Small Business Employer Contribution
A small business employer contribution to health insurance can vary widely, depending on the size of the company, the industry, and the region. However, according to the Kaiser Family Foundation, the average employer contribution for single health insurance coverage in 2022 for small businesses with fewer than 50 employees was $4,565 per year, or $380 per month. The average employer contribution for family health insurance coverage in 2022 for small businesses with fewer than 50 employees was $12,659 per year, or $1,055 per month.
Small business employers may choose to contribute to health insurance in a variety of ways. Some employers may pay the full cost of health insurance for their employees, while others may pay a percentage of the cost. Some employers may also offer their employees a choice of health insurance plans, and the amount of the employer contribution may vary depending on the plan that the employee chooses.
Here are some examples of how small business employer contributions to health insurance might look:
- A small business with 10 employees might offer its employees a single health insurance plan, with the employer paying 50% of the cost of the premiums.
- A small business with 25 employees might offer its employees a choice of two health insurance plans, with the employer paying 75% of the cost of the premiums for the lowest-cost plan, and 50% of the cost of the premiums for the other plan.
- A small business with 50 employees might offer its employees a choice of three health insurance plans, with the employer paying 100% of the cost of the premiums for the lowest-cost plan, 75% of the cost of the premiums for the second-lowest-cost plan, and 50% of the cost of the premiums for the highest-cost plan.
The amount of the employer contribution to health insurance is a business decision that each small business owner must make on their own. However, it is important to note that employer contributions to health insurance can be a valuable benefit for both employers and employees. Health insurance can be expensive, and employer contributions can help employees to afford the coverage that they need. Additionally, employer contributions can make it easier for small businesses to attract and retain top talent.
Small business employers may also be eligible for tax credits to help offset the cost of providing health insurance to their employees. The Small Business Health Care Tax Credit is a tax credit that is available to eligible small businesses that provide health insurance coverage to their employees. To be eligible for the tax credit, the small business must have fewer than 25 full-time equivalent employees (FTEs) and must pay an average annual wage of less than $50,000 per FTE. The amount of the tax credit is based on the size of the small business and the percentage of the cost of employee-only health insurance coverage that the small business pays.
Small business employers can learn more about the Small Business Health Care Tax Credit and other tax benefits for small businesses that provide health insurance coverage to their employees on the IRS website.
