What is Dependent Contribution 25 percent?

A Dependent Contribution of 25% indicates that the total cost to the employer for the quoted group health plan is based on the assumption that the employer will be paying 25% of the premium for any dependent that an employee wishes to add to his coverage. The employee will be responsible for paying the remaining 75% of their dependent premium. Using the same example from Employer Contribution, let’s assume that Joe Smith wants to add his wife and 3 kids to his health insurance coverage. Under the Employee Rate Breakdown, the dependent rate is $400. The employer will contribute $100 toward that amount and Joe Smith will be responsible for paying the $300 balance. Now, let’s combine that with Joe Smith’s $200 employee-only premium amount of $200. The employer is paying 75% of that amount, or $150. Add that to the $100 that the employer is contributing for Joe’s dependents and the total employer contribution is now $250. The total premium for Joe’s Smith and dependents is $600, leaving Joe Smith with the responsibility of paying $350 to insure himself and his family under the group health plan.

The amount that the employer chooses to contribute to the dependent premium is solely at the discretion of the employer. It is not uncommon for a small employer to make no contribution to the dependent premium amount. Some believe that by paying dependent premiums they would be providing greater employee benefits to employees that have families, versus those that are single. Whether or not a dependent is added to a group health plan does not affect any minimum participation requirements outlined in the underwriting guidelines of the insurance carrier. Unlike laws or guidelines that regulate minimum percentages on employee contributions, there are no minimum requirements imposed on the employer for paying any portion of the dependent premium. It is rare to find a small employer that offers to pay full premium for both employee and dependents. This is more commonly found in large group health plans and government employee health plans. This is becoming increasingly the case as the cost of health insurance continues to rise and small employers struggle to pay a portion of the employee only premium.

1 Comment

1. I have group health insurance with Aetna insurance and had been spoiled by my employer contributing on an equal level 50-50 with employees for their dependents, spouses and children. So in practice that meant upgrading to a family plan for a fixed cost. It did receive some attention from the single people who felt they were essentially being cheated out on benefits and salary. Well anyway the recession has meant our employer can no longer offer this deal. We will still be covered with Aetna insurance but from now on we will have to pay 75% for our dependents.

   Comment by Steve — June 4, 2009 @ 6:39 am

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