources

Employer Health Benefits Survey

National Survey of Employer-Sponsored Health Plans

Milliman Medical Index

Employee Benefits Survey

Health Plan Cost Trend Survey

Large Employers Health Care Strategy Survey

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