# Employer health insurance cost calculator

Source: https://www.getprescience.com/tools/employer-health-insurance-cost-calculator
Author: Rishab Jain, Cofounder and CEO, Prescience
Published: 2026-10-21
Updated: 2026-10-21

The average employer plan cost $9,325 a year for single coverage and $26,993 for family coverage in 2025, and employers paid about 84% and 74% of those premiums. That works out to roughly $657 a month per single employee and $1,679 per family. Enter your headcount and premiums to see your company's monthly cost, its cost per employee and what a 10–20% lower premium would save.

- **Average single premium (2025):** $777/month
- **Average family premium (2025):** $2,249/month
- **Employer share, single / family:** 84% / 74%
- **Employer cost, single:** About $657/month

## Estimate your company's cost

_Interactive calculator: open the page in a browser to use it. The rules and figures it applies follow._

The defaults are national averages from KFF's 2025 Employer Health Benefits Survey, so they describe a typical plan, not yours. Replace them with the monthly premiums on your renewal or quote and the share you actually pay. Count employees by the coverage tier they enrolled in, not by headcount: people who waive coverage cost nothing in premiums.

## What employers pay on average

Founders ask me some version of "how much does it cost to give employees health insurance?" on almost every first call. The honest answer is that it depends on four things: how many people enroll, which tiers they pick, your premiums and the share you pay. Here are the national averages the calculator starts from.

**Average annual premiums and contributions, 2025 (KFF)**

|  | Single | Family |
| --- | --- | --- |
| Total premium | $9,325 | $26,993 |
| Worker contribution | $1,440 | $6,850 |
| Employer contribution | $7,885 | $20,143 |
| Employer share | 84% | 74% |
| Employer cost per month | About $657 | About $1,679 |

Small firms tend to pay a similar premium for single coverage but often ask workers to pay more for family coverage, so their employer share for families is usually lower. Many startups pay 100% for employees and 50% or more for dependents, which puts them above the average on single coverage and close to it on family.

## Worked example: a 12-person startup

**8 employees on single coverage and 4 on family, at KFF averages**

Illustrative. Premiums of $777.08 single and $2,249.42 family a month, with the employer paying 84% and 74%.

- Total premiums per month: $15,214
- Employer pays per month: $11,880
- Employer pays per year: $142,563
- Per covered employee per month: $990
- Employees pay per month, in total: $3,334

About $142,600 a year for the company. A plan priced 10–20% lower on the same premiums would save roughly $18,300 to $36,500 a year, before any change in how the cost is split.

**Paying 100% for employees and 50% for dependents**

Illustrative. Same team and premiums. The employer pays all of single coverage and the employee's portion of family coverage plus half of the dependent portion.

- Single, employer pays: 8 × $777.08 = $6,217
- Family, employer pays: 4 × ($777.08 + 50% × $1,472.34) = $6,053
- Employer pays per month: $12,270

About $147,200 a year: roughly $4,700 more than the KFF-average split, in exchange for $0 premiums for single employees. Enter 100% single and about 67% family in the calculator to model it.

## What drives your number up or down

- **Age and location.** Small-group premiums are rated by each employee's age and your ZIP code. A team of 25-year-olds in Texas pays far less than a team of 50-year-olds in New York.
- **Plan design.** A PPO with a low deductible costs more than an HMO with a high one. Most companies offer one richer plan and one cheaper plan.
- **Tier mix.** One family enrollment costs about as much as three single ones.
- **Your contribution policy.** Paying a flat dollar amount instead of a percentage keeps your cost predictable when premiums rise.
- **Funding model.** Fully insured premiums include the carrier's margin and state premium taxes. Other models can remove some of that. Our guide to [funding models](https://www.getprescience.com/guides/level-funded-vs-self-funded-vs-fully-insured) explains the trade-offs.

> **Don't forget the other costs:** Premiums are most of the bill, but PEO admin fees, broker commissions built into premiums and benefits software can add $50 to $200 per employee per month. Ask for every fee in writing when you compare quotes.

## How company size changes the picture

National averages hide a big difference between small and large companies. In KFF's survey, small firms (3 to 199 workers) and large firms pay similar total premiums for single coverage, but small firms are more likely to offer high-deductible plans and to ask workers to pay more toward family coverage. That's how small companies keep premiums in line with large ones: the cost moves to employees through deductibles and family contributions.

For a startup, the practical question is what share to pay. In the companies I talk to, three patterns cover almost everyone:

- **100% for employees, 0% to 50% for dependents.** The most common choice among venture-backed startups. It makes the offer easy to explain ("your coverage is free") and keeps family costs manageable.
- **A fixed dollar amount per tier.** For example, $700 a month toward any employee and $1,400 toward any family. The company's cost doesn't move when premiums rise; employees absorb increases unless you raise the amounts.
- **The KFF average split, about 84% and 74%.** Common among established small businesses, and the default in this calculator.

To model a fixed-dollar contribution, divide your dollar amount by the premium and enter the result as a percentage. A $700 contribution toward a $777 single premium is about 90%.

**Employer cost per month for one employee, by share paid, at KFF 2025 average premiums**

| Employer share | Single ($777 premium) | Family ($2,249 premium) |
| --- | --- | --- |
| 50% | $389 | $1,125 |
| 74% | $575 | $1,665 |
| 84% | $653 | $1,890 |
| 100% | $777 | $2,249 |

Employer contributions are tax-deductible for the business and tax-free to employees, so a dollar of health benefit is worth more to an employee than a dollar of salary. That's one reason a richer health plan often beats an equivalent raise for retention. Our guide on [what employers pay](https://www.getprescience.com/guides/how-much-do-employers-pay-for-health-insurance) has more benchmarks.

## Ways to lower the cost without cutting benefits

1. **Get a quote outside your PEO or carrier** Renewals are priced to stick. A competing quote is the fastest way to find out whether your rate is fair.
2. **Set contributions in dollars** A fixed employer amount per tier caps how much a renewal increase can cost the company.
3. **Pay premiums pre-tax** A Section 125 plan saves the company 7.65% payroll tax on every dollar employees contribute. Use the [Section 125 calculator](https://www.getprescience.com/tools/section-125-tax-savings-calculator) to size it.
4. **Consider ICHRA for small or spread-out teams** A fixed monthly allowance makes cost fully predictable. Check the minimum allowance with the [ICHRA affordability calculator](https://www.getprescience.com/tools/ichra-affordability-calculator).

## What employees see

The employer's number is only half of the story. When I review a company's benefits, I also look at what a typical employee pays out of their own paycheck, because that's what they compare when a recruiter calls. At the KFF averages, an employee on single coverage pays about $120 a month and one covering a family pays about $571 a month, before deductibles and copays.

Those amounts come out pre-tax for most people, so take-home pay drops by less. You can see the per-paycheck effect with the [paycheck calculator](https://www.getprescience.com/tools/health-insurance-paycheck-calculator). If you pay 100% of employee-only premiums, single employees pay nothing, which is a simple and visible perk in an offer letter.

- **Deductibles move cost to employees too.** KFF found the average single deductible for covered workers was over $1,800 in 2025, and higher at small firms. A low premium share with a high deductible can still feel expensive.
- **Family coverage is where employees feel it.** At a 74% employer share, an employee covering a family pays over $6,800 a year in premiums alone.
- **Waivers save money but cost retention.** If people waive because the plan is expensive, you save on premiums but risk losing them to a company with a better plan.

## What the same team would pay with Prescience

The calculator's 10–20% line isn't hypothetical for us: it's the range our quotes usually land in against comparable fully insured coverage. You can see your real number in about a minute.

> **Prescience Diamond: A company health plan with an effective $0 deductible.** Your quote shows one monthly cost for the whole plan, fixed before the plan starts, so the number you put in this calculator stops moving at renewal.
> - **An effective $0 deductible** and simple copays shown before a visit
> - **A broad national PPO network,** plus providers we contract with directly
> - **24/7 physician-led care navigation** that books visits and explains costs
> - **Usually 10–20% below comparable fully insured coverage,** fixed in your quote, with no admin fees
> Best for teams of about 15 or more that want one great group plan. [Get a Diamond quote](https://www.getprescience.com/get-started?p=Employer&product=diamond)

> **Prescience Choice: ICHRA for $20 per enrolled employee per month.** Prefer a fixed allowance per person? Choice lets you set exactly what the company spends each month.
> - **You set a monthly allowance;** each employee picks and owns an individual plan
> - **$20 per enrolled employee per month,** with no setup or platform fee
> - **Works in all 50 states and DC,** so remote and multi-state teams fit
> - **Plan comparison, enrollment help and Crystal,** our assistant for benefits questions
> Best for small teams, teams in several states, and anyone pricing ICHRA. [Get a Choice quote](https://www.getprescience.com/employer/choice)

## Frequently asked questions

**How much do employers pay for health insurance per employee?**

On average in 2025, about $7,885 a year ($657 a month) for an employee on single coverage and $20,143 a year ($1,679 a month) for family coverage, according to KFF.

**What percentage of health insurance do employers pay?**

About 84% of the premium for single coverage and 74% for family coverage on average in 2025. Many startups pay 100% for employees.

**How much does it cost to offer health insurance to 10 employees?**

At KFF averages and the average split, about $6,500 a month if all ten take single coverage, or about $10,600 if four of them cover their families. Your own quote can differ a lot by age, location and plan.

**Is there a minimum employer contribution?**

Most small-group carriers require the employer to pay at least 50% of the employee-only premium. ICHRA and QSEHRA have no such minimum, though ICHRA allowances affect affordability.

**Are employer health insurance premiums tax-deductible?**

Yes. Employer contributions are a deductible business expense and aren't taxable wages for employees.

**Does this calculator include dental and vision?**

No. It covers medical premiums only. Add dental and vision separately; they usually cost far less per person.

**How accurate is the 10–20% savings line?**

It's an illustration of the range Prescience quotes usually fall in against comparable fully insured coverage. Your quote is the real number.

## Sources

- [KFF, 2025 Employer Health Benefits Survey](https://www.kff.org/health-costs/2025-employer-health-benefits-survey/)
- [IRS Publication 15-B, Employer's Tax Guide to Fringe Benefits](https://www.irs.gov/publications/p15b)
- [HealthCare.gov, Small business health insurance](https://www.healthcare.gov/small-businesses/employers/)
- [CMS, Market rating reforms (age and geographic rating)](https://www.cms.gov/cciio/programs-and-initiatives/health-insurance-market-reforms/market-rating-reforms)
- [U.S. Department of Labor, ERISA](https://www.dol.gov/general/topic/health-plans/erisa)