What is Employer Contribution 75 Percent?
Q: What is Employer Contribution 75 Percent?
A: An Employer Contribution of 75% indicates that the total premium amount to be paid by the employer has been calculated on the understanding that the employer will be paying 75% of the employee-only premium. The employee will be responsible for paying the remaining 25% of the premium amount that is associated with their portion of the total group health insurance premium. As an example, Joe Smith is 31 years old and his associated premium on the Employee Rate Breakdown is $200. The employer has agreed to pay $150 toward Joe’s premium, leaving Joe with a monthly premium balance of $50.
The amount that the employer wishes to contribute toward the total group health insurance premium is at the employer’s discretion as long as it is within the limitations set by the health insurance carrier guidelines and state regulations. The minimum percentage of the employee premium that must be paid by the employer can vary based on the underwriting guidelines of the insurance company, the size of the group, the participation requirements and state regulations. The most common requirement for small group health plans is that the employer must be responsible for at least 50% of the employee only premium. One important factor in determining what percentage you are willing to pay for your employee’s is the possible minimum participation requirements set forth in the guidelines of the insurance company. The higher percentage you request from your employees, the less likely you will be to meet this minimum participation requirement. No employee coming to work for your company can be forced to enroll in your group health plan. Perhaps you will have employees that are unable to afford their share of the premium, which is more likely if their share is substantial. In some cases, if the employer agrees to an Employee Contribution of 100%, the insurance company may request that all eligible employees be enrolled in the health plan. This is because there should be no reason for an eligible employee to decline coverage under the group heath plan if the employer is paying 100% of the premium.
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