Market Benchmarks for Premium Contributions
According to the KFF 2025 Employer Health Benefits Survey, the average employer contribution is 83% of the employee-only premium and 72% of the family premium. However, there is significant variation by employer size, industry, and region.
| Coverage Tier | Average Employer Contribution | Average Employee Contribution |
|---|---|---|
| Employee only | 83% ($7,742) | 17% ($1,583) |
| Employee + family | 72% ($19,435) | 28% ($7,558) |
Defined Contribution Strategy
A defined contribution strategy gives employees a fixed dollar amount toward their premium and lets them choose their plan. This approach gives employees more choice and makes the employer's cost more predictable. It also creates stronger incentives for employees to choose lower-cost plans.
ACA Affordability Constraints
Compliance Note
ACA affordability requirements limit how much employers can charge employees for self-only coverage. For 2026, the employee's required contribution for self-only coverage cannot exceed 9.96% of their W-2 wages. Contribution strategies that exceed this threshold expose the employer to 4980H(b) penalties. Always model ACA affordability before finalizing contribution strategy.